Shandong Molong: Optimistic profit outlook

China Merchants Securities in the first half of the bid for PetroChina (00857.HK) oil casing nearly 90,000 tons of the contract, Shandong Molong also obtained PetroChina to 120,000 tons, accounting for the company's 2009 annual production capacity of 34%.　　The amount of the tender is its annual total of 70%, the second half with the market warmer, Shandong Molong is expected to receive the remaining 30% per cent of the corresponding share of the current bid.　　The company has successively entered the Xinjiang oilfield, north China oilfield, laying the groundwork for future increases in domestic sales in addition, we expect the U.S. anti-dumping investigation to have limited impact on the company, the future of the company in Africa and South America market share will gradually enlarge, so we recommend investors pay attention to the company's stock price movements.　　The situation of the contract order is optimistic up to now, the company's winning bid accounted for 11.5% of the tender of PetroChina, ranked third in the successful bidder; PetroChina this tender from the initial 38 bids, finally only about 6, 7 finalists, the company's advantages are obvious. According to the first quarter of the delivery calculation, PetroChina orders of the product margin of 2008 has a certain rise. As of the end of April, the company's tubing orders were scheduled for October 2009, while casing orders were placed in June. The shift is mainly due to a slowdown in demand, especially in the export sector, where customers generally take short-term small orders rather than long-term large orders.　　The above situation led the company to increase the stock of raw materials, from the orders to the delivery cycle shortened to 2 months. Production and production stability since 2009, the company 250,000 tons of casing production line 100% Tatsu production. Judging from the end of April, it is not a problem to complete the annual production target. 180 projects are progressing well, the plant is nearing completion, and foundation and equipment commissioning will be completed at the end of the 4 quarter, which is expected to enter the trial production phase in early 2010.　　The company has made progress in the development of hydraulic prop pipe, the domestic total demand in 100,000 tons, the prospect is broad. The U.S. government is currently conducting anti-dumping investigations into the export products of China's oil casing enterprises and may impose restrictions on domestic export products in the second half of the year. In its 2008 annual report, the company counted more than 20 million yuan (RMB, hereinafter) to prepare for bad debts, mainly due to the European market's rival banks filed for bankruptcy, resulting in the company's accounts can not be recovered in time.　　By the end of April, the company had recovered 50% of the bad debts, if fully charged back, the equivalent of 2008 earnings per share increased by 6.1%. Maintain a "buy" rating we expect a small correction in the near term for scrap and steel prices in the upstream raw materials of the company. Considering the increase in the company's output in 2009, with the price drop bringing the annual income to the same level as in 2008, and the contribution to revenue of the 180 project in 2010, we gave each earnings forecast of $0.105 and $0.15, lowered the target price of 12 months to HK $1.07, but continued to "buy" Rating。