招商证券*港股研究*Sijia(01863.HK)-To become No. 1 in mainland China, the beneficiary from “12-5 Plan”*01863**赵晓

报告名称：Sijia(01863.HK)-To become No. 1 in mainland China, the beneficiary from "12-5 Plan"
研究员：赵晓
报告类型：港股研究*公司报告
报告日期：20101213

行业/子行业：
公司名称及代码：思嘉集团(01863)
投资建议：买入

【内容摘要】

Sijia Group ("Sijia" or the "Company") announced on 2/12, due to personal reasons, one of independent non-executive directors resigned from the Company. The Company will find a new one before the resignation come into effect. The impact on the Company was limited. On 17/11, the Company subscribed 35mn Warrants with an initial subscription price of HKD4.50 for a period of 36 months. The max amount of HKD157.5mn will be applied to expand the production capacity for reinforced materials by acquiring production facilities for producing membrane structure & waterproofing membrane. We viewed the Warrant subscription as neutral that could provide the liquidity in the market. As the leader of reinforced materials market, Sijia is directly benefited from "12th Five-Year Plan" objectives from rural modernization & supportive policies on new materials as an alternative to traditional energy. Since the Company is under the growing stage of the market, we think PEG valuation will be more suitable than DCF. PEG takes the Company's valuation risk into account while also considering the Company's growing factors. By using DCF, Sum-of-Parts and PEG valuation, we concluded the Company's 12-month TP of HKD9.63, equivalent to 12.50X2011P/E，0.24X2010PEG (21.12X2010P/E，0.41X2010PEG), reiterate "BUY" rating.

We maintain our 2010-2012 earning estimates The Company used IPO funds of HKD691 that was raised from listing in Apr., 2010, to expand the production capacity and distribution channel. At present, the Company has 4 manufacturing bases in Fuzhou, Xiamen, Wuhan & Chengdo for producing the reinforced materials and their downstream end-products. For sales & distribution, the Company has 48 direct sales offices & 17 representative offices covering 26 major provinces and cities. Based on the Company's aggressive growth strategy, we expect the revenue to reach RMB1.0bn, RMB1.6bn & RMB2.4bn over 2010-2012, representing an increase of 83.0%, 54.1% & 47.6% respectively; The net profit will accomplish RMB324.3mn, RMB548.2mn and RMB810.5mn, grow 89.4%, 69.0% and 47.9% correspondingly.

To become the No.1 reinforced materials producers in China The Company plans to produce new products in Shanghai manufacture base, and to change 2011 product mix by adding membrane structure, waterproof membrane, TPU materials and etc. If Shanghai manufacture base reaches at full capacity in 2012, we might expect the aggregate output value of RMB18mn to release. Even though, Shanghai base is under the planned and will start to construct in next year. There are still some risks that might cause production delays, therefore we didn't fully include the contribution from Shanghai for our earning estimation over 2011-2012. Additionally, the sufficient capital reserves that raised from the listing, enables the Company to enhance its R&D ability, to consolidate the manufacturing capacity and to realize the production of scale effect for becoming the leader of enforced materials producers in future.


【摘要结束】