招商证券*港股研究*Sijia(01863.HK)-Gold Shine is still covered by sand*01863**陈征宇,赵晓

报告名称：Sijia(01863.HK)-Gold Shine is still covered by sand
研究员：陈征宇,赵晓
报告类型：港股研究*公司报告
报告日期：20110124

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】

Based on the consideration of re-examining and evaluating of Sijia Group, we visited the Company on Jan 8-9, 2011 and had an in-depth conversation with Company's senior management. In general, reinforced materials industry is an emerging field which directly benefited from China "12th Five-Year Plan". Due to new project investment in 2010 and 2011, we expect the Company will increase its expense over 2010-2011, therefore slightly lower forecast of net income to RMB 296 million and RMB 480 million over 2010-2011. We expect company's revenue, gross profit and net profit will rapidly grow over 2012-2015. We maintain the Company's valuation and 12-month TP of HKD9.63, equivalent to 14.28 X2011P/E, 0.31 X2010PEG (23.15X2010P/E, 0.60X2010PEG), reiterate "BUY" rating.

Reliable and persistent gross margin - we attempt to explain Sijia Group's reliable and persistent gross margin based on Company's gross margin structure, comparison with development course of international company in reinforced industry and Company's advantage on technology and processing techniques. Because Sijia is the leader in reinforced materials industry and has advantages on brand, technology, processing techniques, and management talent, it's reasonable for the company to maintain high gross margin. In addition, international companies in reinforced materials industry such as Sika and Sioen have over 50% gross margin in recent 10 years and their gross margin is higher than Sijia's gross margin.

Company's latest development – the new production facility is located in Jinshan industrial district, Shanghai with an area of about 79 acres and mainly involved in production of 3.5 meters high end reinforced materials with annual production capacity: 4 million meters membrane materials, 2 million meters water-proof membrane products , 2 million meters wide biogas materials, 2 million meters tarpaulin and 0.5 million auto rolling gate materials. The Company expects to reach full production capacity in 2012 with annual revenue RMB 1.7-1.8 billion. The production line will become the most advanced membrane materials production line in Asia.

The Company's research and development system is divided into two parts (1) extension of existing product technology and techniques (2) Cooperation with academic institutes and keep patent right. The Company has obtained "National Torch Award" for it's "antifouling and anti-bacteria high strength polyester composite materials project" and was selected as one of ten best modified plastic companies at China Plastic Association in November 2010. The Company is actively participated in the formulation of "National Soft Biogas Tank" Standard.


【摘要结束】