招商证券*港股研究*SIJIA GROUP (01863.HK) - Price fluctuations were unrelated to fundamentals, maintain “Buy”*01863**赵晓,陈征宇

报告名称：SIJIA GROUP (01863.HK) - Price fluctuations were unrelated to fundamentals, maintain "Buy"
研究员：赵晓,陈征宇
报告类型：港股研究*公司报告
报告日期：20110201

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") made two announcements on last Fri., unusual fluctuations in share price & profit alert. The Company noticed the recent sharp decline in stock prices & substantially increased trading volume, & was not clear the causes of such unusual prices movement. The Company did not have any proposed acquisition or sale negotiations. In addition, the Company also made an earnings statement to inform shareholders & interested investors, the FY2010 profits will be significantly higher than FY2009's primarily driven by significant growth in the reinforced material & end product sales. Based on our communication with the Company, we believe the volatility of share price on last Thursday and Friday was unrelated to fundamentals and the stock price sharp decline should be a market overreaction. We maintain "Buy" rating, with a 1 yr TP of HKD9.63, the equivalent to 14.28X2011P/E, 0.31X2010PEG (23.15X2010P/E, 0.60X2010PEG).
Increased cost has a short-term impact on corporate earnings & is in favor of company's long-term rapid growth. Company's production base in Shanghai is expected to be put into operation in Aug. or Sep. 2011. In Oct. 2010 the Company has planned R&D & pilot production activities of TPU, waterproofing materials & membrane structures materials at the production base in Fuzhou. The Company has made the success of product formulations & R&D. We expect the cost of the Company in 2010 will rise YoY. Based on Company's prudent management style, we believe the Company will be more inclined to adopt conservative accounting methods, so the rising cost of the Company is a one-time impact. In addition, the Company is in rapid expansion stage & the growth of admin. Costs are understandable & contribute to the Company's future long-term development.
2012 should be the harvest year In previous reports before Jan., our earnings estimates didn't include the contribution of future sales & profitability of production base in Shanghai Jinshan Industrial Zone. From the last report, based on the estimates that Shanghai production base will be put in oeration in Aug. or Sep., 2011, we redo the Company's earnings estimate of 2012 & 2013. If the production base in Shanghai is smoothly constructed, the new product sales are in line with expectations, & the 2nd phase of Fuzhou factory will start production this year, we expect 2012 will be the harvest year. Based on DCF valuation model, the Company is more than ever the value of long-term investment.


【摘要结束】