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Huaxi Village: Cotton Price Has Cost Support &Nbsp; PET Staple Price Is Worrying Or Can Go.

2010/12/4 11:06:00 108

2009, 2010, international and domestic

Supply and demand of cotton

The gap continued to be large, unfavorable weather and continued reduced planting area made the market bullish mentality gradually strong, coupled with the increasing demand of downstream cotton yarn enterprises, cotton prices began to rise since November 2009, and the high point once hit thirty thousand mark.

However, such a high price lasted for only a week, and the tightening of the policy was accompanied by the rapid advance.

Cotton price

In November 16th, it broke 3 and quickly returned to the market.

Watch carefully

After calculation, we believe that the cotton price support position in 2010 will probably be 24000-25000 yuan / ton, and the bottom of the price will be formed.

Cost support, demand pull and supply and demand gap do not support the sharp fall in cotton prices.

Price and substitution to raise the bottom price of polyester staple fiber

Polyester staple fiber blended with cotton and viscose is made of polyester and cotton. The proportion is generally 50:35:10, and other materials account for 5%.

When the composition of polyester staple fiber changes within 15%, the fabric feels no significant difference, so textile enterprises generally change the proportion of raw materials according to the price of raw materials.

The limited substitution relationship between cotton and polyester has been created, and the price correlation between the two is also larger.

According to past practice, the price difference between cotton and PET staple is generally 3000 yuan / ton -5000 yuan / ton. This year, because of the soaring cotton price, the price difference between the two has reached more than ten thousand yuan. We believe that the price difference between cotton and polyester staple is expected to return to normal level after the cotton price has stabilized.

Huaxi Village - Gao Jingqi, who will benefit from polyester staple in 2011

Huaxi Village has 170 thousand tons of polyester staple fiber, 350 thousand tons of supporting polyester production capacity, of which 170 thousand tons are used for the production of PET staple fiber, and the remaining capacity is polyester chip takeaway. In the first half of 2010, it was restricted by the industry downturn. Most of the polyester staple fibers were exported, earning only processing fees, and the gross profit rate was at a low level of only 3%.

The average price of PET staple tax in 2010 is about 10800 yuan / ton, and we do not expect to have a tax price of 12000 yuan / ton in 2011. At the same time, because of the high cotton price and the increase of the amount of polyester staple fiber, the company will benefit from the high prosperity of polyester staple fiber volume and price rise in 2011.

The company will form a three dimensional pattern of chemical fiber, finance, storage and pportation.

In May 2010, the company signed a "asset replacement agreement" with Huaxi Group. It intends to replace the 75% stake of the subordinate fine wool mill, thermal power plant and special textiles Co., Ltd. into 100 million shares of Donghai securities. We expect to report it in 2011.

The company originally held long-term equity investment projects: 248 million 800 thousand shares of Jiangsu bank, and 45 million 350 thousand financial assets for sale: Huatai Securities (14.21, -0.08, -0.56%).

According to the recent average price of Huatai Securities 14.5 yuan / share, the company's financial equity value was calculated to be 3.4 yuan / share.

At present, the company is the most important storage and pportation center in the lower reaches of the Yangtze River, and has 300 thousand cubic meters of chemical storage business.

The gross profit margin of warehousing business is 70% in the past years. It is the company's highest gross profit rate. It is expected to achieve a net profit of 85 million yuan -9000 million yuan in 2010.

Earnings forecasts and recommendations

Our Forecast Ltd 2010-2012 years EPS were 0.22 yuan, 0.42 yuan, 0.45 yuan, the company closed in December 2010 8.39 yuan closing price, deducting 3.4 yuan / share financial equity value, corresponding to the company in 2011 PE 12 times, the company is currently in the polyester fiber industry boom turning point, 2011 will benefit from the industry volume and price rise, for the first time to the company "buy" investment rating, target price 11.8 yuan.

The price of polyester staple fiber has been maintained high after the cotton price has stabilized, and investors are advised to pay attention to the trend of cotton prices.

Risk indicates the risk of cotton and polyester price fluctuation and the cyclical fluctuation risk of industry.