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KGI: Confidence Confidence-style expansion continued holdings of electrical


    Shanghai Zhixin Electric Co., Ltd. is a company dedicated to the development of high-tech products, high-tech transformation, booster cables application and industrialization of operations of private listed companies.
    Company specializes in the amorphous alloy transformer and related product development,battery clip production and sales. Is currently the largest production scale, the most advanced technical standards, product specifications and the most extensive series of amorphous alloy transformer manufacturers.

    Good growth during the first half, net profit rose 58%.

    First half operating income of the company 720 million yuan, tow rope an increase of 2.03%; net profit of 139 million (including non-recurring items mainly for the government subsidies 9,000,000), earnings per share 0.22 yuan, an increase of 58%, respectively, and 57.14%. Significant increase in net profit to rely on the company acquired in October 2008 at full confidence in Hong Kong (accounting for more than 5 percent of profit contribution, the average margin of 3 percent), ratchet tie dowm so that the first half of this year gross profit increase 15.31 percent.

    Domestic Advanced Technology (000969.SZRmb22.35 no rating) a million tons of production line has always been at the trial stage, can really be put into production when there is a big uncertainty. However, from August 26, 2009 National Grid and the World Bank signed a letter of intent CDM point of view, National Grid intends to present, in 2010-2012 with a turnover of 16.6 million high energy distribution transformer in order to meet domestic 2012 75 million tons of carbon dioxide emissions.

    Although the 166,000 units are not necessarily efficient amorphous transformers transformer, but the signed letter of intent to accelerate, Advanced Technology and the early completion of tons of line testing, the overall domestic production capacity of amorphous spread will make the demand for amorphous transformer a substantial increase, it will change the amorphous were praised, and always low demand situation.

    "Confidence-style" law of mergers and acquisitions to enter the market and get involved in wind power in Henan transformer lead.

    This field will be the confidence of opponents two years of high growth.

    Confidence in the August 10, 2008 announcement, go to the Henan market, the company invested 6 million yuan (40% interest) in the establishment of confidence Longyuan Zhumadian amorphous transformer Limited, which is of Jiangsu in 2007 to enter the market, 2008 into Shandong, Shanxi and Fujian market after another "confidence-style" mergers and acquisitions. From amorphous to 10KV and 35KV transformer-based (currently have to do two to the integration of Jiangsu Province, launched 20KV transformer) situation, are taking even the province of the provincial network-side bidding power companies, and their properties from the amorphous term, more High level (including 110KV) will be the breakdown risk. Therefore, the provincial network of contact and local distribution network transformers is an effective way to get a substantial promotion. From the regional point of view, the company entered the market, the southeast coast of the market are relatively more likely to accept relatively large initial investment amorphous problem. The Henan Central Plains as a traditional "six vertical and four horizontal" After almost all of the UHV Henan Province, in the transmission network infrastructure is completed, will bring more opportunities for distribution network is the main reason for confidence entering the market in Henan.

    In addition to ongoing marketing distribution network, the company has gradually entered a new energy supply-side market. Company and the July 28 announcement successful "Changxing Island wind power project" and "Harbor City Wind Power Project", a total of 6.18 million yuan, the extra amount will be included in this year's revenue. Absolute terms, the amount of winning bid and before the company in Jiangsu and other places far from winning a single volume, but has shown the company has developed for wind and solar power transformers.

    Followed by the first half of the non-ferrous metals and glass in a lower position relative prices, particularly in the first half of the average strip price of 2.5 USD / kg (17 yuan / kg) when compared with 08 to 25 yuan / kg, a decrease of average 32%, the next term we think the company will gross margin as a target, the price balance transformer, so the three percent of the gross profit margin in the future is controlled

    Intention to enter into an amorphous CDM bring opportunities for market expansion.

    Since 2007, annual national grid distribution network side of the transformer needs are in the 50-60 million units, while the demand for amorphous transformers in a relatively weak position has always been, a total of 07 distribution network end purchasing 3 million units of amorphous transformers (5.5% of total demand), compared to 4 million units in 2008 (accounting for 7.3% of demand). This two-year supply of confidence amorphous up to 2.4 million units, respectively, and 3.2 million units, market share has remained at about 80%. Despite the self-energy performance of amorphous transformers have before us the confidence the current production of S16 transformer load loss is only 120W, than conventional grain oriented silicon steel transformer 960W S9 87.5% reduction, but also on the market other than the amorphous transformer type 160-190W S15 internal loss of 25% -58% lower. But the international market with a material supplier Hitachi only, 25% -30% of its production capacity to supply to believe it, and amorphous transformer 1 / 3 the cost of strip monopoly control by foreign companies, we believe that the state has not put On the main amorphous transformer.

    Ended June 2009, the domestic fan installed capacity of 16.6GW, on the next annual capacity of about 16GW of new about every fan should be equipped with 1800KVA 1.5MW Transformer (average of a confidence amorphous 300KVA), transformers need to add 6.4 per year million units, although the amount can not measure the proportion of amorphous, but we think it is confidence in the country before the opening of amorphous transformer market, an important direction for expansion of the company revenue.

    Evaluation and investment advice company.

    To sum up the production capacity of the transformer amorphous confidence Needless to say, after 08 years of expansion of amorphous Hitachi production capacity has reached 90,000 tons and one million tons on its new production line to only invest 8-9 months only billion should be no need for a material supply situation with respect and confidence do not exist capacity bottlenecks. Confidence in terms of style from the sale of new energy power erode and the end of the transformer market access to all aspects of confidence have been well prepared to open only when the national grid due to the amorphous transformer market capacity of the wind's help. Intention of signing from the CDM and national carbon emissions will be included in the national strategy to make us optimistic about the next three years is relatively optimistic about the rapid development of the amorphous market. 09-10 years, the company forecast EPS were 0.56 yuan and 0.71 yuan to give the company 30 times 2010 PE valuations (currently between 25-30 times the industry average) rating target price of 21.3 yuan for the first time to give "overweight." We are optimistic about the state of Qi in short the concept of sustainable low-carbon, especially in deepening the good brought by the continuing driving force during the Copenhagen conference.

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