盈德氣體(2168)－受惠工業用燃氣增長

這兩篇大行報告摘要說明了我為何對盈德氣體這公司起興趣：較獨特的工業燃氣業務、具環保概念、從業務範圍及工程項目擴大等均能取得不俗增長、滲透率偏低、和客戶已鎖定合約、及於宏觀經濟不明朗時期較具防守性等等均是其賣點。惟缺點是資本開支需求大，目前的現金流不是十分明顯等等。

CLSA的目標價為9.6元，花旗的目標價為11.9元。以花旗的盈利１１年預測計，目前預測PE13.6倍。

里昂（ＣＬＳＡ）報告

As China’s leading onsite industrial-gas supplier, Yingde Gases offers defensive earnings plus leverage to a rapidly growing domestic market. More outsourcing and rising environmental standards will ignite the industry, helping Yingde to expand its footprint and ramp up services to major firms. Valuing existing contracts, alone, Yingde is worth HK$13/sh, or double its market value. We recently initiated coverage with a BUY call to a HK$9.60 target (7.2x 12CL EV/Ebitda), implying 28% upside.


Not just hot air. Yingde Gases (2168 HK - HK$7.50 - BUY) is China’s leading industrial gas provider, catering to mid-sized steel and chemical firms. As we note in our new report Igniting the space, although Yingde doesn’t target multinationals, it is already the largest onsite gas supplier in the country. It is also catching up with foreign competitors as it has been scaling up services to larger companies like Shenhua. Although its ROA and margins are already superior to foreign peers, we see upside scope in Yingde’s returns profile as it gears up.



Leveraged to “green” industrialisation. Strategic Analytics (SAI) forecasts a 15% usage Cagr over 2010-15 for outsourced onsite-industrial gas in China. Even though the PRC has one of the largest steel industries in the world, industrial-gas penetration is still relatively low, at just 10% of global sales. The need to outsource industrial-gas supply will rise as tighter emission and energy-efficiency targets demand a higher oxygen fuel mix. Industrial gas is also heavily used in other fast-growing segments, such as the chemical and food industries.


Safe haven with upside potential. More than 80% of Yingde’s revenue comes from its 15- to 20-year onsite supply contracts with cost passthroughs and guaranteed offtakes. Hence, there is little downside risk to these earnings. Moreover, unutilised capacity can be sold to the wider-margin merchant-gas market, in which Yingde is still relatively small. We expect this to become a growth driver as the company expands its geographical footprint and owns more surplus capacity.


Discount on existing assets - BUY. Despite good earnings visibility, Yingde trades at just 8.8x 12CL PE. Valuing only its onsite gas contracts, we estimate that it is already worth HK$13/share. On a discounted cashflow basis, it would be a staggering HK$30/share. A lack of coverage is the main reason for Yingde’s discount, but with a 26% core earnings Cagr over 2010-13, this should change. We recently initiated coverage of Yingde with a BUY call to a HK$9.60 target, based on 7.2x 12CL EV/Ebitda, a 15% discount to peers and implying 28% upside. See our new report, Igniting the space.


花旗(ＣＩＴＩ）報告

Stable growth ahead — We are re-iterating our Buy rating on Yingde Gases and are raising our target price to HK$11.9, based on DCF-valuation to reflect higher sales and earnings outlook. Company reported solid 1H11 results, with sales +56% Y/Y driven by new project ramp, and company also disclosed its project pipeline from 2H11 to 2013, which shows 35% CAGR oxygen capacity growth over two years when the projects are complete. We see detailed disclosures of its projects should provide better clarity, and we expect Yingde to see 59% and 30% earnings growth in 2011E and 2012E. Yingde currently trades at over 50% discount on 2012 P/E to its global peers, and we see its
defensive growth metric should help its shares see a re-rating.


 Strong interim results — Yingde Gases reported 1H11 sales of Rmb2.06bn, +56% Y/Y on ramp of new projects and higher sales from its Shenhua coal liquefaction project and higher installed capacity. Company’s operating capacity reached 783,400 Nm3/hour, which will place it as the leader in on-site industrial gas supply in China. Net income rose 51% to Rmb492 million and EPS was Rmb0.272.


 Growth outlook intact — Company has 31 plants in operation as of Jun 11, and it signed 23 contracts for new plants. It also provided details for its new projects, which included both a geographical and industry diversification by expanding from 70% steel use (sector with largest industrial gas use) into chemical, non-ferrous, and glass sectors. We now expect 31% sales growth in 2011E (from 27%), and see earnings from its existing facilities will provide cash flows for its capacity ramp.


 Revising estimates — We are revising up our 2011/12/13E EPS estimates by 9%/12%/26% respectively to Rmb0.51/Rmb0.66/Rmb0.89 to factor in stronger sales and project pipelines, and we expect company’s capex for FY11 to be Rmb1.7 billion funded mainly from its operating cash flow. Our conservative FY11 forecasts take into account a slowdown in the Shenhua project in 2H11 due to maintenance works in July and August 2011.