Foshan Lighting's valuation rating for the first time issued an "overweight"

Recently, we investigated Foshan Lighting [12.380.00%] (000541) and gave it an “overweight” rating for the first time.


We conduct a valuation analysis of Foshan Lighting by means of a business valuation.


From the perspective of traditional business, Foshan's traditional lighting business is mainly electric light source products. We expect EPS (EPS) to contribute 0.25 yuan in 2010. Although the overall development of electric light source business is stable, the net profit growth rate is around 20%. However, based on its expansion potential in the field of energy-saving lighting systems and LED lights, we still give 35 times PE (P/E ratio) to the electric light source business, and its lighting business can contribute RMB 8.75 per share. In addition, its long-term equity value and currency cash can contribute 0.19 yuan and 1.03 yuan per share respectively. Overall, the traditional business contributed $9.98 per share.


In terms of new energy business, Foshan Lighting currently has two new energy businesses - lithium carbonate and power batteries. We believe that lithium carbonate is difficult to contribute profits in the short term, so only the power battery is considered when evaluating the new energy business. The general car battery capacity is 21,100 WH (electric energy), calculated at 6 yuan per watt hour, the car battery price is about 130,000 yuan. Assume that there will be 150,000 pure electric vehicles in 2012, and the market share of Hefei Guoxuan Gaoke Power Energy Co., Ltd. (hereinafter referred to as Guoxuan Hi-Tech) can reach 10%, and the shareholding Guoxuan Hi-Tech can contribute 0.1 yuan per share. Its power battery segment is 45 times PE, and the power battery segment contributes 4.48 yuan per share. (Editor's note: Guoxuan Hi-Tech is one of the few companies in the power battery industry that has actually supplied and generated profits. We believe that it is appropriate to adopt an optimistic attitude to estimate the profit of Guoxuan Hi-Tech. The main risk lies in the new energy vehicles. Advance speed.)


In summary, we analyzed that the overall valuation of Foshan Lighting can reach 14.46 yuan per share.


Yesterday, Foshan Lighting closed at 12.39 yuan, up 0.08%.


Participation in Guoxuan High-tech power battery can not be underestimated


On March 20th, Foshan Lighting announced that it had reached a letter of intent for equity transfer with Hefei Guoxuan Marketing Planning Co., Ltd. (hereinafter referred to as Guoxuan Marketing) on ​​20% equity of Guoxuan Hi-Tech. If Foshan Lighting can participate in the successful share, Foshan Lighting will become the third largest shareholder of Guoxuan Hi-Tech; the largest shareholder is Zhuhai Guoxuan Trading Co., Ltd., holding 58%; Guoxuan Marketing is the second largest shareholder, holding 22%.


Guoxuan Hi-Tech was established in May 2006. Its main business includes iron-lithium battery new materials, battery core, landscape lithium-ion green lighting system, electric vehicles and other products; the completed production line includes: annual output of 100 million AH iron-lithium power Core production line, with an annual output of 500 tons of iron and lithium material production line, with an annual output of 250,000 KWH iron and lithium battery production line, with annual production capacity of 3000 electric vehicle batteries and annual production and installation of 10,000 sets of scenery lithium battery lighting system.


At present, Guoxuan Hi-Tech has made a lot of achievements in the field of power batteries. It has supplied 30 pure electric bus batteries to Ankai Automobile. These 30 pure electric buses have been officially operated in Hefei City 18 bus line. At present, listed companies related to power batteries rarely have the experience of supplying power batteries to power vehicles. Guoxuan Hi-Tech is one of the best, and its technical strength cannot be underestimated.


Lithium carbonate business ugly profit in 2-3 years


In September 2009, Foshan Lighting and Salt Lake Technology signed a letter of intent to establish Qinghai Salt Lake Buddha Lithium Industry Co., Ltd., but after half a year, the project still only stays at the letter of intent. At present, the technicians have tested the leased equipment, but the test results are not good. It is not excluded that the equipment investment may be greatly increased. The investment in this part of the equipment is estimated to be at least 500 million yuan.

If you need to purchase new equipment, the equipment installation takes 1-2 years, the equipment commissioning run-in period is 3 months, and considering the freezing period of 6 months per year (November-April), it takes at least 2-3 to install the equipment into production. Year time. So in the short term, lithium carbonate is unlikely to contribute profits.


The Salt Lake Group [23.692.60%] has abundant brine resources and has 14 brine pools covering an area of ​​40 square kilometers with a total of 60 billion tons. Even if it is calculated on the basis of 100 million tons per year, it can be used for 600 years. Because the Salt Lake Group has a very strong resource advantage, it is not excluded that the Salt Lake Group will do this alone when the lithium carbonate technology is mature.


If the annual output of 10,000 tons of lithium carbonate is 40,000 tons, Qinghai Salt Lake Fossil Lithium Industry Co., Ltd. can contribute 400 million yuan in revenue and net profit of 200 million yuan. According to Foshan Lighting's indirect shareholding ratio of 19.38%, it can contribute 40 million yuan of investment income. Based on the total share capital of 970 million yuan, the contribution EPS is only 0.04 yuan, which does not contribute much to the performance. And really want to do 10,000 tons, the fastest can take three years to achieve.


OEM production eases capacity and cost pressure


At present, the demand for downstream lighting in Foshan is very strong, but it is subject to difficulties in recruitment, and its orders are more cautious. The demand recovery is mainly due to domestic demand.


Foshan Lighting's 2010 revenue target is export growth of 6% and domestic sales growth of 18%. In order to alleviate the cost of manpower and raw materials, its plan to adjust the original production strategy (the original production strategy is one-stop systematic production, that is, from the procurement of glass Sand, grinding, burning, made into lamps, until the packaging factory, some products will be sold on the OEM, OEM suppliers will come from Jiangsu, Zhejiang and Shanghai, the proportion of OEM sales will reach 20%.


After the ban on incandescent lamps in Europe, many companies have stopped production or changed production. This has made Foshan's orders for incandescent lamps still full. At present, Philip (Philips) has also begun to purchase incandescent lamps from Foshan Lighting. Foshan Lighting believes that the benefits and costs of incandescent lamps can still be flattened in the short term. If the European market does not sell, it can turn to the African and Southeast Asian markets. However, if the domestic use of incandescent lamps is limited, it may have a greater impact on the sales of incandescent lamps. Once incandescent lamps are reduced or discontinued, the original production line will be used to produce car lights or motorcycle lights.


At present, in the total revenue of Foshan Lighting, energy-saving lamps (including T8, T5, compact energy-saving lamps, high-pressure sodium lamps, metal halide lamps, etc.) accounted for 62% of revenue, incandescent lamps accounted for 38%; domestic revenues accounted for 65% %, foreign revenues accounted for 35%, and 2/3 of domestic revenues were energy-saving lamps.


We expect Foshan Lighting's gross profit margin to be around 22% in 2009, which is basically the same as in 2009, but will not exceed 24%.


Negative factors in 2010 gross margin include rising raw materials and labor costs in Foshan, and measures to overcome these negative factors include raising unit prices (expected to increase by 2% in 2010), expanding production scale, and selling OEM products.

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