The company is the largest plasterboard industry group within Asia.
Plank industry is a sunrise industry as benefited by the government’s industrial adjustment policy.
The company is highly competitive in the market, and boasts the most extensive production lines and distribution networks domestically.
Performances in Q2-Q4 2009 will see further improvement.
We predict its 2009-2010E EPS to be Rmb0.45 and Rmb0.60, representing dynamic P/E ratio at 25x and 20x, and absolute valuation is Rmb13.05. Given previous higher markup, “Overweight” rating is hereby given.
Potential risks: 1) Uncertainties in capacity expansion and that it might not reach the fixed target, and 2) Uncertainties in expansion of house ornamentation,