Hu An Cable: to invest in new RMB 338m plant in Yixing city, Jiangsu province. On completion in 2011, annual cable pdtn capacity will almost double to 5760km from 3000km (utilization currently at 75%). The new capacity includes 600km of ultra-high voltage power cables (UHPC), which Hu An is not yet able to produce, allowing co. to expand its product offering. Given the higher value-added product, and fewer than 10 suppliers in China, UHPC offers the highest avg pdt gross margins at 25%...
Industry outlook appears positive, with the State Grid Corporation of China to invest est RMB270bn over next 5 yrs to build 3 ultrahigh voltage power transmission networks in northern, eastern and central China, vs only RMB20bn spent over past 5 yrs.
Other catalyst includes Hu An’s TDR listing, for which it seems close to completion, having received the required approvals from relevant authorities in Taiwan and Singapore. Stock still under researched. Currently trades at 7.4x fwd PE.
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