Undervalued on a Medium-Term View

研报英文原文证据摘录

Undervalued on a Medium-Term View

ices, Recurring profit (¥bn)* 708.3 802.0 875.0 947.0

Net income (¥bn)* 474.5 556.0 605.0 653.0

expectations of higher US interest rates, and release of guidance far below market EPS, basic (¥)* 252.7 307.2 345.1 383.0

forecasts at F3/27 1Q. We see little threat of Asian PVC prices falling under the Prior EPS, basic (¥)* - 330.1 366.3 404.4

EPS (¥)** 252.7 307.2 345.1 383.0

current cost structure of carbide-route PVC in China, and limited downside for US Prior EPS (¥)** - 330.1 366.3 404.4

prices from Aug. Consensus may drop in the near term, but we stay OW as the stock P/E, basic* 24.8 18.7 16.7 15.0

P/BV, basic 2.6 2.3 2.3 2.2

looks undervalued from a medium-term standpoint. ROE (%)* 10.2 12.5 13.6 14.7

EV/EBITDA, basic 11.8 9.5 8.7 7.9

Cut profit forecasts for 3yrs: 1Q OP beat our forecast by ~¥4bn as infrastructure

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

materials fell short (volume discounts in US PVC market were wider than we framework

* = GAAP or approximated based on GAAP

expected at start of year), but electronics materials overshot (strength in semi ** = Based on consensus methodology

e = Morgan Stanley Research estimates

lithography materials). We cut F3/27e OP from ¥785bn to ¥730bn, now assuming

¥160/$ from 2Q (previously ¥155). We revise up for electronics materials

(photoresists among products doing better than we foresaw), but down sharply for

infrastructure materials (briefing comments on an expected YoY fall for Shintech

profit in Apr-Jun suggest a sharp decline in export sales volumes and rising prices for

externally-procured raw materials such as VCM and ethylene), and down overall. Morgan Stanley does and seeks to do business with