These are very good pieces for understanding and researching the company.
Solid fundamental analysis, Q&A with management, great stuff to digest.
(Disclosure: I am long 2198)
From blogger 嘉偌 (http://blog.sina.com.cn/u/1647922815)
1) 为什么选择三江化工？（摘要版） (2011-03-28)
2) 关于三江化工2010年报的几点看法 (2011-04-03)
From blogger 大洋 (http://blog.sina.com.cn/sjlzy2005)
1) 三江化工研究报告 (2011-10-13)
2) 三江化工走势之弱,值得关注 (2011-02-13)
From blogger cxclp (http://blog.sina.com.cn/cxclp)
1) 手上持有的那些港股（三江化工） (2011-11-05)
From blogger 张奇港股博客 (http://blog.sina.com.cn/zhangqi78)
1) 三江化工（HK.2198）调研简报 (2011-09-12)
From blogger 杜先杰的博客 (http://blog.sina.com.cn/duxianjie)
1) 新股策略分析：中国三江精细化工（02198） (2010-09-11)
*Updates: the main products of 2198: EO, the price slashed RMB1300 from 13300 to 12000 in the last week, a 9.77% drop, this may impose a significant negative impact to the stock price. On the other hand, we should keep watching the main material of EO: ethylene as well, but I cannot find the price trend of the ethylene at this moment… if the spread between EO price and ethylene price can be maintained, then we should see can expect a very good 2H for 2198.
*Updates 2: seems ethylene price is surging, margins for 2198 in coming months is expected to face pressure:
Higher energy costs push spot ethylene prices higher across the globe [ 15 Nov, 2011]
Spot ethylene prices in Asia, Europe and the US gained ground over the past week as rising energy costs and poor margins on ethylene production pushed sellers to raise their prices. Ethylene demand was still described as sluggish in most regions, with some players commenting that supply and demand might begin to move back into balance as weak margins have pushed cracker operators to reduce rates.
In Asia, the spot ethylene market witnessed its first real week-over-week increases since late August last week. Sources pointed to firmer crude oil and naphtha prices as the major factors behind the up-tick in spot ethylene pricing. Most Asian ethylene producers are still said to be operating under margin pressure as the downstream demand outlook is discouraging and most buyers therefore remain hesitant to purchase. Reduced operating rates on the part of several cracker operators within the region could help to bring supply and demand back into balance, although some sources commented that an anticipated influx of Middle Eastern material will keep the market well supplied over the next few months.
In Europe, spot ethylene prices recorded their first weekly increases since early August as lower operating rates on the part of cracker operators within the region and the successful conclusion of some ex-Europe export deals helped bring supply and demand dynamics back into balance. Cracker operators are generally operating at reduced capacity owing to unfavorable production margins, although several sellers reported that they would be prepared to lift their operating rates in response to an improvement in demand. Buyers commented that incremental ethylene demand is still sluggish given the lackluster demand outlook for many downstream applications.
In the US, prices firmed up over the past week in accordance with stronger ethane prices. A few spot deals for November ethylene were recorded earlier in the week, although most of the gains in spot prices were witnessed towards the end of the week, tracking movements in the upstream ethane market. Sources commented that ethane prices were pushed higher over the past week by a combination of rising crude oil prices and healthy ethane demand within the country.
*Updates 3: I found this the price quote from alibaba (http://info.china.alibaba.com/news/newsListByTags/v4-l1114.html) ethylene price is about slightly higher than 1000USD (~1020), according to current exchange rate, it is about 6500RMB. Let us took this (三江化工研究报告) as our reference, the ethylene cost is about 70% of total manufacturing cost, we may expect the manufacturing cost per ton is ~9300RMB, with the selling price 12000RMB, the gross profit margin is about 29% (~2700RMB per ton).
Base on past 2 fiscal years. the net profit is about 80% of gross profit. 2700 * 0.8 =2160RMB (here I discount it to 2100RMB for the below forecast), If the company can maintain utilization rate @ 100% (2010: 110%), the nameplate capacity of 2011 2H = 180,000 * 0.5 = 90000 tonnes, we can expect the company will generate net profit = 90000* 2100 = 189mil
plus 158mil net profit @ 1H, 2011 earning will be around 158+189 = 347 mil.
compare with 2011 figures (266mil), 2011 growth will be around 30%
30-percent growth plus >4% yield for a stock trading @ P/E well-below 8(aastock figures is 5.46), obviously is a good bargain, HOWEVER, one should bear in mind that the cost may keep moving upwards as the crude oil price goes near 100 USD, at the same time the ASP start decreasing. This is the biggest risk for 2198 in the coming months. If we see the margin for the company hits the historical low, may be it is the golden chance for the buying the stock which has a clear roadmap for coming 3 years capacity expansion (current: 180K; 2012: 280K; 2013: 380K; 2014:480K) and a oligopoly nature(at least for short to mid term).