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Refractories: Seizing Opportunities for Industry Consolidation

  • Categories:Industry news
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  • Time of issue:2020-02-16 20:26
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(Summary description)The refractory industry has "two highs". The ratio of raw materials to costs is higher than 50%, and the gross profit margin is higher than 30%, which is much higher than that of general manufacturing enterprises. The main reason is that the refractory industry has relatively high requirements for technology, and downstream companies need to obtain stable, quality-assured refractories to ensure the sustainability, stability and safety of their production.

Refractories: Seizing Opportunities for Industry Consolidation

(Summary description)The refractory industry has "two highs". The ratio of raw materials to costs is higher than 50%, and the gross profit margin is higher than 30%, which is much higher than that of general manufacturing enterprises. The main reason is that the refractory industry has relatively high requirements for technology, and downstream companies need to obtain stable, quality-assured refractories to ensure the sustainability, stability and safety of their production.

  • Categories:Industry news
  • Author:
  • Origin:
  • Time of issue:2020-02-16 20:26
  • Views:
Information

  The refractory industry has "two highs". The ratio of raw materials to costs is higher than 50%, and the gross profit margin is higher than 30%, which is much higher than that of general manufacturing enterprises. The main reason is that the refractory industry has relatively high requirements for technology, and downstream companies need to obtain stable, quality-assured refractories to ensure the sustainability, stability and safety of their production.

  Industry Trend 1: The consolidation and merger of the refractory industry is an inevitable trend. The form is mainly upstream integration and intra-industry integration. The first reason is that in order to avoid fluctuations in gross profit margins, the second reason is that the integration of the downstream industry has triggered the consolidation of the company's many refractory industries. Large-scale downstream companies need large-scale superior refractories to provide better refractories and services. The company's consolidation will take place in refractories companies that have the resources or customers.

  Industry Trend 2: Due to the need for energy saving, the current trend of using high-grade refractories instead of low-grade refractories is significant, which is good for companies with good technology and products in the industry.

  Industry Trend 3: The overall contracting trend in the steel production sector is significant. The frequency of refractory replacement is high. If a professional company provides corresponding services, it will effectively guarantee the production of steel.

  Industry Trend 4: Expand overseas markets and pursue further development. At present, the company is doing its best, with overseas sales accounting for 20%.

  Analysis of key companies: The company's EPS is expected to be 0.48 yuan and 0.65 yuan this year and next, corresponding to PE of 30 times and 23 times. The company's upstream and downstream integration strategy is significantly faster than that of Lear, and the overall contracting ratio There is a lot of room for improvement. At the same time, considering the rising cycle of industry demand, it is recommended to increase holdings. Luyang Co., Ltd.'s products are emerging ceramic fibers with a wide range of uses and good performance. The prospects are expected. EPS for this year and next is expected to be 0.8 yuan and 1.1 yuan. Ruitai Technology, following the energy-saving policy, invested in the construction of alkaline refractory materials. With the release of production capacity, performance will also perform.

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