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Sunday, December 16, 2007
SGL Group - Investing In Carbon Fibre For Wind Turbine Blades

SGL Group (SGL Carbon Ag)

As the world looks for lighter materials to build aircraft, automobiles and wind turbines, one company is well positioned to increase its revenues from this trend. The company is called SGL Group and they are a world leader in the manufacture of carbon-based products. SGL Group trades on the German Xetra exchange Xetra XE:723530 or SGL.DE and are traded in Euros. They are a leader in the technology development and manufacture of carbon fibre and on August 6, 2007 announced a long-term contract with Kawasaki Heavy Industries to supply carbon fibre composite floor beams for Boeing's new plane the 787 Dreamliner. SGL Group has a total of 30 production sites in Europe, North America and Asia.

SGL Group is trading today at 36.19 Euros and the 52 week low was 17.25 (02/28) and the 52 week high was 46.80 (10/18). The P/E for the stock is 54.94 and the market capitalisation is 2.31 billion. Currently there is an overall downward trend for stocks on world markets, and probably SGL Group will follow this trend until general equity volatility decreases. There is a 'built-in' price premium for SGL Group's stock and hence its high P/E, which is based upon its forecast significant growth prospects. For Europeans SGL Group is a stock to watch as a 'buy' if it falls with the market in a general trend to a lower P/E. At a price of 32.03 Euros it would represent the median between its high and low for the last 12 months. Much depends on the general stock market trend over the next three months for the time to buy SGL Group and the price to pay. As a long term hold, it is a company with significant growth prospects for its carbon fibre business. For American investors, the current U.S. dollar weakness makes it difficult to look at this Euro stock until the dollar strengthens.

SGL Group's long term prospects are based upon increasing numbers of world manufacturers moving to light weight carbon fibre composites and there are only a few manufacturers capable of making this high technology composite material. Both Airbus and Boeing have announced plans to continue increasing the use of carbon fibre in their aircrafts to reduce weight. In general, aircraft manufacturers would like to raise the carbon fibre content from the current 10% to 50% in the future, and that by 2010 the usage should be double what it is today.

On October 25, 2007 for the first nine months of 2007, SGL Group announced that overall sales were up 17% to $1.005 billion from 2006 first nine months of $858.6 million, and the 2007 (first 9 months) pre-tax profit doubled to 126 Million Euros from the same period in 2006. By 2012 SGL hopes to raise carbon fibre production by five times today's levels just to meet the demand from wind turbine manufacturers, so one can see that there are significant growth prospects for the company. For the first nine months of 2007, SGL Group's Carbon Fibre and Composites (CFC) Business Unit posted a 28% increase in sales to 123.7 million Euros versus 96.8 million Euros (9M/2006). The Carbon Fibre business represented 12.3 % of overall SGL Group turnover. Based upon SGL Group forecasts, the Carbon Fibre Business Unit could represent between 40% to 50% of the total turnover for SGL Group by the end of 2012.

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