Hongrun Construction issued an announcement on signing the Strategic Cooperation Framework Agreement: Hongrun Construction issued an announcement that the company signed a "Strategic Cooperation Framework Agreement" with Ningbo Shanshan Co., Ltd. on January 13, 2022. Shanshan shares intend to transfer the shares of Ningbo Eureka Solar Energy Co., Ltd., a holding subsidiary, to Hongrun Construction, and become a strategic cooperative shareholder of Hongrun Construction. Through this strategic cooperation, Hongrun Construction plans to expand its layout in photovoltaic and other new energy fields, and expand its business in photovoltaic building integration, photovoltaic county, green power asset investment and operation, energy management, energy storage and so on.
The transformation of construction enterprises into BIPV (photovoltaic building integration) has become a trend. According to the China Building Energy consumption Research report (2020), carbon emissions in the whole process of China's buildings accounted for about 51.3% of the country's carbon emissions in 2018. Under the "double carbon" goal, it is imperative for buildings to reduce carbon emissions. Green building is an important foothold for buildings to reduce carbon emissions, and BIPV (Photovoltaic Building Integration) is one of the important ways to achieve green buildings. Since 2021, with the proposal of the goal of "double carbon", a number of listed construction enterprises have carried out BIPV business through cooperation with new energy equipment enterprises. We believe that the transformation of construction enterprises into BIPV has become a trend, and private construction enterprises are relatively active.
"Infrastructure + BIPV" two-wheel drive, performance and valuation are expected to usher in double-click. The main business infrastructure projects are expected to benefit from the "steady growth" of infrastructure in 2022, infrastructure investment is expected to accelerate in the first half of 2022, and the company's infrastructure business is expected to be repaired by both performance and valuation in 2022. The accelerated landing of BIPV business is expected to open up incremental space for the company's development. Through cooperation with Shanshan shares, the company is expected to quickly cut into the photovoltaic building integration track, and further expand the whole county of photovoltaic, green power asset investment and operation, energy management, energy storage and other businesses. The development of BIPV business is expected to further thicken the company's performance and improve the valuation level.
Earnings forecast and valuation: by raising the earnings forecast, we expect the company's EPS to be 0.41,0.48,0.56 yuan in 2021-2023, and the closing price on January 13 will be 11.8,10.2 and 8.7 times, respectively, maintaining the "prudent overweight" rating.
Risk hints: macroeconomic downside risks, lower-than-expected investment in infrastructure and municipal rail transit, risk of deterioration of cash flow, lower-than-expected risk of landing cooperation agreements, and lower-than-expected risks in new business development.