Key points of investment:
Incident: On October 17, 22, the company issued the “On the completion of asset delivery for major asset purchases” announcement stating that the company acquired 92.7708% of the shares of Xinjiang Hongnaosan Railway Co., Ltd. by means of cash payment. As of the announcement date, the company had paid 209 million yuan in cash consideration to the counterparty, and the remaining consideration would be paid promptly in accordance with the “Cash Payment for Asset Purchase Agreement” and the supplementary agreement. The “On the Signing of Railway Freight Agreements and Related Transactions between the Holding Subsidiary, Xinjiang Hongnaosan Railway Co., Ltd., and Related Transactions” was issued at the same time, stating that the company will collect freight charges, truck deferred occupancy fees, miscellaneous fees, and miscellaneous charges based on different traffic volumes. It is estimated that from the date of this announcement to the end of this year, the total transaction amount will not exceed 550 million yuan.
With control over the Hongnao Railway, the major energy logistics artery in Xinjiang is poised to start. The total length of the -Nao - Red Line is 780 kilometers, with an initial design capacity of 39.5 million tons per year, reaching 150 million tons/year in the long term. After connecting with the Jiangnao Railway in the future, it will effectively solve the commodity transportation problems in the Zhundong, Santang Lake and Naomao Lake mining areas. The distance leaving the border is about 300 kilometers shorter than the existing Wujiang-Lanxin line, making it the optimal channel for coal resources to leave the border, which is extremely competitive in the market. This acquisition will help the company accelerate its strategic layout with energy logistics as its main business, greatly enhance the company's strategic resource advantages, and at the same time bring stable cash inflow to the company and enhance the company's ability to operate sustainably.
Issuance of trust loans to protect the construction of logistics business. In order to speed up the construction progress of various energy logistics projects after the company's business transformation, further increase the company's core business scale, and form a new profit growth point for the company as soon as possible, Guanghui Logistics plans to jointly sign relevant agreements with China Cinda and Jingu Trust to apply for trust loans. The trust issues a trust loan to Hongnao Railway Company to repay other payments due from Hongnao Railway Company to Guanghui Energy and the supporting funds required for subsequent station construction and industrial upgrading. The total size of trust loans did not exceed 1.2 billion yuan.
Profit forecasts and ratings. As an A-share privately listed logistics company, the company positions itself as an energy+cold chain+commercial multi-dimensional logistics company.
Considering the sharp increase in the capacity of the company's railway logistics sector in the next 3 years, based on a relative valuation model, the company's 2022-2024 EPS is maintained at 0.62 yuan, 1.20 yuan, and 2.00 yuan. The current market capitalization corresponding to PE is 15X, 7X, and 4X respectively. The energy logistics business of Daqin Railway is comparable to the company's business. SF Holdings' cold chain logistics business is comparable to the company's business, and China Merchants Shekou is comparable to the company's real estate business, so these three companies were selected as industry benchmarks. The average valuation PE of the industry from 2022 to 2024 was 18X, 14X, and 12X, respectively. Furthermore, with reference to the period when railway traffic of the Daqin Railway increased sharply in 2006-2009 and the main business was railway, the valuations were 25X, 57X, and 16X, respectively. The company's performance is flexible and maintains the company's “buy” rating.
Risk warning: The decline in demand caused turnover to fall short of expectations; the construction progress of the Nao Railway project fell short of expectations.