Event: on December 29, 2022, the company announced a summary of the report on the acquisition of Blue Yan Holdings by Shanxi Gas Group Co., Ltd. after the acquisition, the company's controlling shareholder will change from Jin Control equipment to Gas Group, holding 387 million shares of the company, accounting for 40.05% of the total share capital.
The controlling shareholder will change from Shanxi control equipment to Shanxi Gas Group, that is, the management power will be vested in Huaxin Gas. In order to promote the gas industry to become a strategic emerging industry and pillar industry in the transformation and development of resource-based economy in Shanxi Province, the Shanxi provincial party committee and provincial government has studied and deployed the gas industry integration plan for many times. In March 2019, the State-owned assets Supervision and Administration Commission of Shanxi Province agreed to increase the capital of Shanxi Gas Group with its 40.05% stake in Blue Yan Holdings; in November 2022, the State-owned Operation Company issued a notice requiring Huaxin Gas to be entrusted to perform the shareholder duties of Shanxi Gas Control equipment to ensure the production and operation of Shanxi Gas Group. Since then, after the equity transfer of Lanyan Holdings, the controlling shareholder of the company will be changed from Jin Control equipment to Shanxi Gas Group, holding 387 million shares, accounting for 40.05% of the total share capital, and the relevant production and operation and other shareholder rights will be attributed to Huaxin Gas.
The transfer price of equity is 10.73 yuan per share, and the value of the company is expected to increase. According to the company announcement, the equity price of Jin Control equipment transfer Blue Flame Holdings is 10.73 yuan per share, which is higher than the current company share price and belongs to a premium acquisition, which is expected to make shareholders have a higher enthusiasm for operation and management. In addition, the recent reserves reports of the company and Shunhengling, Wuxiang South and Liulin Shixi blocks have passed the review and filing, adding a total of 188.7 square kilometers of proven gas-bearing area and 22.866 billion cubic meters of coalbed methane reserves, compared with 20.5 billion cubic meters of coalbed methane proven reserves at the end of June 2021, double the company's coalbed methane reserves. Taken together, the value of the company is expected to be repaired.
Huaxin gas network is rich in resources, and the company's storage and transportation capacity is expected to be strengthened. Huaxin gas industry chain has strong advantages. In the middle reaches, it has long mileage of pipe network and excellent capacity of gas storage and peak shaving. It has more than 6400 kilometers of long-distance pipelines and 17 liquefaction plants, with a total gas storage capacity of about 96 million cubic meters, accounting for more than 50% of the province. Downstream, it has a large market share and perfect technical support, with 96 urban gas gate stations and more than 300 CNG/LNG filling stations. Its subsidiary, Guoxin Energy, has a networked gas supply pattern covering the whole province. In the long-distance natural gas transmission plate, Guoxin Energy has more than 5000 kilometers of provincial natural gas pipeline network running from north to south, across east-west, and connecting national gas sources, with an annual pipeline design capacity of more than 20 billion cubic meters. In the urban combustion plate, a total of 2700 kilometers of medium-and high-pressure pipelines and 4200 kilometers of low-pressure pipelines have been built, covering 8 cities and 21 counties. After the management of Blue Flame Holdings is vested in Huaxin Gas, the company is expected to enhance its gas supply, storage and transportation capacity, broaden sales channel resources, and further improve its industrial chain advantages with the help of its pipelines and downstream customers.
Investment suggestion: the company distributes the integrated industry chain of coalbed methane upstream, middle and downstream, and the company's reserves and pipeline resources have been further strengthened. We estimate that the company's homing net profit from 2022 to 2024 will be 641, 939 and 1.355 million yuan, respectively, and EPS will be 0.66, 0.97 and 1.40 yuan per share, respectively, corresponding to 13 times, 9 times and 6 times of PE on December 29, 2022, respectively, maintaining the "recommended" rating.
Risk hints: the risk of coalbed methane price decline; the risk of gas well exploration and production not up to expectations; the risk of insufficient policy support.