Investment logic
The problems left over by history have been eliminated and ushered in the starting point of upward development: after the change of shareholders of the company, the liquidation work has been actively promoted, the financial situation and asset quality have been effectively improved, and the problems left over by history have also been eliminated. and started a series of asset integration, from the direction of integration, we can see that the group's positioning of the company is very clear: take the sale of electricity and water supply business and other public utilities in Suining as the first main business. The development of vanadium ore is the second main industry.
The existing business is stable and has a high margin of safety: the company's power supply and sale business has benefited from the rapid development of industrial economy in Suining area and achieved steady growth; the water supply business has benefited from the steady development of the new waterworks; the price of vanadium is still hovering at the historical bottom, and the asset value determined by the current bottom price also ensures that the company has a high margin of safety.
The probability of electricity price increase is high: according to the announcement of the Suining Municipal Development and Reform Commission on holding a hearing on the ladder electricity price of residents' daily life, the company will hold a hearing on the ladder price of electricity for daily use of the company on September 12. If this hearing is passed, we believe that there will be a certain increase in the company's comprehensive electricity price.
The major shareholders are the same, if upward integration is expected to become the monopoly of Suining regional power grid operation: Suining urban area is the company's current power sales area, standing on the side of major shareholders and the company, from the perspective of rational people, do not rule out the possibility of upward integration of Suining power grid resources; at that time, under the promotion of the local industrialization process, electricity sales will continue to grow.
Investment advice and valuation
Without considering the investment income from the future sale of shares in Huaxi Securities, we predict that the company's EPS from 2012 to 2014 will be 0.473 yuan, 0.602 yuan and 0.721 yuan respectively.
The current stock price of the company corresponds to 21 × 12PE and 16 × 13PE, which is obviously lower than the average level of the small hydropower company at present. we think that the company has a certain margin of safety at present, giving the company 25 × 12PE and 20 × 13PE with a target price of 11.83-12.04. considering the asset price of 3.16 yuan per share of vanadium assets, the target price of the company is 14.99-15.20 yuan.
Risk hint
According to the announcement of the Suining Municipal Development and Reform Commission, it is uncertain whether the ladder electricity price hearing will be held on September 12, and there is also uncertainty about the increase in the comprehensive electricity price and its impact on the company's profits.
The possibility of upward integration of the company is our reasonable assumption and is uncertain.
The company has its own risk that the growth rate of small hydropower generation and electricity sales is lower than we expected.
The expected increase of water price in tap water business is based on the reasonable assumption that the local water price is on the low side, and the specific time and extent of the increase are uncertain.