The proposed private placement of Jinshan shares shall not exceed 150 million shares, the additional offering price shall not be less than 6.26 yuan, and the amount raised shall not exceed 1.2 billion yuan, which has been approved by the CSRC. After the completion of the private placement, the company's debt ratio will drop significantly, invest in Dandong Jinshan 2 × 300000 kilowatt cogeneration project and acquire 30% equity of Baiyinhua Jinshan to ensure the future performance growth of the company. We forecast 2013 and 2014 earnings per share of 0.74 yuan and 0.81 yuan, maintaining a prudent recommended rating, with a target price of 8.1 yuan at a target price of 10 times PE in 2014.
The business development model is unique, ensuring stable profitability: the company's development is characterized by cogeneration, pit mouth delivery, low calorific value coal power generation, stable profitability, even when coal prices rise sharply, and profits increase significantly when coal prices fall.
Sujiatun Jinshan cogeneration unit adopts circulating fluidized bed power generation, with a heating area of 4 million square meters and a supply of 200000 tons of steam. 2014 is expected to increase the heating area by 2.5 million square meters, with an annual profit of 80 million to 100 million yuan.
Baiyinhua Power Generation is a point-to-grid coal-to-power joint venture power plant with low power generation cost, grid price lower than Liaoning Province benchmarking price, good profitability, and has become the main profit force of the company. Due to the fall in coal prices, the profit is expected to reach 350 million yuan this year.
Fuxin Jinshan thermal power is a joint venture of heat and power, which can guarantee the power generation. Fuxin thermal power, as a thermal power joint venture enterprise with coal gangue as fuel, can enjoy priority arrangement in power dispatching, and the output of the power plant is relatively stable. With the lower fuel prices, Fuxin thermal power profits are expected to continue to rise.
Fund-raising projects reduce the company's asset-liability ratio, and acquisition projects improve profitability. (1) Dandong Jinshan Thermal Power will become a new profit growth point of the company. Dandong thermal power plant will operate throughout the year in 13 years, with an estimated capacity of 2.7 billion kilowatt hours, complete heating season, and good heating demand, with a newly signed heating area of 2 million square meters in 13 years. Dandong thermal power is expected to contribute about 22 million yuan to the company's net profit. As the power plant dominates the heating business in Dandong urban area, with the improvement of the supporting heating network, the subsequent heating area growth is optimistic. It is estimated that the heating area of Dandong thermal power will reach 9 million square meters and 12 million square meters in 14-15 years. At that time, the net profit of the power plant will be about 68 million yuan and 110 million yuan, which will become an important source of the company's future performance growth. (2) acquire a 30% stake in Baiyinhua Power Generation to enhance the company's profitability. (3) the part of the funds raised by the company will be used to repay the bank loans. according to the preliminary calculation, after the completion of the additional issuance, the financial expenses of the year can be reduced by about 50 million yuan.
The company will grow steadily in the future, benefit from UHV construction, and maintain a "prudent recommendation" investment rating. The company's fund-raising projects to ensure stable growth, the current acceleration of UHV construction, the company's Baiyinhua power plant expansion project can obviously benefit. We predict that the net profit attributable to the company in 2013 and 2014 will reach 250 million yuan and 400 million yuan. In 2013, according to the existing share capital of 340 million shares, the earnings per share will reach 0.74 yuan. In 2014, according to the total share capital of 490 million shares after the issuance of 150 million additional shares, earnings per share can reach 0.81 yuan. Recently, coal prices have risen slightly, the expectation of coal-power linkage to reduce electricity prices has weakened, and the pessimism of the market towards the power industry is expected to be alleviated. We will give 10 times PE according to the 2014 performance, with a target price of 8.1 yuan, and maintain the "prudent recommendation" investment rating.
Risk tips: coal costs rise higher than expected, coal-power linkage electricity prices are reduced, and the installed capacity expansion speed is lower than expected.