Signed 600 million PPP contract with EMFULENI municipal government of South Africa: on the evening of December 10, the company announced that it signed a "Public-Private Partnership Agreement on Purchasing Intelligent Metering equipment" with EMFULENI Municipal Government of South Africa, with a total size of 600 million RMB, with a duration of 10 years, to introduce Chinese intelligent metering and monitoring system to realize intelligent management of water and electricity consumption, reduce loss and share income. It is expected that the construction of the project will be completed in about 2 years, and the revenue will be about 100 million yuan per year during the stable operation period.
Verify that the new business model can be replicated and march towards comprehensive intelligent city management. The company's South Africa project model replicates the previous Ghana loss reduction project, using the PPP model to introduce Chinese advanced technology and capital to achieve win-win results among the local government, people and companies; extending from smart power to smart water resources management, it will march into comprehensive smart city management in the future.
The pure target of the "Belt and Road", the vanguard of overseas expansion of private enterprises. The company began to open up the African market ten years ago, and no one can imitate the short-term accumulation of local conditions and relationships. the mode of development is completely in line with the strategic thinking of the "Belt and Road", bringing China's advanced scientific and technological achievements to less developed countries to achieve win-win results. The partners chosen by the company are relatively stable countries in politics, culture and economy, and the risk of monthly payback projects can be controlled. In the follow-up, there is a large space for replication in other cities in existing cooperative countries, as well as in neighboring countries, and the potential market space is more than ten times that of the current.
Investment suggestion: we raised the company's profit forecast for 2015 and 2016, and estimated that the EPS for 2014-2016 will be 0.47,2.91,5.27 yuan respectively. As a leading integrated circuit enterprise, the company expands its overall solution downstream and ushered in a performance inflection point through new business model innovation. Affected by the company's business model, most of the company's performance in 2015 has strong certainty, strong follow-up replicability and greater performance flexibility. As a pioneer of "Belt and Road Initiative" private enterprises, the value of the company will be gradually recognized by the market, giving the company a buy-A rating with a first target price of 101.85 yuan, which is highly recommended corresponding to a price-to-earnings ratio of about 35 times earnings in 2015.
Risk tips: overseas project national sovereign risk; single major customer risk; RMB exchange rate fluctuation risk; new business development risk, etc.