Description of the event
Jiawei Co., Ltd. announced that the company plans to acquire 100% of Guoyuan Electric Power's shares held by Chuxiang Solar by issuing shares; at the same time, it plans to raise supporting capital by issuing shares to no more than 5 other specific investors. The total capital raised will not exceed 800 million yuan for the construction of a 70MW power plant and supplementary working capital.
Incident comments
The new energy development strategy is clear, and the two main lines of development+operation are advancing rapidly. The company is a leading enterprise in the photovoltaic lawn lamp market segment and has a long experience in the photovoltaic industry. Since 2014, in the context of the rapid development of the domestic photovoltaic industry, the company has further clarified its new energy development strategy. Through cooperation with Zhenfa New Energy, independent development, etc., the company has driven the rapid advancement of the dual main strategy of power plant development+operation: 1) The company quickly entered the power plant EPC field through the acquisition of Huayuan New Energy, a subsidiary of Zhenfa New Energy, and Huayuan New Energy operates 2 200MW photovoltaic power plants, laying the foundation for the company's overall new energy business strategy. According to the acquisition agreement between the two parties, Huayuan New Energy promised to achieve net profit of no less than 2.59, 335, and 366 million yuan in 2015, 2016, and 2017 respectively; 2) The company established Jiawei (Shanghai) Electric Power Company itself to expand the scale of power plants through an acquisition+self-construction model. Currently, it has completed the acquisition of 20MW power plants in Inner Mongolia, and the construction of 20MW power plants in Xinjiang and 40MW power plants in Shandong is expected to exceed 400MW by the end of 2016 (excluding Huayuan).
Privately issued additional purchases of Guoyuan Electric Power and raised supporting capital to promote large-scale and profitable expansion of power plants. 1) The company plans to purchase 100% of Guoyuan Electric Power's shares held by Chugang Solar PV by issuing shares at a price of 1,105 million yuan. The current issue price is 19.44 yuan/share, and a total of 56.84 million shares will be issued. Guoyuan Electric Power has a 100MW grid-connected photovoltaic power plant in Jinchang, Gansu. The electricity price is 1 yuan/kilowatt hour. Gansu is the hardest hit area of China's photovoltaic power restrictions, but the company started a business model and signed a direct power supply contract with Jinchuan Group (sales price of 0.73 yuan) to promote electricity consumption and guarantee profit levels. From January to August 2015, it achieved a power generation utilization rate of 79.49% and achieved a net profit of nearly 40 million yuan. Chuangyang Solar promised that Guoyuan Electric Power's net profit in 2016 and 2017 would not be less than 0.79 or 70 million yuan. 2) The company plans to raise no more than 800 million yuan in supporting capital for the construction of 30MW photovoltaic power plants in Fuzhou and 40MW in Heze Chengwu and supplementary working capital.
Traditional businesses remain stable, smart homes are being deployed, and explosive growth is imminent. The company's traditional LED light business is stable and maintains a low profit level. Based on the original industry, the company focuses on developing smart security wall lamps, entering the smart home field, taking advantage of the company's channel advantages, and focusing on developing overseas markets such as North America. At present, the company's smart security wall lamp has been tested and promoted in North America, and the market response has been good. At the same time, using smart security wall lights as a breakthrough, the company further promoted smart home lighting projects such as high-end Bluetooth intelligently controlled audio low-voltage lights to improve the smart home industry chain layout, and explode growth in the later stages is imminent.
Give the purchase a rating. The company's 2015 and 2016 EPS are expected to be 0.38 and 1.33 yuan respectively, and the corresponding PE is 48 and 14 times, giving a purchase rating.