Event: phased progress on the $1.14 billion contract
The memorandum of understanding signed between the company and Bangladesh State Grid on large-scale upgrading, expansion and transformation of most of the transmission and transformation systems in Bangladesh has made phased progress-on October 10th, authorized representatives of both the owner and the contractor signed the formal EPC contract in Bangladesh, which is currently being approved and signed by the owner after a verification procedure within the owner.
It will take time for the contract to come into effect, and the future performance will be effectively guaranteed.
Judging from the progress disclosed, most of the major work of the company in the signing of the contract, such as: the relevant loans have completed the reporting and approval of government departments; the commercial negotiations on the contract have been completed and approved by the Economic Affairs Committee of the Bangladesh Cabinet; and the EPC contract has been signed. The entry into force of the future contract is mainly the signing of the relevant procedures and agreements between the two governments: the EPC contract is examined and signed by the owner after the verification procedure, and the loan agreement is signed between the Bangladeshi government and the Export-Import Bank of China; within 30 days of the loan agreement, the contractor submits the performance guarantee and the prepayment guarantee to the owner. The contract value of 1.14 billion US dollars (about 7.65 billion yuan), divided into 4.5 years of construction period, combined with previous orders of 300 million U.S. dollars (about 2 billion yuan), is expected to give solid performance support to the company's traditional main business in the next few years.
Yongding Zhiyuan has the competitiveness of the industry and helps the company big data's leading layout in the field.
Yongding Zhiyuan, acquired by the company, is a leading provider of signaling collection and analysis, business operation support, application security analysis, network security and user behavior analysis in telecommunications, and has an excellent customer base in Unicom and Telecom. With the increase of operator bandwidth brought by the growth of mobile traffic in recent years, the demand for Yongding Zhiyuan log retention, IP traceability system, network security and other products will be greatly improved. Yongding Zhiyuan promises to achieve audited net profits of no less than 45 million yuan, 55.6 million yuan and 65.5 million yuan in 2016, 2017 and 2018. As the effective conditions of the contract have not been reached, do not consider the table for the time being, it is estimated that the EPS in 16-18 will be 0.23,0.27 and 0.34 yuan respectively, giving a "buy" rating!
Risk hint
There are still some formalities for overseas engineering contracts that have not yet been completed, and the effective time is uncertain; the industry ceiling of Yongding Zhiyuan is uncertain; and whether its profitability can remain with the scale growth is uncertain.