Main points of investment.
Event: the company transferred 100% equity of Huajun Fuyuan Automobile sales Company, a wholly-owned subsidiary of Huajun Fuyuan, to the Asset Operation Company, a wholly-owned subsidiary of the controlling shareholder Zhanglong Group, for 29.81 million yuan.
Our comments are as follows: accelerate the divestiture of non-core assets and focus on the main business of environmental protection. 1) divesting the equity of agricultural commercial bank: in December 2013, the company transferred 8% equity of Zhangzhou agricultural commercial bank to Fujian Zhanglong, the controlling shareholder, for 230 million yuan. After this equity transfer, the company no longer holds the equity of Zhangzhou Agricultural Commercial Bank. 2) divestiture of primary land development assets: in December 2014, the company transferred 100% equity of Jinfa Development, Longsheng Development and Zhaosheng Development, three wholly-owned subsidiaries involved in first-tier land development business, to controlling shareholder Zhanglong in Fujian Province at 210 million yuan. After this equity transfer, the company will no longer participate in the first-level land development business. 3) transfer of import and export trade assets: in July 2015, the company transferred 100% equity of Shengfa Import and Export Company, a wholly-owned subsidiary, to Fujian Zhanglong, the controlling shareholder, for 24.19 million yuan. 4) divestiture of automobile sales assets: in September 2016, the company transferred 100% equity of Huajun Fuyuan Automobile sales Company, a wholly-owned subsidiary of Huajun Fuyuan Automobile sales Company, to the asset operation company of the wholly-owned subsidiary of Zhanglong Group, the controlling shareholder.
The company is scheduled to raise an additional 600 million yuan, plus water services. 1) Overview of the additional issuance plan: the issuance price is 5.59 yuan per share; the number of shares issued does not exceed 107 million shares, of which 72 million shares are subscribed by Fujian Zhanglong, the controlling shareholder, and 36 million shares are subscribed by Biyuan; the total amount of capital raised does not exceed 600 million yuan, of which 450 million yuan is used for water projects and 150 million yuan is used to supplement working capital. The sales period is limited to 3 years. In July 2016, the additional issuance was approved by the issuance and Review Committee. 2) Bishui will participate in the fixed increase for three years, and strategic cooperation will be promoted: after the completion of this additional offering, Bishui will hold a 3.6% stake in the company. The company and Bishui have signed a strategic cooperation framework agreement and established a joint venture Fujian Zhangfa Bishuan Technology Co., Ltd., making use of the company's advantages in market resources operation and management and the company's advantages in sewage treatment technology and product research and development. work together to speed up the development of water, environmental protection, energy conservation and emission reduction. 3) price adjustment mechanism: during the issuance period, if the aforementioned issue price is less than 70% of the average stock trading price of the company in the 20 trading days before the first day of the issue period, the issue price of this issue shall be adjusted to 70% of the average stock trading price of the company in the 20 trading days before the first day of the issue period.
In April 2016, the company announced the strategic plan of water business: based in Zhangzhou, expand for four weeks, become bigger and stronger.
1) short-term planning: the planned water supply of ① in Zhangzhou will be 380000 m3 / d by 2015 and 700000 m3 / d by 2020. The company plans to complete the expansion project of Zhangzhou second Waterworks, the reconstruction and expansion project of Jinfeng Waterworks and the phased construction of Zhangzhou No. 3 Waterworks. ② Zhangzhou surrounding counties and cities through the acquisition and merger of the surrounding counties and cities of excellent water assets to achieve the goal of Zhangzhou city and county water integration. Complete the sewage treatment project of Pinghe County No.2 sewage treatment Plant, Zhangzhou High-tech Zone Yuanshan sewage treatment Plant and Mazhou sewage treatment Plant. 2) medium-and long-term planning: through the acquisition of high-quality enterprises in the water industry in Zhangzhou, to realize the integration of production, supply and discharge of tap water and sewage treatment in the central city, and consolidate the foundation for the development of Zhangzhou Water Group to become bigger and stronger; expand the business service area through the acquisition and merger of other prefecture-level water supply enterprises in Fujian Province or reach a cooperative relationship; cooperate with domestic influential enterprises to increase investment in sewage and garbage treatment.
Investment advice: give an overweight rating for the first time. The market value of the additional issuance is 5 billion yuan. 1) the company is gradually stripping off auto sales, import and export trade, land development and other businesses, focusing on environmental protection business in the future, and creating a new regional public utility platform. 2) the company plans to raise 600 million additional funds for environmental protection water services in three years, with an issue price of 5.59 yuan per share (current price 5.07 yuan per share). Biyuan will participate in the fixed increase of 200 million to achieve complementary resources and help the company to transform its environmental protection. At present, the additional issuance has been examined and approved by the issuance and Review Committee. Based on this, the overweight rating is given for the first time.
Risk tip: the transformation of environmental protection business is lower than expected