Main points of investment

Events: 1) Luo Honghua filed a civil lawsuit with the court on November 21, 2016, requesting the revocation of the previous resolution of the shareholders' meeting (removing Luo Xiangbo and Luo Honghua as directors of the board of directors, and nominating Qiu Guoqiang and Zhang Yu as additional directors). 2) dismiss Luo Xiangbo, general manager of the company, and appoint Zhu limin (current director of environmental protection in Beijing Luoka) as general manager of the company. Elected Liao Zhengzong (currently chairman of Xiamen Porting) as chairman of the company and Qiu Guoqiang as vice chairman of the company. 3) Qiu Guoqiang plans to increase the holding of the company by no more than 100 million yuan from November 28, 2016 to May 27, 2017.

Our comments on this are as follows:

The chairman is removed, private equity background Qiu always enters the board of directors, minority shareholders may benefit. 1) the chairman was removed, and the new directors have a private equity background: Luo Xiangbo and Luo Honghua currently own 17.3% of the shares, and they are the largest shareholders and real controllers of the company, of which Luo Xiangbo is the former chairman of the company. Qiu Guoqiang, one of the new directors, was the vice chairman, deputy general manager and sales director of Sanwei, and is now the chairman of Zhonglong Hangchuan Investment Fund. Zhonglong Hangchuan currently manages a fund of 6 billion yuan, with investments in mining, energy, new energy and other industries. Zhang Yu, the second new director, is currently the deputy general manager of Shanghai Yongwu Investment Management Department and a director of Wanlishi. Shanghai Yonghua is under the control of Yongjin Group, with a cumulative investment of more than 6 billion yuan, and has invested in more than 80 outstanding enterprises, of which more than 40 have been successfully listed. 2) short-term reminder of trading opportunities, which is beneficial to the interests of minority shareholders in the medium and long term: the removal of directors is a manifestation of the disclosure of contradictions among shareholders before. From the perspective of shareholder structure, Luo Xiangbo and Luo Honghua currently hold 17.3% of the shares, while Qiu Guoqiang, the three shareholders, hold 8.6% of the shares. As a result of the vote at the shareholders' meeting, 129 million shares agreed (32% of the total share capital) and 86 million shares opposed (23% of the total share capital). This management change, the multi-party shareholding ratio is close, which indicates the trading opportunity in the short term; after the management structure change, it may be beneficial to the interests of minority shareholders in the medium and long term.

The new vice chairman Qiu increased his holdings by 100 million yuan, and multi-party disputes continued to ferment. 1) the newly formed management appointed Luo Xiangbo, the general manager of the company, and appointed Zhu limin (the current director of environmental protection in Beijing) as the general manager of the company. Elected Liao Zhengzong (currently chairman of Xiamen Porting) as chairman of the company and Qiu Guoqiang as vice chairman of the company. 2) the new vice chairman Qiu Guoqiang plans to increase the holding of the company by no more than 100 million yuan from November 28, 2016 to May 27, 2017. 3) the actual controller filed a lawsuit to revoke the resolution on the removal of the chairman of the board of directors: Luo Honghua filed a civil lawsuit with the court on November 21, 2016, requesting the revocation of the previous resolution of the shareholders' general meeting (removing Luo Xiangbo and Luo Honghua as directors of the board of directors. Qiu Guoqiang and Zhang Yu are nominated as additional directors. The first 600 million yuan clean heating order landed, and the establishment of M & A funds accelerated extension. 1) Clean heating: in May 2016, the company announced the landing of the biomass thermal power project in Xixia County, Nanyang City, with a total investment of 600 million and a first phase of 300 million. The first phase of the construction of heating boiler 150t/h, supporting generating sets for 24MW back pressure and pumping condensing units and the corresponding pipe network; the second phase of 150t/h, supporting 30MW generating units. In the future, clean heating PPP project is the company's key areas of expansion. 2) accelerated extension of the establishment of M & A fund: the company contributed 120 million yuan to participate in the establishment of 480 million yuan Huaxin-Sanwei environmental protection M & A fund and 100 million yuan to participate in the establishment of 400 million yuan Sanwei-Anjie investment fund to accelerate extension.

Investment advice: maintain the overweight rating. Considering the additional issuance and table, we predict that the net profit of Sanwei Silk in 16-17 years will reach 1.7 / 220 million yuan; at present, the market value of the preparation for the exam will reach 8.4 billion yuan. Xiamen Po Ting on-hand order of more than 1 billion, performance may exceed expectations. The chairman was removed, the private equity background Qiu joined the board of directors; the new vice chairman Qiu increased his holdings by 100 million yuan, management disputes continued to ferment, minority shareholders may benefit. At present, the company's stock price is 20.55 yuan / share, which is close to 17.71 yuan / share financing price and 19.21 yuan / share holding price. The current price security is strong. Based on this, maintain the overweight rating.

Risk hint: dust removal filter media business is lower than expected