Main points of investment:
The third-quarter results exceeded expectations and exceeded the upper limit of the performance forecast. Third-quarter results are forecast to grow by 135% over the same period last year. The actual performance is higher than the forecast limit. A substantial increase in performance, in addition to receiving government subsidies, the transfer of Wuhan electronically controlled plants to get non-recurrent profits and losses. The original main business also increased by a large margin. Mainly from: 1) the expansion of the company's sales scope, Jin Hongwei and Dalian Ruiyou. 2) the photovoltaic project will be put into production. This factor is also sustainable throughout the year, and the company's performance is expected to maintain high growth throughout the year.
Divest Jin Hongwei, eliminate adverse effects and recover cash flow. The company acquired 51% stake in Jin Hongwei in 2015, and later, because Southern Power Grid banned Jin Hongwei from the market, the company transferred 51% of Jin Hongwei to natural person Wang Guilan in cash at a price of 299 million yuan. The company has received a price of 150 million yuan. The adverse impact of Jin Hongwei on the company's performance has been eliminated, and the cash flow recovered through equity sales can be used for subsequent development.
A framework agreement was signed with an increase of 826 million, with a target of 3000 new energy logistics vehicles for rental operation and charging operation. This framework agreement is the beginning of the company's Internet strategy for transforming the layout of energy. the project is aimed at electric logistics vehicle rental and electric vehicle services between wholesale markets, with a total of 3000 electric logistics vehicles operating in two phases. We expect to bring the company a profit comparable to the traditional volume of business.
Stock option incentives are set for years of steady growth, demonstrating confidence. The company grants a total of 11.7 million stock options to 14 people, including the general manager and deputy general manager, in three phases with an exercise price of 23.42 yuan, with a certain margin of safety. The exercise conditions are 30%, 20%, 20% and 20% respectively over the previous year from 2016 to 2019. The goal of steady growth for many years demonstrates the company's confidence in development.
Maintain the company's "overweight" rating: regardless of the contribution of logistics vehicle operation and other new businesses, regardless of the impact of additional issuance, the company's EPS from 2016 to 2018 is expected to be 0.34,0.41,0.50 yuan respectively. The corresponding PE is 91 times, 75 times and 61 times, respectively. We are optimistic about the growth of the company's traditional business and the improvement of performance and valuation into new business expansion, and maintain the company's "overweight" rating.
Risk hints: 1) the systemic risk of the market; 2) the landing of new business development is not as expected; 3) the decline of traditional business affected by the economy; 4) the uncertainty of additional issuance.