Original insights:
Jiangnan Chemical is a large-scale civil explosion listed company integrating scientific research, production, sales and blasting services. its business covers 10 provinces and autonomous regions, and has made a key strategic layout in the provinces with large resources and the bridgehead of "Belt and Road Initiative". Benefiting from the rising prices of resource goods and the pick-up growth rate of infrastructure investment, the prosperity of the civil explosion industry has rebounded. Through the asset injection of Dun'an New Energy, the company realizes the dual-core-driven development of civil explosion and new energy business.
Main points of investment
1. Company profile: civil explosion industry leader marches into new energy
Jiangnan Chemical is a large-scale civil explosion listed company integrating scientific research, production, sales and blasting services, in which civil explosives and blasting engineering are the core business. The company has a production capacity of 251500 tons of explosives, which is in the forefront of the industry in terms of production capacity, scale and technical strength. The company's business covers 10 provinces and autonomous regions, and the key strategic layout is carried out in the resource-rich provinces and "Belt and Road Initiative" bridgehead Xinjiang region.
two。 New energy sector: new energy asset injection, company development to meet dual-core drive
In January 2017, the company announced that it planned to issue shares to buy 100% of Duan'an New Energy, which is the in vitro asset of a listed company under Jiangnan Chemical controlling shareholder Duan'an Holdings Group. Relying on Dun'an New Energy's advanced wind turbine manufacturing technology, rich experience in new energy power generation operation and management, and high-quality wind and light resources, listed companies will gradually complete their strategic layout in the new energy industry, and become a diversified listed company driven by the explosion and new energy business.
3. Civil explosion plate: the bottom of the boom rebounded, Belt and Road Initiative, Xinjiang construction is the focus
Trapped by the depressed demand and price liberalization of civil explosion products, the civil explosion industry has been in the doldrums in recent years. Since 2016, the prices of resource goods downstream of the civil explosion industry have rebounded significantly and there have been fruitful supply-side reforms in key areas such as coal and iron and steel in the second half of the year. With the further boost to the prices of related products, there are obvious signs of recovery at the bottom of the demand of the civil explosion industry, while the construction prospects of Belt and Road Initiative and Xinjiang are worth looking forward to. The infrastructure construction will go first before the civil explosion, and the civil explosion faucets with key layout in the relevant areas are expected to benefit greatly.
4. Investment sector: layout of new technologies, following the frontier of development
Since 2015, the company has invested in artificial intelligence and other new technology areas one after another, including 50 million yuan in Beijing Lightyear Infinity in 2015. invest in the cloud robot brain project (Turing Robot); in 2016, 18 million yuan invested in the visual interaction technology provider Fengshi interaction, signed a strategic investment cooperation agreement with Zhejiang Rushan Huijin Capital Management Co., Ltd. and set up a new industry fund.
Profit forecast and investment rating.
Leaving aside the consolidated table of Dun'an New Energy for the time being, we estimate that the EPS of the company from 2017 to 2019 is 0.08,0.11,0.14 respectively, corresponding to the PE of 110X, 84X and 62X, which is recommended.
Risk Tips:
The rebound of civil explosion demand is lower than expected, and the development of new energy business is not smooth.
