Event

Recently, the company announced that Chongqing Huayu Garden Co., Ltd., a wholly owned subsidiary of the company, participated in the bidding for the comprehensive ecological restoration project in Xixiu District (Phase II) of the Government and Social Capital Cooperation (PPP). On February 7, 2017, the Guizhou provincial government procurement network announced the pre-winning results of the project. Huayu Garden was identified as the pre-winning bidder of the project, and the pre-winning amount was 1.583999 billion yuan. It accounted for 116.73% of the company's operating income of 1.357 billion yuan in 2015.

Brief comment

Pre-win the bid for 1.58 billion PPP, and the PPP project will be the next city.

(1) on October 27, 2016, Chongqing Huayu Garden, a subsidiary of Lipeng Co., Ltd., signed a strategic cooperation framework agreement with the people's Government of Xixiu District, Anshun City, Guizhou Province. The two sides will be based on the development, construction and fund cooperation of overall packaging projects, including tourist scenic spots, eco-tourism small towns and eco-environmental restoration projects, led by Huayu Gardens, and introduced theoretical research, planning and design, infrastructure and other industries.

(2) the mode of project cooperation is PPP mode. According to the specific needs of different PPP projects, all parties jointly initiate and set up project companies. The state-owned platform accounts for 20%, and Huayu Garden accounts for 80%. Huayu Garden is responsible for the investment, construction and operation of the project and is the leader of the project.

(3) the government will take the lead in implementing the preliminary work such as project establishment, feasibility study, environmental assessment, planning and demolition. It is estimated that the preliminary work will take 1-2 years, the project construction period will be 2 years, and the overall implementation period of the project is expected to be about 10 years. The return on investment of the government purchase method is no more than 8% / year. The return on this investment is only within the scope initially agreed by both parties.

The company announced that Huayu Garden was identified as the pre-winning bidder for the project, with a pre-winning amount of 1.584 billion yuan, accounting for 116.73% of the company's business income of 1.357 billion yuan in 2015, which once again shows the market popularity and competitive advantage of Huayu Garden in the southwest garden market. We are optimistic about the continuous promotion and landing of the company's follow-up PPP project.

The acquisition of Huayu garden with excellent texture, steadily moving towards the garden PPP leader.

In 2014, the company acquired a 100% stake in Huayu Garden by issuing shares and paying cash, opening a new mode of dual-main business development of packaging business and garden business. Huayu Garden is a comprehensive landscaping enterprise with early establishment, high qualification, mature business system and excellent management in the whole industry chain, which is widely known in Chongqing garden market. The company's business has developed rapidly, has a strong competitiveness in the Chongqing garden industry, and gradually expanded to the national region. Huayu Garden promises that the non-net profit deducted from 2014 to 2017 will be no less than 105 million yuan, 130 million yuan, 169 million yuan and 198 million yuan respectively, the net profit in 2014 and 2015 will be 110 million and 135 million respectively, and the net profit will be 65.7709 million in the first half of 2016. we expect that the 2016 performance commitment will be fulfilled.

Add 781 million plus PPP projects, performance confirmation is expected to accelerate.

The company announced in July 2016 that it had raised 781 million yuan at a price of not less than 5.19 yuan per share, of which 330 million was used for the PPP project of urban infrastructure and ecological restoration of Jinqiao Lake, Bazhong District, Bazhong City, 290 million for the comprehensive ecological restoration PPP project of Xixiu District of Anshun City, and 60 million for the bottle cap QR code technology upgrading project. At present, the IPO has been completed, and the final offering price is 7.52 yuan per share, raising 781 million yuan.

With the fixed increase of funds in place, the promotion of the company's PPP project is expected to speed up, and the performance of the landscape ecology business is expected to be confirmed quickly.

Actively create "bottle cap interconnection" and promote the innovative development of bottle cap business.

The company is the first manufacturer of anti-counterfeit bottle caps listed in China. According to the latest statistical analysis of China Packaging Federation, the domestic market share of the company's white liquor anti-counterfeiting bottle caps has reached more than 10%, and it is the largest manufacturer of anti-counterfeit bottle caps in Asia. The company's bottle cap business is promoted online and offline at the same time:

Offline, the company began to build the bottle cap QR code business in 2015, and in September 2016, the country's first bottle cap QR code production line was officially launched in Hebei Province, with a total investment of 60 million and a production capacity of 1 billion. Bottle cap QR code can effectively solve the problems of anti-counterfeiting, serial goods, traceability and other problems in the winery, and the market demand is strong.

At present, the customers downstream of the bottle cap cover well-known brand wineries all over the country, such as "Beijing Hongxing, Niulanshan", "Xinjiang Elite", "Sichuan Jiannanchun, Luzhou laojiao, Tuopai, Quanxing, Fenggu", "Shanxi Xinghua Village, Fenyang King", "Hubei strong Wine" and so on.

On the online side, in August 2015, the company contributed with its own funds and co-sponsored with Lan Kun to set up care media, with a registered capital of 200 million yuan, of which the company contributed 120 million yuan, accounting for 60%. At present, the paid-in capital of the media is 10 million yuan, and the actual contribution of the company accounts for 38%. Care about the media with an annual production capacity of 2 billion anti-counterfeit bottle caps as the carrier to provide Internet technical support for "one cover, one yard" to help the company enter the era of mobile Internet.

Investment advice:

Lipeng is the first manufacturer of anti-counterfeit bottle caps listed in China, with a production capacity of 2 billion caps and a market share of 10 per cent. In 2016, the company acquired Huayu Garden and actively explored the garden PPP business model to create the double main business of "bottle cap + garden" business. This time, we won the bid for 1.58 billion PPP, and the main business of PPP moved forward again. We estimate that the company's net profit in 2014-2017 is 1.73,225 million, EPS is 0.20,0.26PE is 39,30, the company's current market capitalization is 6.826 billion yuan, and the company's November 2016 price increase is 7.52 yuan. Provide a certain margin of safety, first coverage, give a "buy" rating.