Investment points:
A large-scale integrated natural gas operator in the province
The company is mainly engaged in the construction and operation of long-distance natural gas pipelines, CNG/LNG and urban gas in Anhui Province. The company has built and operated 18 long pipelines with an annual design gas transmission capacity of about 10.691 billion cubic meters; it has built 5 CNG mother stations with an annual design and processing capacity of about 136 million cubic meters. The company will seize the opportunities of the rapid development of the natural gas industry and the adjustment of the energy consumption structure, actively expand its business in the downstream distribution sector, and develop into a large-scale integrated natural gas operator in the province with the midstream and long-term gas transportation business as the core and downstream distribution business.
Fund-raising projects improve profitability
The funds raised by the company will be invested in the Jiangnan Natural Gas Link Pipeline Project, the Jiangnan Natural Gas Industrial Concentration Zone Branch Line Project, the Natural Gas Lixin-Yingshang Branch Line Project, the Natural Gas Luan-Huoshan Branch Line Project, and supplementary working capital. After the implementation of the fund-raising investment project, the company's profitability and resilience to risks were further enhanced, and the company's competitiveness was enhanced.
Profit prediction
According to the progress of fund-raising project construction, we expect net profits attributable to the parent company in 2016 and 2017 to be 100 million yuan and 110 million yuan respectively, with year-on-year growth rates of -13.71% and 10.13%, respectively, and corresponding diluted earnings per share of 0.30 yuan and 0.33 yuan.
Pricing Conclusions
It is proposed to issue 84 million shares this time, with a total share capital of 336 million shares after issuance. The company's issue price is 7.87 yuan/share. Taking into account the valuation situation of comparable companies in the same industry and the company's growth potential, we believe that the reasonable valuation price given to the company was 13.11-16.39 yuan, corresponding to a price-earnings ratio of 40-50 times the earnings per share in 2017.