Investment suggestion
The share price of Eastec has risen sharply since the announcement of the profit distribution plan, but the company's fundamentals have remained stable and various businesses have made steady progress. In view of the fact that the company's share price has reached a reasonable level, we downgraded it to "neutral" with a target price of 44.50 yuan. The reasons are as follows:
As a result of high transfer catalysis, the stock price has risen sharply. The company pre-disclosed its annual profit distribution plan for 2016 on November 29: it plans to pay a cash dividend of 0.9 yuan for every 10 shares and increase 30 shares for every 10 shares in the capital reserve. The high proportion of the increase plan has spurred a sharp rise in the share price, which has exceeded the previous target price and is currently valued at a relatively high level compared with comparable companies, and we believe that the company's share price reflects future growth expectations.
The company's business growth is stable, in line with expectations. Photovoltaic system integration products are expected to achieve more than 70% revenue growth with the rapid development of the photovoltaic industry; sales of high-end power supplies and data center products are growing steadily, and Guo Fu Guangqi's data center equipment procurement agreement will contribute a major increase; charging pile sales have declined due to the industry environment and policies, but are basically in line with expectations.
The short-term performance contribution is limited in the transformation from equipment manufacturing to operation service strategy. The company has developed a strategy for the development of smart energy and smart city business in three areas: photovoltaic power generation, data center and charging services. At present, the company has nearly 300MW photovoltaic power stations connected to the grid, and the future new power stations will also sell suitable power stations to accelerate revenue recognition; in addition, the company will actively promote the construction and operation of data centers, charging stations and intelligent parking garages. In the future, operational services will become a point of performance growth, but the contribution of performance in the short term is limited.
What is the biggest difference between us and the market? There is still uncertainty about the company's transition to operating services, and our profit forecasts are more cautious.
Potential catalysts: 1) data center operation planning announcement; 2) new energy vehicle subsidy policy; 3) photovoltaic power station acquisition / transfer plan.
Profit forecast and valuation
In view of the fact that there is no significant change in the company's fundamentals, the business is progressing steadily, and the performance forecast is in line with our previous expectations, we maintain the earnings per share forecast of 0.71 pounds per share for 2016 and 2017 unchanged. In view of the fact that the company's share price has exceeded the previous target price and the valuation has basically reached a reasonable level, we downgraded to "neutral", switched to 2017 50x P Bank E, and raised the target price to 44.50 yuan, which is 6.90% lower than the current share price.
Risk.
The photovoltaic industry has reduced power restrictions and electricity price subsidies, and the introduction of new energy vehicle subsidy policy has been postponed.
