Main points of investment:
The acquisition will expand the growth space of new business and realize the deep cultivation of "construction + IDC" business. The company pays close attention to the pulse of the development of IDC industry, acquires high-quality assets of IDC service industry, and enhances the company's profitability and sustainable development ability. In 2015, the company indirectly participated in Zhongjingyun by increasing its 20% equity in Rongmei Technology. This transaction intends to issue shares to Kehua Hengsheng, Jingkai Investment and Hanfu Capital to purchase its 9.33%, 11.20% and 6.67% equity interests in Zhongjing Yun respectively. It is proposed to issue shares to Sun Maojin to buy its 80% equity stake in Rongmei Technology, which holds 63.47% equity. Thus controlling the 90.67% stake in Zhongjing Yun.
Benefiting from favorable policies and rigid demand, the IDC industry is developing at a high speed. The rigid demand brought by the rapid growth of the Internet market has driven the rapid growth of the IDC market. It is expected that the IDC market will maintain rapid growth in the next three years. In 2016, 2017 and 2018, the market size will reach 71.6 billion yuan, 99.6 billion yuan and 139 billion yuan respectively, with an average growth rate of 38.92% in the next three years.
Zhongjing Cloud relies on technological advantages to build an optical storage leader, and its business development is stable and profitable. Zhongjing Cloud is fully responsible for the research, development, integration and application of the National Information Center in the fields of optical and magnetic fusion storage technology, comprehensive energy-saving technology of data center, data security, etc., and is specifically responsible for the planning, construction and operation of the ecological data center, big data cold storage and secure storage network of the National Information Center. There are 5200 cabinets in the first phase of Zhongjing Yunzhuang data center and 5800 cabinets in the second phase of the project, which were put into operation in December 2016. Profits are expected to be stable in 2018.
China Jingyun cooperates closely with Guodun Quantum, and Zhongjing Liantong focuses on quantum communication. Zhongjing Cloud and Guodun Quantum, the largest manufacturer of quantum communication equipment in China, jointly established Zhongjing Quantum, which owns a 60% stake. Zhongjing Jingyun focuses on the construction and operation of ultra-high security data centers and quantum encrypted communication networks.
Cover for the first time, giving a "buy" rating. We estimate that the income of Ningbo Construction Engineering from 2016 to 2018 will be 13.637 billion yuan, 14.836 billion yuan and 15.662 billion yuan respectively. The corresponding net profit belonging to shareholders of the listed company is 209 million yuan, 307 million yuan and 451 million yuan respectively, and EPS is 0.20,0.22 yuan (diluted) and 0.32 yuan (diluted) respectively. Taking into account the layout of Ningbo Construction Engineering in IDC construction and the pretest market value after the acquisition, it was given a dynamic PE of 40 times in 2017, with a target price of 8.80yuan in six months, covering it for the first time and giving it a "buy" rating.
Main risk factors. Profitability is not as good as expected; policy requires change risk.