A brief comment on the event
On May 27, the Securities Regulatory Commission issued a number of regulations on the reduction of shares held by shareholders of listed companies and Dong Jiangao, and then the Shanghai and Shenzhen stock exchanges also issued special rules to improve the system of reduction to further control the intensity of reduction.
Business analysis
In the long run, the new rules will help regulate the financial order and guide the market back to value: compared with the "reduction regulations" of January 2016, Article 9 has the following differences. 1) expand the scope of application, including the reduction of IPO old shares, non-publicly issued shares, and major shareholders through bulk transactions; 2) increase the disclosure requirements for shareholding reduction; 3) tighten the restrictions on the number of holdings reduction, and the rule of "1% in three months" should be applied to reduce old IPO shares and non-publicly issued shares through centralized bidding transactions. Within 12 months after the expiration of the restriction on the sale of non-publicly issued shares, the number of shares shall be reduced by centralized bidding within 12 months from the date of lifting the restriction, the number of reduction shall not exceed 50% of the number of shares held by the non-public offering 4) improve the bridge reduction rules; 5) authorize the stock exchange to formulate rules and supervision.
The selling pressure is reduced under the new rules: the company issued 580 million shares in September 2016 at a price of 4.39 yuan, raising a total of 2.52 billion shares. Before the introduction of the new rules, this batch of shares will be lifted in September this year, and the market will face selling pressure of nearly 600 million shares. after the new regulations, this batch of fixed increase can only be reduced by no more than 50% by September 2018, and the selling pressure will be reduced by 290 million shares. To some extent, it will ease the resistance to the rise of stock prices brought about by the lifting of the ban.
Sufficient orders guarantee high performance, low valuation and stock price support. 1) in 2016, the company won 22 contracts with a total contract value of 4.318 billion yuan, a substantial increase of 62.05% over the same period last year. Since 2017, the contract amount has been 2 billion yuan, and two investment intention agreements have been signed with a total of 10.4 billion yuan. We expect that at least half of the intention agreements will be landed this year, then it is conservatively estimated that the newly signed orders in 17 / 18 will reach 73 / 12 billion yuan respectively, and the proportion of PPP/BT high gross profit orders will increase significantly. As the company's high-margin projects enter the carry-over period, the company's performance is expected to be greatly boosted. 2) We estimate that the return net profit of the company from 2017 to 2019 will reach 3.14x6.06 / 805 million, and the performance growth rate will be as high as 274%, 93% and 33% respectively. The current market capitalization of 7.7 billion corresponding to 2018 and 2019 PE valuation is respectively times that of 24-13-10, and the PEG valuation is only about 0.1. the company's current asset-liability ratio is only 41%, which is only 1.65 times, which is the lowest among listed companies of the same volume in the construction sector.
Investment suggestion
Give the company a target price of 7-8 yuan in the next 6-12 months, corresponding to a 17-year PE valuation of 35-40 times.
Risk hint
The landing of PPP is not as expected and the development of hydrogen energy industry is slow.
