Main points of investment:
The small market capitalization distribution network equipment company has launched the first shot into the overseas market. SPE, which accounts for 48% of the company, won the bid for the 200km BOT project in Brazil, with franchise revenue of 4000 reais (about RMB 78 million) in the first year, and later returns adjusted for local inflation. The company acquired Dalian Ruiyou wholly in 2015, and the remaining shareholders promised that the audited net profit of Dalian Ruiyou in 2015,2016,2017 would not be less than RMB 14 million, RMB 21 million and RMB 31.5 million, respectively, and the total net profit of the three years was promised to be 66.5 million yuan. The project is the first overseas power grid project order won after the acquisition of Dalian Ruiyou, and the winning bid also means that the company's overseas power grid project "from 0 to 1" breakthrough, continue to obtain overseas project expectations.
The strategic layout of new energy business has a bright future. The successful implementation of the company's first batch of 3000 logistics vehicles and charging piles will bring a net profit of about 0.4 to 60 million yuan for the company. At present, the distributed photovoltaic plate is connected to the grid to implement 28.68MW, and the 100MW is planned to be laid, which will bring the company more than 10 million profits in 2017 based on the existing grid-connected scale. Jin Hongwei, which has been banned from the power grid, has been spun off. at present, the company has received part of the resale consideration of 150 million yuan, and the recovered cash flow can be used for the company's business development.
High growth exercise target, management incentives to reduce agency costs. The company recently implemented an equity incentive plan for management, under the condition that net profit in 2016-2019 increased by 30%, 20%, 20% and 20% over the previous year. The multi-year steady growth goal shows the company's determination to develop rapidly, which helps to reduce management agency costs and achieve the same goals for shareholders and management.
Profit forecast and investment rating: the profit does not take into account the contribution of logistics vehicle operation and other new business, regardless of the impact of additional issuance, the company's EPS from 2016 to 2018 is expected to be 0.34,0.41,0.50 yuan respectively. The corresponding PE is 119,99 and 80 times, respectively. We are optimistic about the epitaxial growth of the company's traditional business and the improvement of performance and valuation by the expansion of new energy business, and maintain the company's "overweight" rating.
Risk tips: 1) market systemic risk; 2) new energy business expansion is not as expected; 3) the company's overseas revenue exchange rate fluctuation risk; 4) traditional business customer concentration and market risk.