Main points of investment:
The scale of non-public offerings will be reduced and all of them will be used to repay interest-bearing liabilities. The company plans to issue no more than 219683654 shares at a price of 5.69 yuan per share and raise no more than 1.25 billion yuan to "repay the interest-bearing liabilities of listed companies", of which Henan Yulian Energy Group and Xiamen Yulian Investment Partnership plan to subscribe for 850 million yuan and 400 million yuan respectively. This time, the revised fixed increase plan has reduced the scale of funds raised by the original plan of issuing 553602806 shares to raise 3.15 billion yuan, and the number of issuing objects has been reduced from 6 to 2. The "Henan Cloud Computing data Center Project", which originally planned to invest 1.9 billion yuan, will be implemented through other financing methods.
Reduce asset-liability ratio and financial expenses, improve capital structure and profitability. As of March 31, 2017, the asset-liability ratio of the company was 77.63%, and the total amount of short-term loans, non-current liabilities and other current liabilities due within one year reached 5.914 billion yuan. according to the calculation that the total amount of funds raised this time is used to repay interest-bearing liabilities, the company's asset-liability ratio will drop to 67.90%, while the company's interest expenses will be greatly reduced. Improve capital structure and profitability.
The controlling shareholders subscribe to and increase their holdings constantly, highlighting their confidence in the company. Yulian Group, the controlling shareholder, plans to subscribe for 149384885 non-public offering shares, and the proportion of shares held will rise from 50.41% to 52.38% after completion. At the same time, as of June 2, 2017, Yulian Group had increased its holdings of the company's shares by 44.9563 million yuan, and some of the company's board of directors had increased their holdings by 5.0398 million yuan. Yulian Group and some Dong Jiangao plan to increase their holdings of the company's shares within six months from May 12, 2017, when the company's share price is less than 5 yuan per share, Yulian Group plans to increase its holdings by not less than 50 million yuan, and some Dong Jiangao plans to increase their holdings by no less than 5 million yuan.
Aluminum prices warmed up to share the industry dividend, intensive processing into production to improve performance. The company has formed an integrated industrial chain of "coal-electricity-aluminum-aluminum intensive processing" with aluminum intensive processing as the main body, with an electrolytic aluminum production capacity of 740000 tons and aluminum processing capacity of 750000 tons. Due to the dual effects of supply-side reform and increasingly stringent environmental protection, it is expected that the oversupply of electrolytic aluminum will significantly improve in 2017, and the warming of aluminum prices will enhance the company's profitability. The company's annual output of 130000 tons of high-precision aluminum strip cold rolling project is expected to be officially put into production at the end of 2017, which is fully up to production with the annual output of 50,000 tons of high-performance special aluminum and high-precision aluminum strip hot continuous rolling project. it will bring the company a net profit of 72.84 million yuan, 73.23 million yuan and 65.92 million yuan respectively.
Profit forecast and rating. Benefiting from the supply-side reform of electrolytic aluminum, the warming of aluminum prices and the controllable power costs of the company, the company's profitability is expected to further improve this year, and with the completion of the fixed increase, the company's financial expenses will be greatly reduced. The gradual commissioning of the three aluminum intensive processing projects will become an important performance growth point for the company, and the "Henan Cloud Computing data Center Project" will also contribute new profits. Assuming that the fixed increase will be completed within 2017, and considering dilution, we estimate that the EPS in 2017-2019 will be 0.20,0.28,0.37 respectively. Taking into account the average valuation level of the industry, it is given a valuation of 35 times in 2017, with a target price of 7.0 yuan, upgraded to a buy rating.
Uncertainty analysis. Aluminum price fluctuation risk; fixed increase transaction risk; market risk and so on.