Events:
The company issued an announcement to sign a "Cooperation Framework Agreement" with Beijing Splendid Land Electronic Commerce Co., Ltd. (hereinafter referred to as "Splendid Land"). The total amount of the agreement is tentatively set at 600 million yuan.
Main points of investment:
The non-profit deducted for the first half of the year will increase by 96%, and the high growth for the whole year is expected. The company mainly deals in power distribution equipment and photovoltaic. The company's profits increased significantly in the first half of the year. In addition to the atomic company Jin Hongwei and Dalian Ruiyou, the expansion of the company's sales scope is an important reason. The company's box-type substations, C-GIS ring network cabinets and other equipment have won the bid in 16 provinces and bureaus of the national network, of which 7 provinces have won the bid for the first time. The expansion of the sales range will continue to support the growth of traditional business. We expect that the high growth for the whole year mainly comes from the following aspects: 1) the expansion of the traditional main business sales scope; 2) photovoltaic projects. The Xiaoxian 20MW project has been completed. The total installed capacity of the Linxian project is 140MW, with a total investment of 1.4 billion yuan. The first phase of the project has been officially started on June 30, 2016. 3) Jin Hongwei, a subsidiary company, set aside 14.14 million yuan in goodwill impairment in 2015.
In February 2016, SPE, which accounts for 48% of the company, won the bid for the Brazilian power grid project, and the future franchise revenue is expected to be 4000 million reais (about 78 million yuan), which will greatly increase the company's profits when completed.
Divest Jin Hongwei, eliminate adverse effects and recover cash flow. The company acquired 51% stake in Jin Hongwei in 2015. later, because Southern Power Grid banned Jin Hongwei from the market, the company transferred 51% of Jin Hongwei to natural person Wang Guilan in cash at a price of 299 million yuan. The company has received a price of 150 million yuan. The adverse impact of Jin Hongwei on the company's performance has been eliminated, and the cash flow recovered through equity sales can be used for subsequent development.
Signed a framework agreement to target 3000 new energy logistics vehicles for rental operation and charging profits.
This framework agreement is the beginning of the company's transformation of the energy Internet strategy. The project is targeted at electric logistics vehicle rental and electric vehicle services between wholesale markets, with a total of 3000 electric animal vehicles operating. The completion of the two phases is expected to bring the company a profit comparable to that of the traditional business volume.
Stock option incentives are set for years of steady growth, demonstrating confidence. The company grants a total of 11.7 million stock options to 14 people, including the general manager and deputy general manager, in three phases with an exercise price of 23.42 yuan, with a certain margin of safety. The exercise conditions are 30%, 20%, 20% and 20% respectively over the previous year from 2016 to 2019. The goal of steady growth for many years demonstrates the company's confidence in development.
Forecast and investment rating: first coverage, given "overweight" rating: regardless of the contribution of logistics vehicle operation and other new business, the company's EPS from 2016 to 2018 is expected to be 0.34,0.41,0.50 yuan respectively. The corresponding PE is 83 times, 69 times and 56 times, respectively. We are optimistic about the growth of the company's traditional business and the improvement of performance and valuation to new business expansion, giving the company an "overweight" rating.
Risk hints: 1) systemic risks in the market; 2) the landing of new business development is not as expected; 3) the decline of traditional business affected by economy