Main points of investment
Event: the company recently issued two announcements: one is to acquire Joy Boy wholly-owned by way of equity transaction, with a total consideration of 130 million yuan; the other is to issue 155 million new shares to Hengqu in Shanghai, which will receive a capital of about HK $70.4 million. The above two new share issues have accounted for about 34.7% of the total share capital issued by the company, and the funds raised are mainly used for investment in downstream solar projects.
Capacity in Malaysia is beginning to be released. The company's new production base in Malaysia has begun to release capacity and is expected to reach full production in the third quarter of this year. Malaysia production base in the pull rod process of electricity and other supporting costs compared with the company's Shanghai, Hai'an factory costs have been greatly reduced. In the slicing process, the Malaysian plant uses the diamond line technology, which can further reduce the cost. With the reduction of production costs, the gross profit margin of the production base in Malaysia is expected to reach 15%, and the profit contribution is expected to be reflected in the first quarter of 2017.
Additional issuance relieves the pressure on financing. The company has allocated 155 million new shares to Shanghai Hengqu and will receive a capital of about HK $70.4 million. Shanghai Hengqu has a special fund for investing in Internet and new energy, and has certain photovoltaic industry resources in Shanghai, Jiangsu and other places, such as distributed power stations, roof solar equipment, etc., which helps the company to obtain more stable financing channels. and conducive to the development of the company in East China.
Acquire Joy Boy company, enter the development of downstream photovoltaic power station. The company intends to acquire Joy Boy Company wholly by way of equity transaction, with a total consideration of 130 million yuan. Joy Boy mainly provides photovoltaic power station development services, and currently has a 70MW photovoltaic poverty alleviation project in Luoyang, Henan Province. Through the acquisition of Joy Boy, the company enters the downstream photovoltaic power station business, mainly to provide third-party services, and does not participate in the actual operation. The company can get a development service fee of 0.5 yuan per kilowatt-hour of electricity when engaged in the project, and the gross profit margin is expected to reach 40% Mel 50%, which will help to improve the company's profitability.
Our point of view: Camdanke Solar Energy (712.HK) is a leading manufacturer of monocrystalline silicon wafers in China. At present, the company is actively expanding to downstream power station services, construction and operations, while the company's plant in Malaysia has been put into production. We look forward to the end of the company's long-term contract with customers at the end of 2016 after the end of the main business gross loss and profitability improvement. We expect the company to continue to lose money in 2016, but will reduce losses for the whole year and may make a profit in mid-2017. investors are advised to pay attention to the progress of the company's downstream business development and the profit of the Malaysian factory.
Risk hint: the company's additional issues and acquisitions are not as expected, and the progress of new production capacity in Malaysia is not as expected.