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杭电股份(603618)点评:主业持续拓展 员工持股计划、大股东增持带来安全边际

Hangzhou Power Co., Ltd. (603618) comments: the main business continues to expand employee stock ownership plan, and the increase of major shareholders brings the margin of safety.

國海證券 ·  Dec 17, 2015 00:00  · Researches

Events:

On December 9, 2015, the company issued a pre-plan for a non-public offering of no more than 22866402 shares, the offering price was not less than 27.77 yuan per share, and the total amount of funds raised did not exceed 635 million yuan.

On December 15, 2015, the company announced that the plan of Mr. Sun Qingyan, the actual controller, to increase his shareholding in the company had been completed.

Main points:

1. UHV, rapid growth of distribution network investment, steady growth of railway investment, optimistic about the company's revenue and profit prospects; actively expand new products to enhance competitiveness

The company's prospectus makes it clear that the company's wire and cable products are sold mainly by "direct sales", mainly by participating in the bidding of large customers such as State Grid, Southern Power Grid, Railway Corporation and so on. With the rapid increase of power grid investment and the steady increase of railway investment, the company is expected to continue to benefit.

In December 2014, China had three UHV lines under construction; at present, a total of 9 UHV lines are under construction. President Xi proposed to explore the construction of a global energy Internet at the United Nations headquarters in September, and several transnational networking projects are being carried out in an orderly manner. According to the announcement of the State Grid Corporation, the company has won the bid well in the bidding for power grid equipment. Considering the 20-24 month construction period of the UHV project, the main orders under construction are expected to contribute profits in the year after next year, which is expected to steadily increase the profits in the year after next year.

In 2014, the national investment in the distribution network was about 200 billion yuan. At the end of August 15, the Energy Bureau made it clear that the national investment in the past 15 years was 300 billion yuan, and the cumulative investment during the 13th five-year Plan period was not less than 1.7 trillion yuan. As the new investment is mainly recognized from next year, it is expected to boost the company's profits next year and the year after next.

In October, the NDRC approved eight railway projects with a total investment of about 301.235 billion yuan. under the circumstances of the state increasing investment in railway projects, it is expected that the company's railway project orders and profits will increase steadily.

In the first three quarters of 2015, the company's operating income was 2.309 billion, up 17.04%, and net profit was 93.87 million, up 23.61%. It is expected that the company's main business revenue and profits will increase steadily in the next two years.

The company continues to increase investment in the research and development of new products and new technologies, and has successfully developed new products such as aluminum tube support wire aluminum alloy enlarged busbar, special photovoltaic cable, wrinkled copper sheathed fireproof cable, aluminum alloy special cable and so on. The project of special cable for urban rail transit and special cable for wind power generation is progressing smoothly. As the company actively increases the layout of special cable field, it will further improve its profitability.

2. Raise funds to promote the construction of special cables and continuously enhance their competitiveness.

On December 9, 2015, the company issued a pre-plan for a non-public offering of shares. The number of shares in this non-public offering shall not exceed 22866402 shares, and the reserve price of the non-public offering shares shall be 90% of the average trading price of the company's shares in the 20 trading days before the pricing benchmark, that is, the issue price is not less than 27.77 yuan per share, and the total amount of funds raised shall not exceed 635 million yuan (including issuing expenses), all of which will be invested in the construction project of annual 38000km special cable production base of Hangzhou Yongte Cable Co., Ltd. It includes annual 4000km marine engineering cable project, annual 15000km special energy-saving wire project and annual 19000km special cable project. This additional issue still needs to be approved by the shareholders' meeting of the company and the China Securities Regulatory Commission. The construction period of the project is 1.5 years, the annual additional sales income after full production is about 1.3 billion yuan, the net profit is about 98.11 million yuan (according to the 25% enterprise income tax rate), the financial internal rate of return (pre-tax) of project investment is 20.46%, and the payback period of project investment (pre-tax) is 6.5 years.

When the project is completed, profits are expected to increase significantly in 2018 and beyond.

3. Employee stock ownership plan and major shareholder increase provide a certain margin of safety.

As of September 30, 2015, the company's employee stock ownership plan to buy a total of 3499339 shares of the company, accounting for about 1.64% of the company's total share capital, the total transaction price is 67007622.73 yuan, and the average transaction price is about 19.15 yuan per share. The lock-up period of the shares purchased by the employee stock ownership plan is 12 months from the date of this announcement.

From July 14, 2015 to December 10, 2015, Mr. Sun Qingyan, chairman and actual controller of the company, accumulated 717840 shares of the company, with an average cost of 27.87 yuan per share, with a total transaction price of 20.0075 million yuan. On December 16, 2015, Sun Qingyan and his actors Yongtong Holdings Group Co., Ltd. and Zhejiang Fuchunjiang Communication Group Co., Ltd. held a total of 124317840 shares, accounting for 58.27% of the total shares of the company.

4. Profit forecast and rating

The company benefits from UHV, distribution network, railway construction; employee stock ownership plan, major shareholder increase to provide a margin of safety. Based on the principle of prudence, regardless of this increase, it is estimated that in 2015-2017, the company's EPS will be 0.69,0.88,1.12 yuan respectively, and the corresponding valuation will be 48,37 and 29 times respectively.

5. Risk hint

The investment in power grid and railway is not up to expectations; the scope of business is too concentrated; the risk that the company wins the bid is lower than expected; and there is uncertainty in non-public offerings.

The translation is provided by third-party software.


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