Events:
The company released the 2017 employee Stock ownership Plan (draft). The plan participants are no more than 200 core employees, including Dong Jiangao, and the maximum fund to be raised is 60 million yuan, of which 84.7% are subscribed by Dong Jangao. The plan will set up priority and inferior shares at 1:1, raise a total ceiling of 120 million funds, and Mr. Li Renchao, the controlling shareholder, will undertake financial compensation obligations for priority clients to fully obtain priority principal and expected income. Within 6 months after the approval of the shareholders' meeting, the company plans to buy it through the secondary market and bulk transactions, with a price ceiling of 15 yuan per share, a lock-up period of 12 months and a duration of 24 months.
Main points of investment:
The employee stock ownership plan has a wide range of incentives, which is conducive to stimulating the internal growth momentum of the company. The participants in the company's employee stock ownership plan are about 200 core employees, including Dong Jiangao, accounting for 11% of the total number of employees of the company. The incentive scope is relatively extensive, and most of the core employees are bound with the interests of the company. At the same time, through the 1:1 lever to set priority and inferior subordinate levels, will enlarge the maturing earnings of participating employees, which will help stimulate the internal growth momentum of the company.
Dong Jiangao participates in the subscription, and the controlling shareholder gives priority share principal and expected income to the full compensation obligation, highlighting the company's confidence in future development. Li Renchao, chairman and actual controller of the company, Mao Jihong, director and president, Lin Yu, Yang Xiangdong, vice president and secretary to the board of directors, Luo can, chairman of the board of supervisors, Yang Zusheng, and other 7 board members participated in the employee stock ownership plan with a planned subscription share of not less than 50.82 million yuan, and the subscription proportion reached 84.70%. In addition, Mr. Li Renchao, the controlling shareholder of the company, will also undertake the obligation of financial compensation for the priority principal and expected income of the priority client of the employee stock ownership plan, which fully demonstrates the firm confidence of the management of the company in the development of the company.
The purchase price of no more than 15 yuan per share establishes the margin of safety, and the one-year lock period shows the company's determination to develop rapidly. In order to control the risk of employee stock ownership plan, the price of shares purchased by the company through the secondary market and block trading will not be higher than 15 yuan per share, which effectively protects the interests of employees and provides a margin of safety for the stock price. After the stock purchase is completed within 6 months after the approval of the shareholders' meeting, the lock-up period will last for 1 year and last for 2 years. Compared with most employee stock ownership plans, the period is relatively short, which reflects the company's determination and confidence to develop rapidly.
With orders in hand exceeding 10 billion yuan, it is expected that project funds will be recorded in the second quarter, and the cash flow and profit situation will be improved. With the signing of the "Senegal AESA 3x135MW clean and efficient power plant EPC project general contract" signed between the company and the African Energy Company on June 5, the company has so far completed the order balance of 13.637 billion yuan, four times the 2016 revenue. At present, Laos, Thailand and other projects have been launched and received advance payments. They are expected to receive 1.3 billion yuan in the second and third quarters, and 2 billion yuan in cash rebates for the whole year, which will effectively improve the company's current operating cash flow and contribute to profits. Coupled with the Guangyuan garbage power generation is expected to be connected to the grid in July, and the Jiamusi and Yulin projects are expected to be completed and ignited by the end of 2017, we believe that the company's first-half performance will reverse the downward trend in the first quarter compared with the same period last year and return to growth.
Maintain the company's "buy" rating: the company has the advantages of order acquisition and execution in areas such as engineering general contract and PPP, coupled with the completion of the 15% equity acquisition of graphene, which will provide the company with the driving force for business multipolar growth. The company is expected to have an EPS of 0.71,0.82,0.94 in 2017-2019, respectively, and the previous share price PE is 16.74,14.35,12.57 times, maintaining the company's "buy" rating.
Risk hints: the risk that the order acquisition is not up to expectation; the project schedule and rate of return are not up to expectation; the graphene technology development and industrialization application are not up to expectation; the graphene output is not up to expectation; overseas projects are political and economic risks.
