Main points of investment

The company plans to issue additional shares to acquire 100MW photovoltaic power station and raise 800 million yuan of supporting funds: the company plans to issue 56.84 million shares in private at the price of 19.44 yuan per share, paying a total of 1.105 billion yuan for the transaction consideration to buy 100% equity of Guoyuan Power held by Chuyang Photovoltaic; Guoyuan Power is the project company of Gansu Jinchang 100MW grid-connected photovoltaic power station, and the grid price of photovoltaic power station is 1 yuan / kWh. At the same time, the company intends to raise supporting funds from non-public offerings of no more than 5 specific objects, and the total amount of supporting funds raised does not exceed 800 million yuan, of which 600 million yuan is used to invest in the new 70MW photovoltaic power station project and 200 million yuan is used to supplement the working capital of listed companies.

Guoyuan Power's three-year performance commitments all exceed 70 million yuan, and the transaction price is relatively reasonable: Guoyuan Power's net profit after deduction from 2016 to 2018 is not less than 78.95 million yuan, 70.18 million yuan and 81.39 million yuan, respectively, and the accumulated actual net profit at the end of the current period will not be lower than the net profit accumulated at the end of the current period. Within 3 years after the completion of registration of Guyang photovoltaic subscription and issuance shares, 25%, 25% and 50% of the shares were unlocked year by year. The 100MW photovoltaic power station of Guoyuan Power is a full capital investment, and the unit price of this acquisition is about 11.05 yuan / W, taking into account the transaction mode of all share swaps, combined with the expectation of future improvement of Gansu power cuts and the possibility of continued cooperation with Guoyuan Power shareholders, the transaction price is relatively reasonable.

Guoyuan Power's innovative business model, direct power supply promotes power consumption: Gansu Jinchang 100MW Photovoltaic Power Station, which is held and operated by Guoyuan Power, is divided into Phase I 50MW and Phase II 50MW, which reached trial operation on December 18, 2013, and was connected to the grid in that month. Since Guoyuan Power was connected to the grid in December 2013, affected by the power restriction measures of the regional power grid in Gansu Province, the online electricity consumption in 2014 was 7717 kWh, the power generation utilization rate was 46.42%, and the net profit was 11.65 million yuan. In February 2015, the "Jinchang New Energy Power Direct consumption contract" signed between Guoyuan Electric Power and Jinchuan Group stipulated that from February 11, 2015 to December 31, 2015, Jinchuan Group directly consumed 4000 million kWh of electricity from Guoyuan Electric Power, and the actual power supply could fluctuate by 10%. The amount of electricity sold by Guoyuan Power to Jinchuan Group will first be settled with Gansu Electric Power Company of State Grid at the price of 1 yuan / kWh (including tax), and then Guoyuan Electric Power will pay Jinchuan Group the difference of 0.27 yuan / kWh between the online settlement price and the local consumption price in cash. In other words, from February 11, 2015 to December 31, 2015, Guoyuan Power directly supplied 3600-4400 million kWh to Jinchuan Group at a price of 0.73 yuan / kWh (including tax), promoting power consumption and improving power cuts. From January to August 2015, the online capacity of Guoyuan Electric Power was 8720 kWh, the utilization rate of power generation was 79.49%, and the net profit was 39.35 million yuan.

Complete the acquisition of Huayuan New Energy, enter the photovoltaic power plant EPC and operation: in August 2015, the company completed the issuance of shares to Zhenfa Energy and Ham Xuan and paid cash to buy 100% equity interest in Huayuan New Energy, expanding its main business to photovoltaic power plant EPC and investment operation. At a price of 13.82 yuan per share, the company issued 8321 million shares (consideration 1.15 billion yuan) to Zhenfa Energy and paid 200 million yuan in cash to buy its 75% stake in Huayuan New Energy. Hao Xuan invested 3256 million shares (consideration 450 million yuan) to buy its 25% stake in Huayuan New Energy, and Zhenfa Energy and Hao Xuan's shares were locked up for three years. Huayuan New Energy has the third-level qualification of general contracting for electric power project construction, is engaged in the EPC business of photovoltaic power stations, and holds two photovoltaic power plants with each 100MW installed capacity through its subsidiaries Gaoyou Zhenhe and Jinhu Zhenhe. In 2013, Huayuan New Energy began to engage in photovoltaic power station EPC business. In addition to a few sporadic sales of pipe piles and finished components, there are mainly five total 110MW photovoltaic power station project EPC business, such as Binhai 20MW, Gaoyou 20MW, Jinhu 20MW, Sheyang 30MW, Xuyi 20MW, etc., with operating income of 873 million yuan and net profit of 82.37 million yuan in 2013. In 2014, Huayuan New Energy added EPC business for two large photovoltaic power station projects, such as Sihong 109.9MW and Jinchang 100MW, with operating income of 1.144 billion yuan and net profit of 205 million yuan in 2014. Fang Zhenfa Energy and Ham Xuan promised that the net profit of Huayuan New Energy in 2015-2017 would not be less than 259 million yuan, 335 million yuan and 366 million yuan respectively. Huayuan New Energy trades at 1.8 billion yuan, with a valuation of about 8.8 times in 2014 and 6.9 times in 2015, at a relatively low price. In addition, after the completion of Huayuan New Energy acquisition, Zhenfa Energy has become the actual second shareholder of the company (the actual controller, that is, the person acting in concert holds a total of 41.78% of the company).

Build a domestic first-class photovoltaic power station EPC brand contractor: based on Huayuan new energy photovoltaic power station EPC qualification and team, with the company's injected human resources and team, the company strives to create a domestic first-class photovoltaic power station EPC brand contractor. Huayuan New Energy has a complete EPC construction team of photovoltaic power station, and has practical experience in the construction of large-scale photovoltaic power station. Since its establishment, listed companies have been deeply ploughing the photovoltaic industry, operating the upper and middle reaches of the photovoltaic industry for nearly two decades, and maintaining long-term technical and business cooperation with global photovoltaic leaders in the field of photovoltaic cells and modules. produce solar cell modules of global benchmark quality and have a strong ability to control the quality of the components needed for photovoltaic power stations. By combining years of accumulation in the middle and upper reaches of the photovoltaic industry and Huayuan New Energy's experience in building downstream power stations in the photovoltaic industry, the company is expected to further enhance the existing power plant construction capacity of Huayuan New Energy. Starting from 2016, the annual EPC construction scale of the company is expected to exceed that of 300MW (excluding self-built operating projects).

Has been connected to the grid, proposed acquisition, under construction, proposed power station up to 390MW, independent development will become the main way in the future: at present, the company through the acquisition has been realized in the hand-connected power station 220MW, proposed to acquire the grid-connected power station 100MW, proposed to raise supporting funds for the new power station 70MW, in addition, the reserve project 100MW has been announced. At the beginning of 2015, the company invested in the establishment of Shanghai Power Station platform subsidiary and more than 10 project companies across the country to carry out the preliminary development of power plant projects. With the completion of the company's acquisition and the improvement of its financial structure, the company's own financial strength and financing strength have been greatly strengthened, and expanding the holding scale of power stations through independent development of power stations will become the main way. In 2016, we expect the scale of the power station developed and built by the company to be about 300MW, and the company is expected to become one of the leading power plant investment operators in China within 3-5 years.

Continue to cultivate LED business, expand smart home and intelligent security business: while adding photovoltaic business, the company also speeds up the merger and integration of LED business, domestic business and foreign business to form a global operating network to create a first-class LED lighting brand. The company has successively acquired the famous domestic commercial lighting brand lighting and European LED lighting business company Lion & Dolphin Ahand S, which can quickly make up for the weakness of network layout in the domestic market and European market, further improve the R & D, production and sales system, and give full play to the synergy of overseas supermarket retail channels, overseas engineering distribution, domestic channel sales and domestic project channels. Realize the multi-brand operation of self-owned lighting, Maixing lighting brand and Jin Bawang brand. While ploughing the traditional market, the company makes every effort to promote the upgrading of lighting business to the direction of intelligence and Internet applications, and focuses on expanding new smart home and intelligent security business. At present, the company has launched a number of intelligent lighting products, has been in North America and other regions for trial marketing, test marketing is in good condition. The intelligent security wall lamp launched by the company in May this year has obtained a considerable number of orders on hand, and will further increase marketing efforts in the future. We expect that the company's smart home and intelligent security products are expected to expand rapidly to ensure the steady growth of the company's LED business.

Strengthen the research and development of graphene technology and take new energy as the application direction: graphene is widely used in the fields of physics, chemistry and material science because of its unique structure and excellent material properties. One of the promising applications is the new generation of solar cells with high photoelectric conversion efficiency. The company strengthens the research and development of graphene application technology, focuses on its photovoltaic and LED business applications, and strives to make progress in LED heat dissipation, energy storage, graphene solar cells and other technology research fields, and put into commercial applications. In July 2014, the company established Shenzhen Guochuangjiawei graphene Technology Co., Ltd. (referred to as "Guochuangjiawei") to research and develop the preparation technology of graphene materials; in September 2014, it signed a technology development contract for the project "Research on graphene-Silicon thin Film Solar cells" with Tsinghua University. At present, the graphene powder products produced by Guochuang Jiawei mainly include JIG-AE series of single-layer graphene, low-layer graphene and graphene microchips; JIA-T series of graphene thermal conductive interface products, graphene thermal conductive paste grease, graphene thermal conductive coatings and pastes (including water and oiliness), as well as graphene oxide solution and JIG-LIB series of graphene composite cathode additives for lithium-ion batteries. At the 2015 China International Advanced carbon Materials Application Expo held in Qingdao in October this year, Guochuang Jiawei put its own graphene powder and application products on the booth for the first time, attracting many exhibitors to exchange and discuss upstream and downstream cooperation. a number of units on the scene have reached a cooperation intention with Guochuangjiawei.

Investment suggestion: combined with the performance commitments of 259 million yuan, 335 million yuan and 366 million yuan of Huayuan New Energy in 2015-2017 and 78.95 million yuan, 70.18 million yuan and 81.39 million yuan of Guoyuan Electric Power in 2016-2018, we expect the company's net profit to shareholders of listed companies to be 145 million yuan, 454 million yuan and 645 million yuan in 2015-2017, with performance growth of 1673%, 213% and 42%. Without considering the diluted share capital, the EPS of the company in 2015-2017 is expected to be 0.38,1.18,1.68 yuan respectively, and the corresponding PE is 48.0,15.3,10.8 times, respectively. After additional dilution (additional issuance and acquisition of assets and raising supporting funds, calculated at the price of 19.44 yuan per share), the EPS is 0.30,0.94 and 1.34 yuan respectively, and the corresponding PE is 60.3,19.3 and 13.6 times respectively; the company is given a "buy" investment rating for the first time with a target price of 30 yuan, corresponding to 25 times PE before dilution in 2016 and 32 times PE after dilution in 2016.

Risk tips: power plant record or power generation does not meet expectations; acquisitions or financing do not meet expectations; performance commitments of acquired assets are uncertain; smart home and intelligent security business development does not meet expectations.