This report is read as follows:
The acquisition of Tieling Company has achieved considerable epitaxial growth, and the acceleration of UHV construction has helped the company to promote the Baiyinhua Phase II project. Following 2006-2007 and 2010-2011, the company once again ushered in the peak of growth.
Main points of investment:
Investment suggestion: the company's plan for additional issuance and acquisition of Tieling Company has been reviewed by the CSRC. After the completion of the acquisition, the company will achieve considerable epitaxial growth, increase the controllable installed capacity by 83%, increase the installed capacity of equity by 114%, increase the installed capacity per share by 27%, and increase static earnings per share by about 26%. The construction of Ximeng UHV transmission line will contribute to the approval process of phase II project of Baiyinhua Jinshan Power Plant. If the project is approved and carried out in 2015, it is optimistically expected to contribute profits in the second half of 2017. It is estimated that the annual contribution to the net profit of the project is about 305 million yuan, which is more than double the company's net profit in 2014. Regardless of the performance contribution and equity changes of the acquisition of Tieling, it is estimated that the net profit of the owner of the company belonging to the parent company from 2015 to 2017 is 3.03,3.47 and 409 million yuan respectively, and the corresponding EPS is 0.35,0.40,0.47 yuan respectively. Comprehensive PE and PB valuation, give the company a target price of 20.12 yuan, cover for the first time, and give a "overweight" rating.
Tieling injection will achieve considerable epitaxial growth. The company's plan for the acquisition of 100% equity in Tieling Company was resumed by the CSRC. Tieling Company has a total installed capacity of 2.4 million kilowatts, with an operating income of 3.358 billion yuan in 2013 and a net profit of 310 million yuan belonging to the owner of the parent company. After the completion of the acquisition, the company's installed capacity per share increased by 27%, and static earnings per share increased by about 26%.
The acceleration of UHV construction will help the company to promote its reserve project. One of the company's reserve projects is located in Ximeng Baiyinhua Power Plant Phase II to strive to be included in the coal power base UHV transmission plan and approved to start construction at the end of the 12th five-year Plan, and is optimistically expected to contribute profits in the second half of 2017. It is estimated that the annual contribution to the net profit of the project is about 305 million yuan, which is more than double that of the company in 2014.
Risk factors: the supply pressure of power market in Liaoning area is increasing, the approval process of additional issuance and acquisition of Tieling Company is not smooth, and the progress of reserve projects such as Baiyinhua Phase II is slower than expected.