Items:

The company issued a notice: Jiangsu Metallurgical Design Institute, a wholly-owned subsidiary, signed a contract for 500,000 tons / year high-end alloy new materials project with Guangxi Jingyulong New material Technology Co., Ltd., with a total contract amount of 4.38 billion.

Comments:

With the second deepening cooperation with Guangxi Jinglong, the project extends from E to P, C. Guangxi Jinglong New material Technology Co., Ltd. is mainly engaged in the R & D and promotion of new materials, energy-saving and environmental protection technologies. According to the data of the second environmental assessment of the project, the Jinglong project in Guangxi covers a total area of 1482.8 mu, with an annual output of 164000 tons of nickel alloy, 401600 tons of chromium alloy and 1.64 million tons of new building materials. After the project reaches production, the average annual net profit is 676 million yuan, the financial internal rate of return of the project is 15.74%, and the payback period of all investment is 4.84 years (excluding the construction period). The economic benefit is considerable.

The Jinglong project in Guangxi is a PC project. Shenwu Energy Saving is responsible for equipment procurement (P) and engineering construction (C). Of the total contract amount of 4.38 billion, part P is 2.72 billion and part C is 1.66 billion. The construction period of the project is 15 months. This project is the second deepening cooperation between the company and Guangxi Jingyulong Company. Prior to this, Jiangsu Institute signed the "500000 tons / year Design contract for High-end Alloy New Materials Project" with a total amount of 98 million yuan, that is, part E of the project. This time, the cooperation was deepened on the basis of the original part E, and energy conservation continued to do the follow-up PC part, which can be seen from the owners' recognition of the company's technical strength.

The completion of the increase of senior executives' holdings shows confidence, and nearly 12.6 billion orders are in hand to ensure high performance growth. In February this year, the company's actual controllers and executives increased their holdings by 4.13 million shares, with an average price of 32.13 yuan per share and an increase of 133 million yuan. In June, senior executives increased their holdings again, with a total increase of 297 million shares, with a total increase of 7.92 million shares, with an average price of 37.488 yuan per share. Senior executives increased their holdings twice in half a year, demonstrating the management's firm confidence in the development of the company. Coupled with the 4.38 billion order of the Guangxi Jinglong project, the company currently has nearly 12.6 billion orders on hand, and the order on hand is sufficient. Sufficient order reserve ensures the high growth of the company's performance in the future.

Doubt gradually subsided, long-term technical verifiability is strong, follow-up orders can be accelerated release can be expected to respond to the questions in the market one by one, at present, the doubts about Shenwu energy saving in the market are gradually subsided. We believe that Shenwu energy-saving performance has high growth, strong long-term technology verifiability, large market space and sufficient orders on hand, and we are firmly optimistic about the company's future development prospects. We expect the company's net profit for 17-19 to be 6.91 pounds 10.61 / 1.558 billion, corresponding to the valuation 36X/23X/16X, maintaining the "buy" rating.