Summary of the event: the company issued an announcement, and the subsidiary Zhangjiakou Xuanhua Jinhong signed an agreement with Datang International to provide exclusive gas supply guarantee for the gas-fired cogeneration project of Datang Zhangjiakou Power Plant, with a gas price of 1.95 yuan per square meter and a maximum annual gas supply of 2 billion square meters. The contract has been performed for 20 years.
II. Analysis and judgment
The gas supply agreement contributes flexibly to the performance and will continue to benefit from Zhangjiakou clean energy replacement. The company sold 664 million square meters of gas in 2016, and the annual maximum gas supply of 2 billion square meters is about 3 times that of the company's annual gas sales. Zhangjiakou has the important task of the Winter Olympic Games, natural gas has reliability and economic advantages over other clean energy, which will be the key development direction of Zhangjiakou, and the company will sign more gas-fired power plant projects.
The company's future gas growth mainly comes from the following aspects: in the short term, the State Reserve Liquefaction Plant resumed production in June this year, and is expected to sell 160 million to 180 million square meters of gas this year, and about 250 million square meters for the whole of 2018. Zhangjiakou coal to gas: there are about 3000 administrative villages in Zhangjiakou, each with 200,300 households. According to the calculation of 3000 yuan per household connection fee and 1400 square meters per household gas consumption, the market space of Zhangjiakou coal to gas connection fee is 1.827 billion yuan, and the gas consumption can reach 84 to 1.26 billion square meters. The Shahe project is expected to be ventilated this year. The long-term demand is about 350 million square meters. The long-term volume of 100 million square meters of Hengyang Shuikoushan national non-ferrous metal base is expected to start supplying gas next year.
The conversion of coal to gas in Beijing, Tianjin and Hebei is unprecedented, and Hebei natural gas consumption will enter a period of explosive growth. Policies such as the "enhanced measures for the Prevention and Control of Air pollution in Beijing-Tianjin-Hebei (2016-2017)" and the "work Plan for the Prevention and Control of Air pollution in Beijing-Tianjin-Hebei and its surrounding areas in 2017" have been issued successively. Coal is banned and coal is restricted in Beijing-Tianjin-Hebei and surrounding urban areas. It is required to comprehensively promote clean heating in winter and complete zero clearance of small coal-fired boilers by the end of October 2017. On the basis of the subsidies provided by the central government according to the city level, local governments have also issued unprecedented subsidy policies to promote the work of "changing coal to gas". For example, Hebei Province has a subsidy of 3000,000 yuan per household connection fee for rural heating and 1 yuan per square meter for three years. With the vigorous promotion of the policy, it is expected that Hebei's natural gas consumption will enter a period of explosive growth, and it is estimated that Hebei's natural gas consumption will reach 30 billion square meters by 2020.
It is proposed to change its name to Jinhong Holdings, which highlights the strategic pattern of the company to build a new energy platform for environmental protection. In recent years, through mergers and acquisitions, the company has begun to set foot in the environmental protection engineering industry, and has made a layout in the upstream of natural gas, new energy development, new energy storage technology and so on. Renaming Jinhong Holdings highlights the company's strategic pattern of building a comprehensive clean energy platform company with the whole natural gas industry chain, environmental protection and clean new energy.
Third, profit forecast and investment advice: the EPS of the company from 2017 to 2019 is expected to be 0.67,0.91,1.16 yuan respectively. Corresponding to PE 26 times, 19 times, 15 times, the company's performance reversal certainty is strong, extension expansion is expected to be strong, maintain the "highly recommended" rating.
Fourth, risk hints: gas sales and engineering installation revenue are lower than expected.