Main points of investment
Event 1: the company issued a semi-annual performance forecast. it is estimated that the net profit of returning home in the first half of 2017 is 24.24 million yuan to 31.51 million yuan, an increase of 100% to 130% over the same period last year, of which the net profit affected by non-recurrent profit and loss is 21.22 million yuan to 26 million yuan. Mainly due to the increase in revenue from the company's energy-saving ignition business, a substantial decline in financial costs, and a substantial increase in profits from the disposal of idle assets.
Event 2: the company and Zhongtao Financial Control jointly launched a strategic cooperation framework agreement for the establishment of an industrial investment fund, with a total size of no more than 2 billion yuan and a planned scale of 1 billion yuan in the first phase.
Our comments:
The performance is good, and management optimization is beginning to take effect: the company expects the net profit of returning home in the first half of 2017 to be 24.24 million yuan to 31.51 million yuan, an increase of 100% to 130% over the same period last year, of which the net profit affected by non-recurrent profit and loss is 21.22 million yuan to 26 million yuan. The net profit after deducting non-profit was 3.02 million yuan to 5.51 million yuan, an increase of 20% to 120% over the same period last year when deducting 2.5 million yuan. On the one hand, the company's positive performance is due to a substantial increase in orders for low-nitrogen burners, resulting in an increase in business income from energy-saving ignition; on the other hand, since the company's new shareholders have taken over, continue to optimize management and integrate internal resources (substantial reduction in financial costs, disposal of idle assets). We believe that with the gradual completion of the company's internal management optimization and resource integration, the company will focus on developing environmental protection business and is optimistic about the continued development of the company's environmental protection business.
Continuous actions, the future development is worth looking forward to: the company and Zhongtao Financial Control jointly launched the establishment of an industrial investment fund (with a total size of no more than 2 billion yuan). In addition, in March, the industrial investment fund framework agreement was signed with Qinzhi Capital (the total size is not more than 2 billion yuan), and future extension mergers and acquisitions are worth looking forward to. And recently signed a strategic cooperation agreement with Henan Water Conservancy Bureau and Henan Water Conservancy Investment Group to further enhance the company's comprehensive competitiveness from the aspects of capital, technology and resources. Since 2015, the company has successively implemented several PPP projects, and recently signed a framework agreement with Yexian government on comprehensive environmental management projects (with an investment of about 500 million yuan). Coupled with the rich industrial resources of Fengli, the major shareholder, the future development is worth looking forward to.
New shareholders increase their holdings and incentives demonstrate confidence: in June 2016, the company replaced its major shareholders into Fengli Wealth. Equity incentives were first launched after the new shareholders were in place. 13 million stock options were granted to a total of 189 people, such as the company's middle and senior management, core business personnel and main managers of the subsidiary, at an exercise price of 7.53 yuan per share. Then, in April, the company announced the plan to increase its holdings. Ms. Mao Fengli, the actual controller and chairman of the company, and other directors, supervisors and senior managers of the company plan to increase their holdings of not less than 100 million and no more than 1 billion of the company's shares within 12 months. it demonstrates the confidence of the management team in the future development of the company.
Investment suggestion: the company's new shareholder Fengli capital industry is rich in resources, which is expected to bring vitality and diversified financing channels for science and technology. The company has formed an environmental governance platform, and future PPP orders will bring high flexibility in performance. We estimate that the EPS from 2017 to 2018 is 0.33,0.59, and the corresponding PE is 24x and 13x.
Risk hint: the order is not as expected and the progress of project construction is not as expected.
