Main points of investment
A fixed increase will reduce the financial burden, and the price will be inverted to build the margin of safety. The company will raise 1.25 billion yuan to repay the company's interest-bearing liabilities in the near future, the financial burden is expected to be reduced, and the asset-liability ratio will drop to 72.84%. The IPO price will reach 5.69 yuan, which is still more than 6% premium to today's closing price. The current stock price still has a strong margin of safety.
Large-scale increase in holdings, strong recognition of the value of the company. Yulian Group, the company's controlling shareholder, and some Dong Jiangao plan to increase their holdings in the company within six months from May 12, 2017, when the company's stock price is less than 5 yuan. Up to now, the increase amount of Yulian Group has exceeded 45 million yuan, and that of senior executives has exceeded 5 million yuan. We believe that the continuous increase in holdings of controlling shareholders and senior executives since mid-May reflects a positive signal and is a sign of recognizing the value of the company and strongly optimistic about the long-term development of the company.
Focus on cost reduction advantages, intensive and deep processing gradually. The company has an integrated industrial chain of "coal-electricity-aluminum-aluminum deep processing" and has focused on reducing power consumption for a long time. The electrolytic aluminum production capacity of this part is 500000 tons / year, and 92% of the electricity comes from the subsidiary Zhongfu Electric Power. Linfeng aluminum electrolysis aluminum production capacity of 250000 tons / year, using the mode of direct power purchase, is the first batch of pilot enterprises of direct power purchase in Henan Province. In recent years, the company's electricity expenditure continues to decline, but also actively implement technological transformation to promote energy saving and efficiency, the future power cost is expected to continue to decline. The company's three intensive processing projects began to reach production one after another, and have obtained a number of certifications, gradually leading to the release of performance.
It is estimated that from 2017 to 2019, the company's net profit attributable to the parent company of the listed company is 3.38,5.12 and 656 million yuan respectively, and the EPS is 0.19,0.29,0.38 yuan respectively (excluding fixed dilution), corresponding to the current PE of 27.5,18.1 and 14.2 times, maintaining the company's "overweight" rating.
Risk hint: the progress of the project is not as expected; the price of electrolytic aluminum fluctuates greatly.