Event: Houpu shares signed a "letter of intent for Cooperation in establishing an Industrial Investment Fund" with China Natural Gas and China Nuclear No.5 Corporation. The industrial investment fund is invested in liquefied natural gas related businesses / projects, and the total capital investment will be RMB 5.01 billion.
Comments:
(1) the project operator participates in the fund and is responsible for the buyback project, which greatly reduces the project risk. The company announcement reveals that after the expiration of the duration of the industrial investment fund, the projects invested by the industrial investment fund will be fully repurchased by Party A (China Natural Gas). The industrial fund investment project is repurchased by the China Natural Gas Corporation, and the risk of the project is greatly reduced.
(2) Multi-party cooperation to set up an industrial fund, and all parties are small and broad to solve the problem of project funds and enhance business synergy. ① cooperates with many parties to solve the problem of funds. The amount of investment set by the industrial fund is 5 billion, and does not rule out the continued introduction of other people, multi-party participation to solve the problem of project funds; ② to enhance business synergy. China Natural Gas is engaged in natural gas operation business, Houpu shares are mainly engaged in natural gas industry equipment and project design, CNNC No. 5 is a project construction company, the businesses of all parties complement each other, and can produce synergy in investment projects.
(3) Hupu's new main business EPC business is actively landing, and the company's performance inflection point is coming. ① Houpu has the core competitiveness to carry out business. HTC's relatively complete design qualification and long-term accumulated equipment manufacturing and integration capabilities in the natural gas industry. The ② project is abundant and the market prospect is broad. Sichuan-Chongqing region has sufficient natural gas reserves, sufficient natural gas-related projects, huge market space, and broad prospects for the company. ③ Yongchuan project is about to land, the company's performance inflection point is coming. The company said in its 2017 three-quarter report that the Yongchuan project is being actively promoted, and the two sides have agreed to sign an investment agreement before the end of November 2017. It is expected that with the project about to land, the company's performance inflection point will come.
(4) Investment suggestion: the company's operating income from 2017 to 2019 is expected to be 1313.7 million, 2134.8 million and 2729.2 million, and the return net profit is 141 million, 248.8 million and 310.11 million, the corresponding EPS is 0.38,0.67,0.84 yuan, and the corresponding PE is 38,22,17.5. Recommend rating.
(5) risk hint: the landing of the EPC project is not as expected.