Main points of investment
Event: Wuxi Hongqi Shipyard, a subsidiary of the company, recently signed a certain type of equipment order contract with a military unit, with a total contract amount of 254.8 million yuan, accounting for 21.32% of the company's annual operating income in 2016.
Civil-military integration is expected to be a bright spot for the company's future growth: the company acquired a 60% stake in Wuxi Hongqi Shipyard in 2016. The signing of this contract is an important embodiment of the manufacturing capacity of military products in Hongqi Shipyard. The order growth of the military and marine industry business plate has made a major breakthrough in the company's strategy of "building first-class clean energy, power engineering, new energy integrated service providers; military-civilian integration, forging an important force in the construction of national defense science and industry". Wuxi Hongqi Shipyard achieved a performance of 1.2823 million yuan in the first half of 2017, turning losses into profits. We judge that the performance of Hongqi Shipyard is expected to achieve rapid growth.
From January to September 2017, Tianwo Technology achieved an income of 9.015 billion yuan, an increase of 814 percent over the same period last year, and a net profit of 206 million yuan, an increase of 469 percent over the same period last year. The annual performance for 2017 is expected to increase: 270 million yuan-350 million yuan. By the end of June 2017, the company had an order of 18.3 billion yuan on hand to ensure rapid performance growth this year and next year.
The subsidiary China Machinery Power Co., Ltd. has a high performance growth in the first half of this year; we are optimistic that China Machinery Power will benefit from photovoltaic and wind power. In the first half of the year, China Electric Power completed an operating income of 5.781 billion yuan, an increase of 154% over the same period last year, and a net profit of 247 million yuan, an increase of 55% over the same period last year. China Motor Power is the leading energy construction service package in China, which undertakes a large number of domestic and foreign power engineering design and general contracting business, such as cogeneration, photovoltaic power generation, biomass power generation, garbage power generation, power transmission and transformation, wind power generation and so on. Among them, the photovoltaic business achieved good results in the first half of the year.
Tianwo Technology completed the 2.9 billion cash acquisition of 80% stake in China Machinery Power in 2016, and the payment was completed after the performance was achieved in five phases. China Electric Power: power Engineering EPC ranks among the top 5 in China. After holding CNPC Power, power engineering, new energy and clean energy general contract business have become the core pillars of the company. China Electric Power has promised that the deduction of non-net profit from 2017 to 2019 will not be less than 376 million, 415 million and 456 million yuan.
The installed capacity of domestic photovoltaic in the first three quarters of 2017 has exceeded that of the whole of last year, and distributed photovoltaic has increased nearly fourfold compared with the same period last year. By the end of September, the installed capacity of national photovoltaic power generation has reached 120GW, including photovoltaic power station 94.8GW and distributed photovoltaic 25.62GW. The main reason for the continued higher-than-expected photovoltaic capacity is the explosive growth of distributed photovoltaic. In the medium to long term, the domestic photovoltaic installation will continue to remain high.
The state demands to solve the problem of abandoning water, wind and light as soon as possible, and photovoltaic and wind power are booming. In November 2017, the National Development and Reform Commission and the National Energy Administration issued the implementation Plan for solving the problem of abandoned Water and Wind and Light, clearly taking effective measures to improve the level of renewable energy utilization and promoting the solution to the problem of abandoned water, wind and light.
The company's non-public offering has been examined and approved: the company promotes the implementation of Yumen Xinneng Photothermal first Power Co., Ltd., raising no more than 1.572 billion yuan by non-public offering and investing in a 50, 000-kilowatt photothermal power generation project of secondary reflection molten salt tower. In November 2017, the application for non-public offering was examined and approved by the China Securities Regulatory Commission.
The company and Zhejiang Gold Trust signed a strategic cooperation framework agreement on May 5, 2017. From April 6 to April 14, Zhejiang Gold Trust increased its stake in the company by 36788143 shares, accounting for 5.00% of the company's total share capital, which is equivalent to the upgrading of Zhejiang Gold Trust from "financial investor" to "strategic investor".
Traditional business: coal chemical equipment bottomed out and rebounded, nuclear power, new materials trend upward. Recently, the coal chemical and petrochemical industries have picked up, and the company's orders for coal chemical equipment and petrochemical equipment have begun to recover. It is expected that the company's traditional business will make a substantial turnaround in 2017.
Tianwo Technology is expected to make a net profit of 3.2,4.7 and 620 million yuan from 2017 to 2019, with a current market capitalization of about 5.7 billion, corresponding to PE of 18-12-9, maintaining a "buy" rating.
Risk tips: the risk of bad debts of accounts receivable, the decline risk of traditional business demand such as coal chemical / petrochemical equipment, the risk of transformation of military industrialization, and the risk of order execution of China Electric Power.
