CNC sheet metal parts subdivision leader, the transformation focuses on thermal power flexible peak shaving services and photovoltaic high-end equipment industry. The company is mainly engaged in industrial-grade CNC sheet metal structures, which is second only to military-grade high-end products and has accumulated superb manufacturing capacity. Since 2014, the company plans to vigorously develop the energy-saving and environmental protection industry, and acquired Nanjing Youzhi Technology in August 2014 in the field of environmental monitoring, involved in gas flow measurement and control systems and operational services. The field of environmental governance acquired a 51% stake in Shanghai Apani in December 2014, but due to policy and institutional restrictions, the promotion of related projects was blocked, and it was announced in December 2017 that the entire equity would be transferred by 1 yuan. During this period, the company signed a "unique Cooperation Agreement" with Sweden Apani to continue to vigorously promote the EPC operation of high-voltage electrode boilers in the field of flexible peak regulation in domestic thermal power plants.
In 2015, the company set up the Photovoltaic Automation Division, cooperated with RCT Solutions to develop solar silicon cell manufacturing and etching equipment, and maintained close cooperation with Tongwei, Xiexin and China Energy Saving, etc., and the business was progressing smoothly.
The policy vigorously promotes the flexible transformation of thermal power plants, the market-oriented mechanism ensures strong profitability, and the space for high-voltage electrode boilers is broad. In order to solve the problem of new energy consumption, the Chinese government has actively promoted the flexible peak regulation transformation of thermal power, planning to transform 133 million kilowatts and 82 million kilowatts of thermal power and pure condensation units respectively in the "three north" areas during the 13th five-year Plan period; at present, the total load of the two batches of pilot thermal power units is only 15.65 million kilowatts, and the potential market space is broad. Northeast Power Grid took the lead in experimenting with market-oriented incentives. Guodian Zhuanghe project made a good profit and received 158 million yuan in compensation for peak-shaving auxiliary services in 2016.
High voltage electrode boiler is one of the more mature solutions for flexible peak regulation of thermal power plant. On September 25, 2017, the company announced that the subsidiary Youzhi Technology is the operator of Fuxin and Jingke power generation peak regulation project respectively. Jingke project 120MW electric heat storage peak regulation project 10 Taiwan power boilers are all in full load trial operation, which is the first landmark project in China, with a total investment of 122 million yuan. The company announced that the project is expected to recover the cost in 2 years. Therefore, the average annual profit of the project is estimated to be about 60 million yuan. Fuxin Power Plant has 1.1 million kilowatt units, which is nearly three times the installed capacity of Jingke Power Plant, with a total investment of 296 million yuan. The profit space of Fuxin project in the future is worth looking forward to.
Introduce advanced German technology and actively expand photovoltaic automation related equipment: in 2015, the company introduced the core engineering and production team of solar wet equipment, set up the automation equipment department, and actively developed solar wafer velvet and etching equipment through technical cooperation with RCTSolutions company of Germany. The announcement shows that the cumulative order volume of photovoltaic automation equipment in 2017 is more than 100 million yuan, and the company has accumulated high-quality customers such as Tongwei, China Energy Saving and Xiexin, and announced that it has delivered more than 20 pieces of black silicon process cashmere making equipment to Xiexin. At the same time, continue to carry out school-enterprise cooperation to seek technological breakthroughs, the future photovoltaic automation equipment industry has broad prospects for development.
Investment suggestion: we expect the net profit from 2017 to 2019 to be 44 million yuan, 231 million yuan and 303 million yuan respectively, corresponding to 0.08,0.42,0.55 yuan for EPS. The company's historical acquisition of Shanghai Apani has included losses. Jingke and Fuxin auxiliary peak regulation projects are progressing smoothly and are expected to improve profitability. for the first time, the company covers and gives the holding-A rating, with a 6-month target price of 9.66 yuan. It is equivalent to 23 times dynamic price-to-earnings ratio in 2018.
Risk tips: project profitability decline; thermal power flexible transformation project is lower than expected; related policy uncertainty.