Main points of investment
Event: the company's application for non-public offering of shares was examined and approved by the Securities Regulatory Commission. In this regard, our comments are as follows:
Major shareholders contributed not less than 2 billion yuan to participate in the fixed increase, plus photovoltaic power station investment construction. The company intends to issue no more than 362 million shares, the issue price is not less than 13.40 yuan per share, and the total amount of funds raised does not exceed 4.852 billion yuan. Dongxu Group, the controlling shareholder of the company, plans to subscribe for the shares of this issue with no less than 2 billion yuan in cash, calculated according to the upper limit of the number of non-public offerings and the lower limit of Dongxu Group's proposed subscription amount. Dongxu Group's shareholding in the company will rise from 31.17% to 33.35%. The funds raised will be used for the construction of the company's 11 photovoltaic power plant projects, with a total installed scale of 693.64MW. According to the non-public offering plan, the company has started the construction of photovoltaic power stations close to 1GW and has completed the development and filing of 4.4GW photovoltaic power station projects. After raising funds in place, it will promote the construction of the company's existing photovoltaic projects and promote the rapid growth of photovoltaic EPC engineering business.
Divest the real estate business to withdraw funds and focus on ecological and environmental protection + new energy main industry. Formerly known as Baoan Real Estate, Dongxu Group acquired 70.39 million shares and 69.91 million shares of Baoan Real Estate held by Zhongbao Holdings and Donghongxin Investment respectively in August and September 2015, becoming the controlling shareholder of the company. In July 2016, Dongxu Lantian completed an additional offering of 9.5 billion, all used for the investment and construction of photovoltaic power station projects. Dongxu Group contributed 3 billion to subscribe for 274 million shares, increasing its shareholding to 30.98%. In May 2017, the company invested 340 million yuan to acquire 100% equity in Starscape Ecology, officially entering the field of ecological and environmental protection. In December 2017, the company announced that it planned to transfer all real estate business assets and rights and interests to the related party rising Sun Capital, with a total transaction consideration of 2.134 billion yuan. After the completion of the equity transfer, the company will withdraw funds to focus on ecological and environmental protection and the main industry of new energy to promote the development of the main industry and the realization of performance.
Photovoltaic power station put into production, environmental protection performance release, promote high performance growth. On January 30, 2018, the company issued a performance forecast for 2017, which is expected to achieve a net profit of 535 million yuan to 600 million yuan, an increase of 205% to 242% over the same period last year.
The performance growth is mainly due to the company's construction of power stations and the gradual release of the company's environmental protection industry performance. Since the transformation of real estate, the company has established the dual main business of ecological environmental protection and new energy, and the strong growth momentum of the two businesses has promoted the high growth of the company's performance.
Investment advice: for the first time to cover the "prudent overweight" rating. Assuming that the company completes the issuance and transfer of the real estate business in 2018, and the corresponding recognized investment income is 1.41 billion yuan (before tax), we estimate that the company's net profit from 2017 to 2019 will be 5.57,18.59 and 1.986 billion yuan respectively, with a current pro forma market value of 19.5 billion yuan. After the additional issuance of the company, the major shareholders contributed not less than 2 billion yuan to participate in the fixed increase, divested the real estate business to withdraw funds, and focused on ecological environmental protection and new energy business. For the first time, it covers the rating of "prudent overweight".
Risk hint: the construction progress of the project is lower than expected, and the financing cost is rising.
