City gas integrated service provider
The company is a comprehensive city gas service provider that mainly supplies urban gas, including CNG automobile refueling, residential gas, gas for industrial and commercial customers, covering urban gas supply network construction and heating services, and equipment installation developed around the gas market, and tailor-made gas supply solutions for customers. The company's business operations are mainly concentrated within the administrative area of Changji City, Xinjiang. The company has a natural gas gate station in Changji City and a West Second Line Changji receiving station. The operating pipeline length reaches 1,048.72 kilometers. It has a gas pipeline network system with 1 CNG parent station and 13 gas stations, serving 209,000 residential customers, 510 industrial and commercial users, and 630,000 automobile CNG users.
Fundraising projects enhance profitability
The capital raised by the company mainly invested in urban natural gas renovation and expansion projects and industrial equipment installation projects in Changji City (high-density polyethylene polyurethane foam insulation steel pipes, 3PE anticorrosive steel pipes, non-standard steel equipment, pressure vessel production projects). The implementation of fund-raising projects will help the company expand its business scale, improve the efficiency of pipeline network operation, and raise the level of profit.
Profit forecasting
According to the progress of fund-raising project construction, we expect net profit attributable to parent companies in 2018-2020 to be 107 million yuan, 114 million yuan and 123 million yuan respectively, with year-on-year growth rates of 10.16%, 7.28% and 7.93% respectively. The corresponding diluted earnings per share were 0.66 yuan, 0.71 yuan and 0.77 yuan respectively.
Reasonable valuation
The total share capital of the company before issuance was 12 million shares. The proposed issuance of no more than 40 million shares this time is no more than 25.00% of the company's total share capital after issuance. The company's issue price is 13.09 yuan/share. Considering the valuation situation of comparable companies in the same industry and the company's growth, the company was given a reasonable valuation price of 19.95-23.27 yuan, corresponding to a price-earnings ratio of 30-35 times the earnings per share in 2018.
