Main points of investment:
Win-win cooperation, agro-ecological industrial park is expected to accelerate the landing. The company announced on the 22nd that it has signed a "Investment Cooperation Framework Agreement" with CIC Zhongcai Fund Management Co., Ltd. the cooperation model is as follows: 1. In the next three years, it is planned to jointly build no more than 20 agro-ecological industrial park projects in the three eastern provinces, Hebei and other places, with an estimated investment of 500 million yuan for each project. 2. The specific investment mode of each project can be determined through consultation between the two parties. CIC Zhongcai can act as the controlling shareholder of each project, the company holds 15% of the shares, and the remaining equity is open to public funds, especially the local government investment platform. CIC Zhongcai will try its best to help solve the financing problem of each project, while the company promises that under the premise of sustained adequate supply of biomass resources and the implementation of relevant policies, the annual profit of normal operation of each agro-ecological industrial park on the scale of 10MW power generation is not less than 20 million yuan, and if the scale of power generation is 50MW, the corresponding annual profit is not less than 100 million yuan. We believe that through the combination of the company and CIC property, the financial pressure on the company's project investment will be greatly reduced, and it is expected to accelerate the construction of an agro-ecological industrial park. According to 20 projects, in the next 3-5 years, the company is expected to receive orders of 10 billion revenue, generate about 1 billion net profit, and high performance growth is expected to continue to be realized.
Shanghai transport capacity has been transferred, looking forward to synergy. The announcement on the completion of the transfer of the underlying assets of issuing shares to purchase assets and raising supporting funds on June 15 indicates that Shanghai Transport has completed the transfer of ownership and become a wholly-owned subsidiary. According to the performance commitment of Shanghai Transport capacity in 17-19 years, the net profit deducted from non-return is not less than 76.5 million yuan respectively. By the middle of December 17, the total contract amount of orders executed on hand is about 2 billion yuan, 28 potential projects (negotiation projects), and the total contract amount is expected to reach 3.4 billion yuan. We believe that Shanghai Yunneng has high-end boiler manufacturing capacity and various qualifications, sufficient on-hand orders, high probability of achieving performance commitments, and look forward to forming a synergy with the company in the future.
Major shareholders increase + employee stock ownership plan released, demonstrating confidence. As of June 19, the controlling shareholder had accumulated an increase of 55.4588 million yuan, fulfilling the promise of not less than 50 million yuan in the six months from February 2. At the same time, the company has issued a draft employee stock ownership plan, raising an upper limit of 38 million yuan to recognize the secondary shares in the collective trust plan, and the upper limit of the trust plan share shall not exceed 76 million yuan. Priority shares and secondary shares shall be established in proportion not exceeding 1:1. We believe that the increase of controlling shareholders and the release of employee stock ownership plans demonstrate the confidence of major shareholders and management of the company in the future development.
Profitability and valuation. We estimate that the EPS of the company in 18-20 years is 0.42 EPS 0.64x0.83 yuan respectively (excluding the additional issuance). If we consider the additional issuance (the total share capital of 630 million shares after completion), we expect the company's 18-20 year EPS to be 0.44 scarp 0.72 scarp 0.90 yuan, corresponding to the PE valuation of 31-19-15 times, the current additional issuance has been approved, is expected to be completed in 2018, and the transfer of assets has been completed. We believe that the company has mastered high-end core technology, is a leader in energy conservation, environmental protection and import substitution, and the innovation model of the agricultural environmental protection industrial park is worth looking forward to, continuously benefiting from environmental upgrading, but also in line with the rural revitalization strategy. The cooperation with CIC is expected to solve the problem of capital bottleneck, and the performance is expected to achieve rapid growth. Comprehensive consideration, give the company's 18-year overall performance (without considering additional issuance) 35-38 times PE valuation The reasonable value range is 14.70-15.96 yuan, which is rated as "better than the market".
Risk hint. The landing of the order did not meet expectations; the market expansion did not meet expectations.
