Main points of investment
Event 1: Mr. Chen Yuzhong, the company's controlling shareholder and actual controller, and Ms. Qian Fengzhu, who acted in concert with Shanghai Electric Group Co., Ltd., signed the share transfer Agreement and the Voting Rights entrustment Agreement on August 3, 2018.
Mr. Chen Yuzhong transferred his 4376 million shares of the company, and Ms. Qian Fengzhu transferred his 7.51 million shares (a total of 51.28 million shares, accounting for 5.81% of the company's total share capital) to Shanghai Electric by agreement at 6.83 yuan per share, totaling 350 million yuan. At the same time, Mr. Chen Yuzhong entrusted Shanghai Electric to exercise the voting rights corresponding to 131 million shares held by the company (accounting for 14.87% of the company's total share capital).
After this equity change, Shanghai Electric directly holds 132 million shares of the company, accounting for 15.00% of the total share capital of the company, and obtains the voting right of 131 million shares of the company through the entrustment of voting rights, accounting for 14.87% of the total share capital of the company. In total, Shanghai Electric has obtained the voting right of 29.87% of the shares of the company, Shanghai Electric has become the controlling shareholder of the company, and Shanghai SASAC has become the actual controller of the company.
Shanghai Electric is one of the largest enterprise groups in China's equipment manufacturing industry, with an annual turnover of nearly 80 billion yuan. It owns many industrial groups, such as power stations, power transmission and distribution, and heavy industry. Since the 1990s, sales revenue has always ranked first in the national equipment manufacturing industry. At present, efficient clean energy and new energy equipment are the core business of Shanghai Electric, and energy equipment accounts for more than 50% of the group's sales revenue.
We believe that the fact that Shanghai Electric has become the company's controlling shareholder is conducive to business coordination and opens up a space for in-depth cooperation.
Tianwo Technology and Shanghai Electric have good business cooperation. Tianwo's main business includes energy engineering services, high-end equipment manufacturing and civil-military integration. It is complementary to Shanghai Electric in terms of customer structure, product structure and design capabilities, especially in the energy engineering service sector. Tianwo Science and Technology has a number of Class A qualifications in the power engineering industry, and has rich experience in power engineering projects. Shanghai Electric's core advantages focus on equipment manufacturing. The two sides are highly complementary.
Shanghai Electric quickly provided financial support for Tianwo Technology: Shanghai Electric announced that in order to support the future business development of the target company, it agreed to lend 2 billion yuan to Tianwo Technology for its production and operation.
Event 2: the company released its 2018 semi-annual report, with revenue of 3.98 billion yuan in the first half of the year, down 42.97% from the same period last year; net profit from home reached 103 million yuan, up 13.70% from the same period last year; and net profit after deducting non-return was 101 million yuan, up 20.05% from the same period last year.
Due to the influence of contract delivery period, Spring Festival holiday and winter project construction conditions, the effective working time of the company decreased in the first quarter, and the output value completed in the first quarter was lower than that in the same period last year. With the normal development of business in the second quarter, the company's operating performance returned to the normal level.
19.875 billion yuan on-hand orders to ensure performance growth: by the end of the second quarter, the company's power engineering and clean energy engineering business had orders of 17.02 billion yuan, including 9.379 billion yuan for thermal power projects, 2.293 billion yuan for photovoltaic projects, 3.208 billion yuan for wind power projects, 244 million yuan for power transmission and transformation, and 1.896 billion yuan for other projects. The order for pressure vessel equipment is 2.537 billion yuan, and the order for military, marine and other equipment is 318 million yuan.
We expect the net profit of Tianwo Technology from 2018 to 2020 to be 3.03,4.29 and 576 million yuan, corresponding to the PE of 20-14-10. The current share price is lower than the IPO price (7.28 yuan). Maintain a "buy" rating.
Risk tips: traditional business demand decline risk, in the machine power order execution risk.
