Event: Jiangsu Jintong Ling hydrogen Energy Machinery Technology Co., Ltd., a wholly-owned subsidiary of the company, signed the Framework Agreement for Cooperation in hydrogen Energy Industry Investment projects with the Economic and technological Development Zone of Rugao City, Jiangsu Province on October 22, 2018. According to the agreement, the project plans to invest a total of 450 million yuan in the construction of R & D and manufacturing bases for fuel cell air compressors and hydrogen backup power sources, as well as investment in the construction of hydrogen fuel cell industrial park smart energy island, hydrogen refueling station (according to the overall plan of Rugao City), biomass hydrogen production base, compressed air station.
Extend the company's industrial chain and promote the research and development of high-end equipment: with the enhancement of environmental awareness, the cleanest hydrogen energy is regarded as one of the most promising energy sources. Compared with other energy sources, hydrogen energy has relative advantages in terms of material energy density and power generation construction cost, and the relevant national subsidy policies are also relatively stable. We believe that in the future, with the strong support of the national subsidy policy, the whole hydrogen energy industry chain will become more and more perfect, and at the same time drive the development of relevant high-end special equipment in the industry chain.
This strategic cooperation will integrate the existing hydrogen industry chain of Rugao Economic Development Zone and the manufacturing advantages of the company's high-end equipment. Rugao Economic and technological Development Zone was founded in September 1992 and promoted to the National Economic and technological Development Zone in January 2013. At present, Rugao City is making great efforts to build a hydrogen energy town, promote the industrialization of hydrogen energy utilization from the whole hydrogen energy industry chain, and carry out the demonstration and application of hydrogen energy technology in industrial parks, transportation, consumption and other fields. At the same time, Rugao Economic and technological Development Zone will provide preferential policies to attract investment and give the company competition protection, which will help the company to achieve low-cost, large-scale production, and at the same time promote the R & D and manufacture of related high-end equipment. Achieve synergy with their own fluid equipment business.
Comprehensive layout of new energy, accelerate into the field of new energy utilization: the company has carried out business in biomass energy, new energy power generation and other fields, and the investment in the hydrogen energy industry is in line with the company's strategic planning in the field of new energy. We believe that, as the leader of domestic fluid machinery manufacturing, the company has mastered the core technology in high-end special equipment, this cooperation will further promote the research and development of compressor technology, biomass gasification hydrogen extraction technology, hydrogen energy utilization technology and the industrialization of related scientific and technological achievements. The company's R & D, manufacturing and operation of hydrogen energy industry projects, on the one hand, can promote the company's business to extend to the new energy industry chain, on the other hand, it can further enhance the company's core technology in the R & D and manufacturing of high-end equipment, increase the competition barriers of existing business, and improve the influence of the brand.
Profit forecast and investment rating: we believe that the company as the domestic fluid machinery manufacturing leader, master high-end core technology, while the agricultural environmental protection industrial park innovation model has achieved certain results. The company signed a framework agreement with Rugao Economic and technological Development Zone on hydrogen energy, and its business continues to extend to the new energy industry chain, which is expected to further promote the development of the company's high-end equipment. We estimate that the company's net profit from 2018 to 2020 will be 2.33,3.73 and 549 million yuan respectively, corresponding to 0.20,0.32,0.47 yuan for EPS and 17,11,7 times for PE, respectively.
Risk hint: the specific implementation content and progress of the agreement are not clear, the budget amount may not be completely consistent with the implementation amount, industry competition intensifies, strategic cooperation and technical cooperation is not as expected.