Report guide
The company issued the announcement on the re-signing of the Cooperation Framework Agreement on major matters terminated by the controlling shareholder.
Main points of investment
The controlling shareholder terminates the cooperation with Xinjiang China and Thailand
On September 17, 2018, the company announced that Guo Jiaxue planned to carry out strategic cooperation with Xinjiang Zhongtai on Dongsheng Group in the form of equity transfer and capital increase. After nearly a year of communication, the two sides had differences on major projects such as equity buyback and corporate governance, failed to reach agreement, and terminated this cooperation on July 30, 2019.
As the two sides have not signed any formal agreement so far, the termination of this major issue will not adversely affect the company's production and operation, nor will it affect the company's future development strategy.
The controlling shareholder and Shanxi State Investment Corporation sign the Cooperation Framework Agreement.
On July 30, 2019, Dongsheng Group, the company's controlling shareholder, signed a "Cooperation Framework Agreement" with Shanxi State Investment, which agreed on equity investment, debt investment and other cooperation matters. The company introduced Shanxi State Investment as a strategic investor this time. It can not only resolve the equity pledge risk of Dongsheng Group, but also provide fund, policy, tax and other aspects of support for the future development of Dongsheng Group. Moreover, it is helpful to optimize the ownership structure of listed companies, improve corporate governance, and provide strong support for listed companies to become bigger and stronger.
Profit forecast and valuation
We predict that the company's operating income from 2019 to 2021 will be 2.234 billion yuan, 3.081 billion yuan and 4.357 billion yuan respectively, an increase of 38.01%, 37.94% and 41.39%, respectively, and the net profit attributed to the parent company will be 425 million yuan, 619 million yuan and 915 million yuan respectively, with year-on-year increases of 13.63%, 45.55% and 47.94%, respectively. The corresponding EPS is 1.20,1.75 and 2.59 yuan respectively, and the corresponding pre-PE is 13 times, 9 times and 6 times respectively.
Risk hint
The rate of sales expenses remains high.
Accounts receivable cannot be collected.
The follow-up cooperation with Shanxi State Investment Fund is not smooth.