Company dynamic events
The company announced on September 30, 2019 that it had received a "bid winning notice" from the bidding center of Zhongguang Nuclear Engineering Co., Ltd., confirming that the company was the winning bidder of "Zhongguang Nuclear Xingan Wind Farm Tower Purchasing-bid Section 2". The company won the bid worth 925 million yuan, accounting for about 66.39% of the total revenue in 2018.
Comments on matters
Major projects won the bid, the layout of the three northern areas
The company won the bid for Zhongguang Nuclear Xingan Wind Farm Tower Section 2 in Inner Mongolia, with a total purchase of 351 towers, with a winning bid amount of about 925 million yuan. it is expected to be delivered in three years starting from 2020, with annual sales of about 30,000 tons. According to the price of 8000 yuan per ton, it is estimated that the annual additional income for the company is about 240 million yuan, and according to the gross profit margin of 26%, the annual contribution gross profit is about 62 million yuan. At the same time, the company announced that it intends to set up a wholly-owned subsidiary, Xingan Tianneng heavy Industry Co., Ltd., with its own funds in Xingan, Inner Mongolia, with a registered capital of 100 million yuan and a designed annual production capacity of about 30,000 tons. The company has 8 production bases throughout the country, including Jilin and Xinjiang. This time, the company has set up a base in Inner Mongolia to accelerate the layout of the three northern regions, which will help to optimize regional response efficiency, reduce transportation costs and enhance competitiveness.
Rapid growth in performance and significant improvement in profitability
In the first half of 2019, benefiting from the rebound in the wind power industry, the company achieved an operating income of 855 million yuan, a substantial increase of 126.88% over the same period last year, and a net profit of 84.1434 million yuan, a substantial increase of 174.98% over the same period last year. The company is a domestic professional fan tower manufacturer, is one of the leading domestic fan tower production enterprises. As of the first half of 2019, the company's wind power tower business orders on hand totaled about 2.76 billion yuan. The company's gross profit margin in the first half of 2019 was 27.47%, up 0.97% from the same period last year, of which Q1 gross profit margin was 26.05%, up 3.56% from the previous month; and Q2 gross profit margin was 28.50%, up 2.44% from the previous month.
In terms of wind tower business, the company's revenue per ton of wind tower in the first half of the year was about 7871 yuan, up 7.1 percent over the whole of 2018, and the gross profit per ton reached 1829 yuan, a significant increase of 24.43 percent over the whole of 2018. The price of the wind tower is usually determined by the cost addition method, which is affected by the obvious fluctuation of the upstream steel price, and due to the dislocation between the delivery node and the steel purchasing node, so the influence of the change of steel price on the price has a certain lag. China Iron and Steel Association data show that medium and heavy plate prices accelerated after 2018Q3 hit a short-term high of 4500 yuan / ton, helping the company's tower tube single-ton gross margin rebounded significantly. And the company's fan tower production and sales adopt the principle of "apanage proximity", in order to reduce the transport radius and reduce the transportation cost.
Strategic transformation to expand the operation of downstream wind farms
In the first half of 2019, the company acquired 100% stake in Vision Huili and will directly hold 100% stake in Vision Huili and indirectly hold 100% stake in the eldest son Vision of its wholly-owned subsidiary.
The eldest son vision owns and operates the "eldest son Shizhe 99MW wind power station" (the actual installed capacity is 74.8MW). As of the first half of 2019, the company has a total of about 100MW grid-connected photovoltaic power stations, achieving operating income of 59.2315 million yuan, and accumulated wind farm approval from 190MW.
Profit forecast and valuation
We estimate that the operating income of the company in 2019, 2020 and 2021 is 2.478 billion yuan, 3.087 billion yuan and 3.592 billion yuan respectively, with a growth rate of 77.84%, 24.58% and 16.35% respectively, and the net profit of shareholders belonging to the parent company is 257 million yuan, 365 million yuan and 462 million yuan respectively. the growth rates were 151.40%, 41.8% and 26.51%, respectively. The fully diluted EPS per share is 1.14,1.62,2.05 yuan respectively, corresponding to the PE of 16.52,11.65 and 9.21 times. The lifting of the ban in the north, the rush to install downstream, the recovery of the wind power industry, and the rise in the volume and profit of the company's wind power tower products. With the winning bid of 925 million yuan, we are optimistic about the future growth of the company. Give the company an "overweight" rating for the first time.
Risk hint
The recovery of wind power demand is not as expected, the price fluctuation of raw materials such as upstream steel is higher than expected, the release of new capacity is lower than expected, and the implementation risk of winning the bid project.