Incident: On December 2, 2023, the company issued the “Notice Concerning the Termination of Issuance of A-Shares to Specific Targets in 2023”. In view of the low proportion of capital raised by the company when the board of directors meeting on plans to issue shares to specific targets, taking into account factors such as the current capital market environment, related policies, and the actual situation of the company, it is proposed to stop issuing shares to specific targets.
The capital raised last time was 1,375 billion yuan which has not yet been used. It is planned to invest in projects such as wind power, photovoltaics, batteries, and environmentally friendly absorbents. In March 2020, the company's convertible bonds were successfully issued, raising a total capital of 2 billion yuan. As of June 30, 2023, the company's unused capital raised amount was 1,375 billion yuan, the Pinghu Ecological Energy Project has been put into operation, the roller production line for the Longjing Environmental Transportation Equipment and Intelligent Manufacturing Project has been put into operation, and the unused capital is planned to be invested in the Longjing Environmental High Performance Composite Environmental Absorbent Project/Heilongjiang Duobaoshan Phase I 200MW Scenery Project/Battery R&D and Pilot Line Project of 1.0/10.02.75 billion yuan.
The original plan was to raise a fixed increase of 1,542 billion yuan from Zijin Mining to strengthen the position of controlling shareholder and support the development of listed companies. On July 11, 2023, the company issued the “Plan for Issuance of A-Shares to Specific Targets in 2023”, which plans to issue no more than 108 million shares to Zijin Mining, the controlling shareholder. The total capital raised is 1,542 billion yuan. It plans to invest in 5GWH energy storage battery manufacturing projects with an annual output of 5GWH and repay bank loans of 1,00/542 billion yuan respectively. If implemented, this fixed increase will help give full play to the company's own advantages and local policies and resources in Shanghang County, accelerate the company's development in the field of new energy storage, optimize the company's financial structure, and improve its solvency and resilience to risks. At the same time, Zijin Mining's holding ratio will increase from 15.72% to 23.36%, which is conducive to strengthening the position of controlling shareholders and injecting capital into the company to support the development of listed companies.
Controlling shareholders have demonstrated confidence by increasing their holdings in the secondary market. The company has sufficient capital on hand and steady cash flow. On November 3, 2023, the company issued the “Prompt Notice on Controlling Shareholders' Holding of the Company's Shares by More than 1%”. From October 26 to November 2, 2023, Zijin Investment, a wholly-owned subsidiary of Zijin Mining, increased its holdings of the company by 1,4947 million shares through centralized bidding, accounting for 0.1383% of the company's total share capital. The increase in holdings in the secondary market shows the unwavering confidence of controlling shareholders in the company's development prospects. At the same time, as of the end of 2023Q3, the company's monetary capital was 2,367 million yuan, and the net operating cash flow of 2023Q1-3 was 579 million yuan, +125.03% over the same period last year. There was plenty of capital in hand, and the operating cash flow was steady.
Profit forecast: Give the company an “increase in holdings” rating. According to the company's latest business situation, the company's profit forecast was lowered. It is estimated that 2023-2025 will achieve operating income of 123.12/158.68/17.729 billion yuan (previous value was 160.75/207.38/224.27 billion yuan), and net profit of 8.86/11.42/1,42/1,449 billion yuan (previous value was 12.12/17.05/1,773 billion yuan), corresponding to PE 17.02x/13.21x/10.41x.
Risk warning: changes in the macroeconomic situation at home and abroad have exceeded expectations, order acquisition has fallen short of expectations, the approval and construction process of wind and photovoltaic energy storage projects has fallen short of expectations, and profit forecasts and valuation models have fallen short of expectations