Introduction to this report:

The company's Green Industry Fund added new partners. After the addition, the total amount of pledges reached 9.15 billion yuan. The second-phase fund raising progress exceeded expectations, and I am optimistic about the development of the company's private equity business.

Incidents:

On January 15, 2024, the company announced that the Harmonious Green Industry Fund managed by the company's subsidiary added a partner, Futaihua Industrial (Shenzhen) Co., Ltd. (“Futaihua”). According to the agreement, Futaihua will pledge an investment of RMB 500 million to the partnership in cash.

Commentary:

Maintain the “Overweight” rating, maintain the target price of 33.16 yuan, and 26xP/E for 23 years. The continued increase in the scale of fund raising in the Phase II fund and the listing of projects invested by the Phase I fund are expected to drive the company's profit growth. The net profit forecast for 23/24/25 is $9.90/14.41/1,865 million yuan, corresponding to EPS of 1.30/1.89/2.44 yuan. Maintain the “gain” rating and maintain the target price of 33.16 yuan, corresponding to 26 xP/E in 23 years.

In order to further promote the development of the company's private equity business and enhance profitability, the company participated in investing in the Harmonious Green Industry Fund and continuously introduced new partners to increase the size of the fund. Previously, the company announced its participation in the Harmonious Green Industry Fund, with a total commitment of 7.5 billion dollars. The new fund will further promote the development of the company's private equity business and enhance the company's profitability.

The new LP is strong, and the total amount of funds pledged for the second phase of the fund has exceeded expectations. As the company's second phase fund, Harmony Green Industry Fund completed fund filing in December 2022. At the time of filing, the fund paid a total of 3.25 billion dollars. Since then, additional partners have been added. Futaihua was added as an LP. Futaihua was founded on March 14, 2007. The backbone company holds 100% of Futaihua's shares. The backbone company is also the largest shareholder of the listed company Industrials Futaihua, with a direct shareholding ratio of 36.71%. In addition, Futaihua directly holds 21.97% of the shares in IFF, adding strong LP strength. Currently, the total amount of fund pledges has reached 9.15 billion yuan. The total amount of fund pledges has exceeded the target amount, and the second-phase fund raising progress has exceeded expectations.

As the private equity business accelerates, we are optimistic about the release of subsequent results: the company recently announced that it plans to buy back the company's shares for no less than 50 million yuan and no more than 10 million yuan, demonstrating the company's confidence.

As various projects of the company's first phase fund, such as Yitang Semiconductor, Jet Hydrogen Technology, and Gurivat, are listed one after another in the future, the payment of the company's follow-up income and performance rewards is expected to accelerate; the scale raised by the Harmonious Green Industry Fund of the Phase II Fund continues to grow, and the company's management fee revenue is also expected to increase significantly. The private equity business continues to gain strength, and we are optimistic about the company's future performance release.

Risk warning: The capital market fluctuates greatly; the equity investment environment deteriorates.