Incident: On January 30, 2024, the company issued the “Prompt Notice Concerning the Cancellation of Shareholders' Voting Rights Delegation and Changes in Equity”. Zijin Mining, the controlling shareholder of the company, its wholly-owned subsidiary, and Longjing Industrial, a shareholder of the company, lifted the voting rights delegation. The total voting rights were changed from 29.36% to 19.46%.
Zijin Mining's voting share declined, and it still maintains its position as a controlling shareholder. On May 8, 2022, Zijin Mining and Longjing Industrial, Tibet Sunshine Ruize, Xintuocheng and others signed the “Control Transfer Agreement on Fujian Longjing Environmental Protection Co., Ltd.” and agreed to entrust their voting rights with a total of 107 million shares to Zijin Mining. Prior to this equity change, Zijin Mining and its wholly-owned subsidiaries held 210 million shares of the company, accounting for 19.46% of the company's total share capital. <关于福建龙净环保股份有限公司的控制权转让协议>On January 29, 2024, Zijin Mining and Longjing Industrial and its co-actors Xin Tuocheng, Lin Tengjiao, and Wu Jie jointly signed the “Supplementary Agreement”. Longjing Industrial and its co-actors changed their total voting rights ratio from 0% to 9.91% due to the cancellation of the voting rights delegation, and promised not to actively reduce their holdings of Longjing Environmental Protection shares through major transactions, agreement transfers, or bidding transactions within 18 months from the date this agreement was signed and effective.
Controlling shareholders have shown confidence by continuing to increase their holdings in the secondary market. The company has sufficient capital and steady cash flow. From August 2022 to January 2024, Zijin Mining's wholly-owned subsidiary has increased its shareholding by 497.47 million shares through centralized bidding transactions. Of these, since October 26, 2023, the company has increased its total holdings of 404,074 million shares in four installments, of which Zijin Mining increased its holdings by 1.4947 million shares from October 26 to November 2, November 13 to December 7. Zijin Investment increased its total holdings by 17.1181 million shares. From December 25 to January 22, Zijin Investment increased its holdings by 10.9793 million shares, demonstrating that the controlling shareholders' firm confidence in the company's development prospects is unwavering. At the same time, as of the end of 2023Q3, the company's monetary capital was 2,367 billion yuan, and the net operating cash flow of 2023Q1-3 was 579 million yuan, +125.03% over the same period last year. The capital on hand is relatively abundant, and the operating cash flow is steady.
Profit forecast: Give the company a “neutral” rating. According to the company's latest business situation, and considering the current high risk of impairment of the company's goodwill, the company's profit forecast was lowered. It is estimated that in 2023-2025, it will achieve operating income of 104.87/138.53/14.822 billion yuan (previous value was 123.12/158.68/17.729 billion yuan), and net profit to mother of 6.51/7.43/913 billion yuan (previous value was 886/11.42/1,449 billion yuan). The corresponding PE is 16.83x/14.73x/12.00x.
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