Description of the event
China Railway Emergency announced on June 11 that recently, with the high-quality credit support of Hainan Holdings, the company successfully signed strategic cooperation agreements with Bank of Hainan, China CITIC Bank, Huaxia Bank, Minsheng Bank, and Ping An Leasing.
Incident comments
Earlier, the company announced that it plans to transfer control to Hainan Industrial Investment, a wholly-owned subsidiary of Hainan Holdings. Hainan Holdings will rely on its superior resources to support the company in financing and other areas. The company announced on May 21 that Hu Danfeng, Huatie Hengsheng, Hornet Holdings, and Huang Jianxin will transfer a total of about 275 million shares of listed companies to the Haikong Real Estate Investment Agreement at a price of 7.258 yuan/share. After the transfer is completed, Haikong Industrial Investment will hold 14.01% of the listed company's shares and become shareholders of Huatie Emergency Holdings. Hainan Holdings is very optimistic about the company's equipment leasing industry circuit, the company's development prospects, and the management team with Chairman Hu Danfeng as the core. It hopes to develop in collaboration with Huatie to enhance the competitiveness of Hainan Holdings' commercial and trade service sector and expand new profit growth points and state-owned profitability. At the same time, Hainan Holdings hopes to rely on China Railway's emergency digital management and control capabilities to reinforce shortcomings in digital capabilities and promote the digital upgrading of Hainan's state-owned assets system and the development of Hainan's digital industry.
In terms of financing, Hainan Holdings will strive to coordinate a credit amount of more than 5 billion yuan for the company to help the company further reduce financial costs. Close communication has already been carried out with financial institutions such as the Industrial and Commercial Bank, the Bank of Communications, and the Agricultural Bank. After the delivery is completed, the implementation of the company's comprehensive credit line will be further accelerated. In terms of asset light, Hainan Holdings will use the advantages of the state-owned enterprise background to push China Railway to expand its “asset-light” model layout, push for an asset-light cooperation scale of more than 10 billion yuan, and help the company's business development. In addition, Hainan Holdings' trade sector business is actively connecting with China Railway's emergency upstream equipment procurement process and carrying out research and judgment work on the procurement of engineering equipment and computing power equipment. In the future, it will form a closed business loop with financial leasing companies to effectively help the company's development. In the future, Hainan Holdings will take into account the company's actual production and operation situation and business development needs, apply for financing and credit from relevant financial institutions under the conditions of state-owned assets supervision, strive to increase the total emergency financing amount of China Railway with the help of Hainan Holdings, and strive to reduce comprehensive financing interest rates to the greatest extent possible.
On June 11, the company announced that it has reached strategic cooperation with 5 financial institutions, and the credit support of Hainan Holdings is gradually being implemented. It is expected to further stabilize the company's capital chain and reduce financial costs in the future. Recently, with the high-quality credit support of Hainan Holdings, the company successfully signed strategic cooperation agreements with Bank of Hainan, China CITIC Bank, Huaxia Bank, Minsheng Bank, and Ping An Leasing. According to the cooperation agreement, the financing will mainly be used for emergency equipment procurement, technology research and development, and market expansion for China Railway. At the same time, major financial institutions will also provide a full range of financial services for China Railway's emergency response to meet China Railway's emergency equity investment, credit bond issuance, production and operation, trade transactions, strategic expansion, etc., including credit granting services, loan support, capital settlement, etc., to provide a solid guarantee for China Railway's emergency daily operation and business development.
The aerial work platform rental boom remains the same. The company's main business is expected to continue to grow rapidly, and the implementation of various types of rental equipment will further increase the company's profits. In the future, with the advancement of its own procurement and the implementation of asset-light assets, the scale of the company's main business is expected to continue to grow; based on the marketing network established by the aerial work platform, the company will further explore multiple categories of operations, and use forklifts as one of the next key rental categories to explore, so it is recommended to pay attention. At the same time, the gradual implementation of innovative leasing businesses such as computing power and low altitude is also expected to increase the company's profits. It is expected to achieve results of 10.2, 12.6, and 1.51 billion in 2024-2026, corresponding to current valuations of 10.98, 8.87, and 7.40 times, maintaining the “buy” rating.
Risk warning
1. Asset light falls short of expectations;
2. High leverage risk.