Longji and the company joined hands to enter the BIPV blue ocean, or as a new impetus for the company's growth. Maintaining a “increase in holdings” rating company recently announced that the company's actual controller, Liu Aisen, and his controlling company Shi Xing Shengya, and Huayong Investment signed a “Share Transfer Agreement” with Longji Co., Ltd., and Longji Co., Ltd. plans to acquire a total of 27.25% of the company's shares from the three parties. After the transaction is completed, Longji will become the company's second largest shareholder. Longji and Sent joined hands to expand photovoltaic product application products and promote BIPV applications. The development of BIPV may accelerate during the “14th Five-Year Plan” period. Longji and Sent joined forces to have a first-mover advantage on the BIPV track, and the BIPV business may become a new impetus for the company's growth. The details of the cooperation have yet to be implemented, and the results still need to be further observed. For the time being, we maintain the company's net profit forecast for 20-22 at 2.0/28/330 million to maintain an “increase in holdings”
ratings.
Longji reached an equity acquisition agreement with the three parties. Longji and the company's interests were deeply tied to the company's announcement. According to the company's announcement, Longji reached an equity acquisition agreement with Liu Aisen, the company's actual controller, and Shixing Shengya and Huayong Investment (financial investors who entered before the company's IPO). Longji will each acquire 7.25% of Liu Aisen (share of the company's total share capital, same below), Shixing Shengya will acquire 10.00% of the company's shares, and Huayong Investment will acquire 10.00% of the company's shares.
The transaction price was 12.50 yuan/share (30.8% premium compared to the company's closing price of 9.56 yuan/share on the announcement date), and the total transaction amount was about 1.64 billion yuan. After the transaction was completed, Longji held 27.25% of the company's shares, making it the company's second largest shareholder; Liu Aisen and Shi Xing Shengya reduced their total share of the company's shares from 57.43% to 40.18%, and the actual controller status remained unchanged. The interests of Longji and the company are deeply bound, showing the sincerity of cooperation between the two parties.
Jointly promote the expansion of BIPV applications and the development or acceleration of the BIPV industry during the “14th Five-Year Plan” period. According to the announcement of Longji Co., Ltd., the transaction will help to take advantage of Sent's advantages in building roof design/maintenance, and combine the advantages of Longji Co., Ltd. in the manufacture of BIPV (integrated photovoltaic building) products, thereby expanding the application prospects of photovoltaic products. Promoting the expansion of BIPV applications is an important factor in the in-depth cooperation between the two parties. Compared with BAPV (rear-mounted photovoltaic power generation system), BIPV has obvious advantages in terms of economicity/waterproof reliability. According to the Polaris Solar Photovoltaic Network, the cost of electricity per kilowatt hour of photovoltaic power generation in China is estimated to be about 0.36 yuan/kW in 2020. The cost of electricity generated by photovoltaic power generation is already clearly economical, and BIPV development may enter the fast track. According to Polaris Solar PV Network, the number of new BIPV installations in the world is currently about 1 GW per year, and China accounts for about 70%. We believe that economic efficiency is the internal driving force for BIPV development, that policies such as “carbon peaks” are an external driving force, and that BIPV may have ushered in relatively rapid development during the “14th Five-Year Plan” period.
BIPV may become a new growth point to maintain the “increase in holdings” rating
The company is a leading enterprise in the metal maintenance industry and has advantages in R&D capabilities, cost control and customer reputation.
BIPV may be a blue ocean market worth looking forward to in the future. Together, the company and Longji will either have a first-mover advantage in this field, or become a new engine for future performance growth. The equity transfer has not yet been finalized, and how to advance the BIPV business still needs to be further refined. For the time being, we maintain the company's 20-22 net profit forecast of 2.0/28/330 million, and YoY is -7%/41%/20% respectively. Comparable to the company's PE 26x in '21, considering the company's growth prospects or significant improvements, an appropriate premium was granted. Approval was given to 28x PE in '21, corresponding to the target price of 16.24 yuan, maintaining the “increase in holdings” rating.
Risk warning: New orders are lower than expected, there is a risk of repayment, and the results of the cooperation with Longji are lower than expected; the equity transfer has not yet been completed, and there is uncertainty about related matters