Events:
The company released its semi-annual report for 2019: operating income in the first half of the year was 761 million yuan, an increase of 441% over the same period last year; net profit was 47.39 million yuan, up 606%; non-net profit was 58.21 million yuan, compared with-1.41 million yuan in the same period last year; net cash flow from operating activities was 250 million yuan; EPS was 0.46 yuan per share, an increase of 318% over the same period last year. In 2018, the company controls 50.5% (37.17% of the actual equity ratio) of Zhongwa Bang through cash acquisition and fixed increase, which will be consolidated by the end of 2018. The improvement of the company's performance in the first half of 2019 mainly depends on the performance growth of China Shiba's natural gas business: during the reporting period, Zhongwa's operating revenue was 600 million yuan, an increase of 35.63% over the same period last year, and its net profit was 280 million yuan, an increase of 39.80% over the same period last year.
Zhongwobang's performance exceeded expectations, 30 wells were filed by the Energy Bureau, Xinli Gas sales Company, the future growth of China Haiwobang is an important natural gas enterprise in Shanxi Province, its gas production accounts for 13.59% of Shanxi's natural gas production in 2018; its Shilou West Block, which is operated jointly with CNPC, covers an area of 1524 square kilometers and has proven economic recoverable reserves of 44.3 billion square meters by the end of 2018. In April 2019, the 800 million square meter / year development project of tight gas in Yonghe 30 well area of Shilou West Block in Ordos Basin was put on record with the State Energy Administration. Yonghe 30 well is in transition to the development and production stage, and the gas sales in Zhongwo State are expected to further increase. In the first half of the year, Zhongwobang established Shanxi Wojin Gas sales Company and signed natural gas sales contracts with downstream users, opening up long-term and stable natural gas users and creating new profit growth points; in addition, Wojin Gas sales Company also signed a natural gas procurement agreement with PetroChina Coal to ensure a stable gas supply. In the first half of 2019, natural gas exploration and exploitation in Zhongwa State progressed smoothly, with a steady increase in natural gas production, with 469 million square meters of natural gas production, an increase of 36.60 percent over the same period last year; operating income of 600 million yuan, an increase of 35.63 percent over the same period last year; and net profit of 280 million yuan, an increase of 39.80 percent over the same period last year. It is estimated that Zhongwobang's gas production in 19-20 years will be about 9.1 billion square meters, and its net profit will be about 499 million yuan.
The revenue of the original business increased, but the gross profit decreased, and the gas well treatment lost. In the first half of the year, the company's original business revenue was slightly affected by 140 million yuan, up 13% from the same period last year; the gross profit margin was 18.28%, down 3.49% from the same period last year; in the west block of Shilou, the disposal loss of Zhongwobang's natural gas well located in the nature reserve is about 26 million yuan. In addition, M & A loans increase the company's financial expenses, and the above factors have an impact on the company's performance.
Bullish on the development of China Haiwobang, the company plans to continue to issue additional acquisitions and acquire shares in cash to achieve 67% absolute holding and to be optimistic about the future development of China Haiwobang. The company plans to issue shares to buy another 41% of the holding subsidiary Wo Jin Energy, thus indirectly buying 11.15% of the shares of Zhonghai Wobang. After the transaction, the company still controls 50.5% of the shares of Zhonghai Wobang, but the equity proportion will increase from 37.17% to 48.32%. Zhongwobang 100% equity trading price is 5.47 billion yuan, Wo Jin Energy 41% stake is priced at 610 million yuan, this acquisition will issue 21.2549 million shares, the company's total equity increased from 102 million shares to 123 million shares. After 18 years of performance betting, the company will continue to acquire a 16.50 per cent stake in CSB in cash, thus controlling a 67 per cent stake in CSB and becoming its absolute controlling shareholder.
Profit forecast: we expect the company's net profit for 19-20 years to be 174.27 million yuan per share and 2.23 yuan per share for EPS. At the same time, the profit forecast for the preparation for the exam is given: 1. After the company acquired 41% stake in Wojin Energy, the net profit for 19-20 years was 223 million yuan, 296 million yuan, and EPS 1.86 yuan per share. two。 After the company acquired 67% stake in Zhongwa Bang, the net profit of return to home in 19-20 years was 31max 397 million yuan, and EPS was 2.53 Universe 3.22 yuan per share.
Risk tips: valuation risk of assets to be purchased, risk of trading being suspended / cancelled, gas production not meeting expectations, gas prices falling, macroeconomic downturn
