Main points of investment:
The basic situation of the Strategic Framework Agreement: acquire 70% of Anjie's shares and reach an intention to cooperate in LNG filling stations and other related fields. Inner Mongolia Anjie Natural Gas Co., Ltd. is mainly engaged in liquefied natural gas treatment plant and liquefied natural gas filling station. It currently operates a LNG gas filling station in Shibatai Town, Zhuozi County, Wulanchabu City. The original shareholders of the company intend to transfer 70% of Anjie's equity to Hengji Daxin, and the two sides agree to carry out cooperation in LNG filling stations and other related fields, including cooperation in Xinghe County vehicle renovation plant and Cr Industrial Park liquefaction plant.
The transformation to LNG logistics is further, which is gradually verifying our early judgment. We have always believed that the company will straighten out the interest mechanism of major shareholders and executives to non-public offerings such as major shareholders and executives, and that the future mainly depends on the transformation of the company to LNG logistics (refer to the follow-up reports of February 28, March 11, June 5 and August 18 for details). The company recently announced the acquisition of 70 per cent of Inner Mongolia Anjie Natural Gas Co., Ltd. and reached an intention to further carry out business cooperation such as LNG filling stations, which indicates that the company has made a further transformation to LNG logistics and gradually verified our earlier judgment on the company's "transformation of LNG logistics".
The traditional chemical logistics business improved month-on-month, and the operating performance of Yangzhou subsidiary improved significantly. In the second quarter of 2014, the company realized operating income of 45.0001 million yuan and attributable net profit of 14 million yuan, an increase of 10.21% and-9.21% respectively over the same period last year, a significant improvement over the first quarter. In addition, under the efforts of improving capacity utilization and increasing marketing, the Yangzhou subsidiary has changed from a huge loss in 2011 to a profit of nearly 50% in the first half of 2014 (the Yangzhou subsidiary made a net profit of 11.1102 million yuan in the first half of 2014). Compared with the same period last year, the year-on-year increase of 35.36%; the half-year profit in 2014 is close to that of the whole of 2013).
Based on the significant improvement in business performance, we are confident that the completion of the II phase of the Yangzhou expansion project will reach production.
Maintain the profit forecast for 2014-2016 and reiterate the "overweight" rating. We maintain the profit forecast of 54 million yuan, 65 million yuan and 67 million yuan for 2014-2016 (not considering the profit contribution of investment cooperation projects and projects under construction for the time being), and the corresponding fully diluted EPS is 0.22,0.27,0.28 yuan. If we consider investment cooperation projects and projects under construction, the company's net profit will be greatly increased in the next two years. The PE corresponding to the latest stock price is 48.2X, 40.3X and 38.7X respectively. Although PE's valuation is relatively high, based on the company's positive outlook for the next three years after this private offering and the catalyst for oil and gas reform, we reiterate that the company's "overweight" rating, the recent adjustment provides an excellent allocation time window.