Main points of the report
Event description
Qianjiang Water Conservancy announced that the net profit attributed to shareholders of listed companies is expected to be about 3363.84-424.96 billion yuan in 2015, an increase of 90%, 140% over the same period last year, due to the company's completion of non-public offerings to reduce the cost of capital; the net profit of the participating company is expected to increase significantly this year.
Event comment
The company's high profit growth or benefit from 27.9% equity participation in Paradise Silicon Valley, investment income recognition accelerated performance improvement. The company has a 27.9% stake in Paradise Silicon Valley, a subsidiary of the new third board listed company, Silicon Valley Paradise. In terms of profit structure, in mid-15 years, the net profit of Silicon Valley Paradise was 681 million yuan, and the net profit of Silicon Valley Paradise was 67.4 million yuan, accounting for about 9% of Silicon Valley Paradise net profit. 27.9% of the company participated in Paradise Silicon Valley and contributed 18.8 million yuan in investment income. As the market fluctuates in the second half of the year, the annual net profit of Silicon Valley Paradise is expected to be about 876 million yuan, an increase of about 451% over the same period last year. Paradise Silicon Valley's net profit is expected to be about 79 million yuan, an increase of about 688% over the same period last year. Considering the company's shareholding ratio of 27.9%, Paradise Silicon Valley is expected to contribute 22 million yuan, an increase of 688% over the same period last year, accounting for about 57.79% of the annual return net profit.
The venture capital industry continues to benefit from the expansion of the capital market and accelerate its performance contribution. Market expansion will not only broaden the exit channels of venture capital, on the other hand, it will also provide rich project resources. The company has participated in the capital increase and share expansion of Paradise Silicon Valley for 15 years, which shows that it is optimistic about the venture capital business. Paradise Silicon Valley ploughs the reform, fixed growth, mergers and acquisitions of state-owned enterprises in Zhejiang and its surrounding areas. It not only acts as a financial adviser to listed companies and new third-board enterprises, but also actively participates in additional projects, including shares issued by Zhongda and Hangzhou Iron and Steel Co., Ltd., with rich investment, and its contribution to the company's profits will be further enhanced in the future.
Non-public offerings supplement capital strength, and the cost of capital has dropped. In March this year, the company completed a non-public offering to raise 745 million yuan, of which 136 million yuan was used to replenish working capital. On the one hand, it alleviated the financial pressure. By the end of the third quarter of 2015, short-term borrowing was 927 million yuan, down 20.84% from the end of 14 years. On the other hand, it also reduced the cost of capital. At the same time, the company's financing methods are increasingly diversified, issuing short-term financing bonds of 200 million yuan, issuing targeted instruments of 500 million yuan, the issuing interest rate is low, and the cost of capital has dropped.
We expect the company's performance to continue to grow in the past 16 years. On the one hand, the company has completed a non-public offering of shares, and the funds raised are mainly used to consolidate the main water industry, and the contribution to the performance of the main business has increased with the landing of the project; on the other hand, the venture capital industry will maintain a high growth trend under the background of registration system reform. The company's stake in Paradise Silicon Valley is 27.9%, which will become the company's largest profit growth point in the future. It is estimated that the company's 16-and 17-year EPS will be 0.15,0.17 yuan, maintaining the recommended rating.
