Events:
The company announced on April 8 that it intends to acquire a 100% stake in environmental protection by issuing 29.61 million shares and paying 105 million in cash.
Main points:
1. Enter the environmental protection and energy saving industry, and optimize the industrial structure.
The company's traditional business is the production and sales of professional asphalt for high-grade highways. In October and November 2013, it was announced the establishment of Xinjiang Baoli Petrochemical Company and the planned acquisition of some natural gas operating assets of Xi'an Huatong to enter the oil and gas field. This acquisition will enter the environmental protection industry together, so that the company will build asphalt + oil and gas + environmental protection industry chain planning more clearly in the future. Starting the diversification process can enable the company to avoid the impact of the traditional asphalt business by the economic situation, optimize the industrial structure and achieve great-leap-forward development.
two。 The price of environmental protection is reasonable and there is plenty of room for follow-up development.
Together Environmental Protection is mainly engaged in technical research and development, project general contracting and operation in the areas of energy conservation and emission reduction in the power industry, iron and steel industry, and high-frequency and high-voltage power supplies, with net profits of-13.52 million and 22.99 million respectively from 2012 to 2013. and promised that the net profit for 2014-2016 will not be less than 3000, 3500, 40 million. With the 100% equity price of Environmental Protection at 325 million, the PE and PB corresponding to the 2014 net profit are 10.8 times and 5.49 times, respectively, compared with the overall PE and PB of the A-share environmental protection plate. The output value of China's environmental protection industry is expected to reach 4.5 trillion by 2015. With the help of the high-quality platform of listed companies, environmental protection will accelerate the market development of desulfurization and ESP electrostatic precipitator technology, and benefit from the huge development space of energy-saving and environmental protection industry.
3. Traditional asphalt business will maintain steady growth
The National Highway Network Plan (2013-2030) issued in mid-2013 significantly raised the planning target to 118000 km of highway network by 2030, with a total investment of 2.5 trillion, and the modified asphalt market will increase by at least 11 million tons. The company's newly opened markets such as Xinjiang and Sichuan have sufficient orders, and the project volume will continue to grow, and the petroleum asphalt futures have been listed on October 9, 2013, which will help the company to reduce warehousing and financial costs and stabilize the gross profit margin. The traditional modified asphalt business benefits from the acceleration of highway construction, the layout of the whole country makes the market share increase gradually, and will maintain steady growth.
Conclusion:
The company marches into the environmental protection industry through acquisition and opens up new profit growth points. the industrial chain layout of traditional asphalt business + oil and gas + environmental protection makes the company have great room for development in the future. Considering that the company will continue to look for high-quality targets in the energy conservation and environmental protection industry, achieve extension expansion, and the vast market for environmental protection and oil and gas, the company should enjoy a valuation premium; as the acquisition requires approval by the CSRC, regardless of its contribution to performance, the company is expected to have an EPS of 0.27,0.34 yuan respectively from 2014 to 2015, with a current share price of 26 times and 21 times of PE, respectively, maintaining a "highly recommended" rating.
Risk Tips:
The financial risk caused by the increase of environmental protection receivables; the risk of excessive concentration of downstream customers