The plan for the acquisition of Jiangyin environmental protection is issued: it is proposed to purchase 100% of the shares held by Zhao Haihao and Liu Ling in cash and issue shares, and raise supporting funds. The 100% stake in environmental protection is estimated at 325 million yuan. Among them, 220 million yuan was paid by way of issuing shares, and a total of 29609690 shares were paid to the original controller of environmental protection according to the issuing price of 7.43 yuan per share. At the same time, it plans to raise 105 million yuan from no more than 10 other specific investors and pay it to the other party in cash. The other party promised that the net profit in 2014, 2015 and 2016 would not be less than 30 million yuan, 35 million yuan and 40 million yuan.
Together environmental protection business centralized desulphurization and out-of-stock: together environmental protection is a comprehensive environmental protection company that provides integrated energy saving and emission reduction solutions for high pollution and high energy consumption industrial enterprises. The main projects include: desulphurization and denitrification, electrostatic precipitator transformation and tail gas recovery. In 2013, the operating income was 180.27 million yuan and the net profit was 17 million yuan. The growth rate of operating income was 170.80%, and the growth rate of net profit was 229.38%. China's iron and steel, cement and other highly polluting enterprises are expected to introduce compulsory desulphurization and out-of-stock emission standards. Environmental protection has certain technical advantages in the desulphurization and out-of-stock market of iron and steel enterprises, and is expected to benefit from the implementation of mandatory emission standards.
Xinjiang oil refining project is expected to make a breakthrough, and the profit will increase after asphalt self-sufficiency: Baoli Petrochemical will invest in the Layisu Petrochemical Industrial Zone in Luntai County to build an "annual processing of 2 million tons of heavy crude oil to produce 1 million tons of heavy petroleum asphalt project". The crude oil quota will be supplied by China Petroleum & Chemical Corp Tahe Oilfield, and the company is actively implementing the crude oil resource quota. Once the project is put into production, the company will enter the oil refining business, the raw material asphalt will be produced by itself, the cost will be further reduced, and the profitability will be significantly improved. Due to the insufficient supply of asphalt in Xinjiang, it needs to be transferred and transported from outside Xinjiang. At the same time, the highway construction in Xinjiang has entered a stage of rapid growth, and the demand for asphalt has maintained growth.
Investment advice: we expect the acquisition and environmental protection to be completed by the end of 2014, and the performance contribution will begin in 2015. It is expected that the company's earnings per share from 2013 to 2015 will be 0.19 yuan, 0.24 yuan and 0.34 yuan respectively. The progress of diversification after M & A will benefit from the expansion of the industrial chain to the upstream refinery, resulting in outstanding growth. Upgrade the investment rating to buy-A & Q 6-month target price of 9.5 yuan, equivalent to the dynamic P / E ratio of 28 in 2015.
Risk hint: the acquisition is a risk approved by regulators, and crude oil quotas are difficult to obtain.