Chuantou Energy (600674) Commentary on Major Issues-Acquisition of Qingyi River Basin Power Station
The acquisition target belongs to the cascade hydropower station in the Qingyi River basin, which is scarce; the volume of assets to be acquired is not large, and the company’s equity installed capacity will increase after completion.
From 4% to 9.64 million kilowatts, the purchase consideration is reasonable from a PB perspective, and the profit improvement potential of generators such as trough fishing beaches has been overcome; maintain a “Buy” rating and 12.
Target price of 40 yuan.
The company proposes 12.
2.2 billion acquisition of four hydropower assets.
The company announcement stated that it intends to start with 10.
4.5 billion acquisition of 100% shares of Gaofengshan Hydropower Company (including Baihuatan) and Caoyutan Hydropower Company62.
35% equity, 100% equity of Jiaojiping Hydropower Company, and assume the original shareholders’ equity of Jiaojiping Hydropower Company.
770,000 yuan, with a total purchase amount of 12.
The above acquisition has been approved by the Sichuan State-owned Assets Supervision and Administration Commission and established by the board of directors.
Equity installed capacity is expected to increase after the completion of the acquisition3.
4% to 天津夜网 9.64 million kilowatts.
The golden cycle of domestic hydropower development is coming to an end. Asset integration and foreign investment are increasingly important for the long-term development of hydropower companies.
The total planned installed capacity of the four hydropower stations is 342MW.
Three of them are cascade units in the Hongya section of the Qingyi River. From upstream to downstream, they are trough fishing beach (3 * 25 MW), Baihuatan (3 * 40 MW), Gaofengshan (3 * 25 MW); Jiaojiping Hydropower Station (3 *24MW) belongs to the second-stage hydropower station of the three-stage hydropower planning of the two estuaries of the Tianquan River to the Qianxipo River.
As of H1 2019, the total installed capacity of the company’s participating holdings is 39 million kilowatts, and the equity installed capacity 淡水桑拿网 is 9.33 million kilowatts. After the completion of the acquisition, the company’s equity installed capacity will increase by 3.
4% to 9.64 million kilowatts.
The profitability of power plants such as Caoyutan is expected to usher in a marked improvement after the company enters.
At the end of 2018, the total net assets of the power plants to be acquired10.
20,000 yuan, net profit totals 0.
40 ppm, the PB corresponding to the purchase price is 1.
4 times, PE is 35 times, from a PB perspective, the purchase price is estimated to be a certain discount to the company’s current PB.
The company subsequently adjusted its rich experience in the management and operation of hydropower stations, regional comprehensive resource advantages, and Qinghai River Basin hydropower joint dispatch and management advantages to improve the profitability of the acquisition target. It is expected that after the completion of the acquisition, the Caoyutan Hydropower Station will usher in significant profit improvement.After the completion of the water storage of the upstream power station, the Jiaojiping Power Station will also see a marked improvement in profitability.
It is expected that after the completion of the above measures, the net profit of the proposed acquisition of power plants is expected to improve to zero.
Risk factors: intensified fluctuations in electricity prices; incoming water exceeding expectations; the progress of Yazhong unit’s investment and construction, and the expected rate of return gradually; Investment proposal: Considering that the acquisition of the acquisition target has not yet been completed, we will temporarily maintain 2019?
0 in 2021.
The 79 yuan EPS forecast is unchanged, and the company’s current PE is 13/13/12 times.
The company ‘s core assets, the Yalong River Hydropower, are highly scarce. It is estimated that there is a safety margin and it has fully reflected the expectations of Yazhong China ‘s generators to be replaced. Subsequently, the pressure was gradually changed to balance the expectations and the expectations were cleared and eliminated.
Maintain “Buy” rating and maintain target price of 12.