\u3000\u3000 Tianjin Guangyu Development Co.Ltd(000537) (000537)
Housing development has been deeply cultivated for many years, and assets have been restructured and transformed into new energy
Tianjin Guangyu Development Co.Ltd(000537) was registered in Tianjin in March 1986 and listed on Shenzhen Stock Exchange in December 1993. As a comprehensive real estate business platform focusing on the integration and development of residential real estate development business in China’s green development system, the company’s main business is real estate development and sales. The business segment focuses on residential real estate development, and the layout area is concentrated in 18 cities such as Beijing, Jinan, Chengdu and Yibin. In September 2021, the company announced that it planned to replace the assets and liabilities such as the equity of its real estate company and property company with the 100% equity of Luneng new energy jointly held by Luneng group and capital Weiye. Through asset replacement, the company disposes the assets of the original real estate business and the new energy power generation business with good industry prospects, prominent competitive advantages and good development prospects. After the completion of this transaction, the listed company will hold 100% equity of Luneng new energy. The main business of the listed company will be changed to the development, investment and operation of wind energy and Cecep Solar Energy Co.Ltd(000591) .
The real estate business developed steadily, and all the assets were sold out after the reorganization
In 2021q1-3, the company achieved a sales amount of 12.962 billion yuan, a year-on-year increase of 174.27%; The sales area was 773200 square meters, with a year-on-year increase of 122.38%; The settlement area was 694100 square meters, a decrease of 75800 square meters over the same period last year, a year-on-year decrease of 9.85%. By the first half of 2021, the remaining exploitable soil storage scale of the company is 2905600 square meters, which can support the development and operation of the company in the next 2-3 years. In the first half of 2021, the company added 4 pieces of land, with a total land price of 5.78 billion yuan. The land acquisition attitude is more cautious, and the overall development of the company’s real estate development business is relatively stable. According to the asset restructuring plan, the listed company plans to buy out all the equity of 23 real estate development companies and put in 100% equity of Luneng new energy jointly held by Luneng group and capital Weiye, and the valuation difference will be made up in cash. After the completion of this transaction, the 13.2 billion yuan cash paid by Luneng Group will strongly support the smooth development of the company’s new energy business.
The development of new energy can be expected
The company’s assets are Luneng new energy, and its main business is the development, investment and operation of wind energy and Cecep Solar Energy Co.Ltd(000591) . By December 2021, Luneng new energy had 43 self operated projects, with an installed capacity of 3.4415 million KW, including 400000 kW of offshore wind power, 2.302 million kw of onshore wind power, 689500 kW of photovoltaic power generation and 50000 kW of energy storage. The company’s new energy business is dominated by wind power, accounting for 79%. At the same time, new energy projects such as photovoltaic power generation and solar thermal power generation are arranged to form a green energy system with simultaneous development of sea and land and complementary multi energy. In 2020, China proposed the “3060” double carbon goal of “achieving carbon peak in 2030 and carbon neutralization in 2060”. By 2030, the proportion of non fossil energy in primary energy consumption will reach about 25%. The clean and low-carbon transformation of the power industry is the key condition to achieve the double carbon goal. In terms of installed capacity, the company’s independent installed capacity is 3.4415 million KW, which is at the medium level of the industry. With the construction of new projects, Luneng new energy is expected to usher in a period of rapid development. From the perspective of operation, Luneng new energy achieved a main business income of 2.369 billion yuan in August 2021, with a gross profit margin of 59.05%, higher than the industry average. In recent years, the revenue scale and profit margin of Luneng new energy have continued to improve, and its development is in good condition.
Profit forecast and investment suggestions
Under the background of low-carbon transformation of the power industry, and with the decline of power station development costs, China’s wind power and photovoltaic industry has ushered in the opportunity of rapid development of market scale expansion and good profitability. Tianjin Guangyu Development Co.Ltd(000537) through asset restructuring, the assets of the original real estate business will be disposed of, and the new energy power generation business with good industry prospects, prominent competitive advantages and good net profit before development will be placed at the same time. The company actively arranges new energy projects such as wind power, photovoltaic and solar thermal power generation, which has strong growth. Benefiting from the “3060” double carbon goal, the company’s new energy business is expected to achieve rapid growth.
Luneng new energy achieved a net profit attributable to parent company of RMB 505 million in the first August of 2021, and linear extrapolation is expected to achieve RMB 760 million in 2021. At the same time, considering that the company has a large amount of cash, which provides a solid guarantee for the subsequent accelerated expansion of the company, we expect the installed capacity of Luneng new energy to be 12gw and 18gw respectively from 2022 to the end of 2023. Assuming that the installed capacity is 1GW, it can realize the net profit attributable to the parent company of 220 million yuan. Therefore, We predict that the company’s net profit attributable to the parent company will be 1.7 billion yuan and 3.3 billion yuan respectively from 2022 to 2023 (calculated according to the average installed capacity at the beginning and end of the year considering time weighting).
Tianjin Guangyu Development Co.Ltd(000537) grasp the development opportunities of renewable energy industry, realize the transformation and upgrading of asset restructuring, and have sufficient funds, which is expected to realize the rapid expansion of the company’s scale. If the asset restructuring is completed and Luneng new energy is successfully put into operation, we expect the company to realize a net profit attributable to the parent company of 1.70/3.3 billion yuan from 2022 to 2023, corresponding to the closing price of 18.95 yuan / share on February 11, 2022, and the PE is expected to be 20.8/10.7 from 2022 to 2023. At present, the company’s asset restructuring has not been completed. For the company’s original real estate business, we expect the company’s real estate business to realize a net profit attributable to the parent company of -13.6/18.2/2.25 billion yuan from 2021 to 2023, corresponding to the closing price of 18.95 yuan / share on February 11, 2022. It is expected that the PE from 2021 to 2023 will be -26.0/19.4/15.7. Considering that the prosperity of the company’s industry is good, the company has abundant funds and is expected to achieve rapid scale expansion, the company is given 14 times PE in 2023 (after the completion of asset restructuring), the corresponding target price is 24.81 yuan / share, which is covered for the first time, and the company is given a “buy” rating.
Risk tips
The progress of asset restructuring is less than expected; Changes in industry support policies; Risk of changes in feed in price and subsidy policies
