\u3000\u30 China Baoan Group Co.Ltd(000009) 35 Sichuan Shuangma Cement Co.Ltd(000935) )
Event: the company announced that based on the company’s management and overall arrangement of investment enterprises, the company’s subsidiary harmony Jinfeng plans to gradually reduce the shareholding ratio of Huisuan Cayman and new Cayman, and no longer has the right to appoint directors to the board of directors of Huisuan Cayman. The company will change the accounting method of Huisuan Cayman, and this change will increase the current investment income of the company by about 250 million yuan.
Key investment points
Sorting out historical events: harmony Jinfeng directly invests in new Cayman company and enjoys voting rights on specific operational matters. On October 12, 2021, the company disclosed the announcement on the reorganization of joint stock companies and related party transactions: 1) Tibet Jinchuan Venture Capital Management Co., Ltd. (hereinafter referred to as “Tibet Jinchuan”), a wholly-owned subsidiary of the company, reduced the capital of Beijing Gongjin Technology Co., Ltd. (hereinafter referred to as “Beijing Gongjin”) in full; 2) Furthermore, Tibet Jinchuan lost the shares of huixuanzhang Cayman holding Inc. (registered in the Cayman Islands, hereinafter referred to as “huisuanjiang Cayman company”) indirectly held by Beijing Gongjin through the vie agreement. 3) Subsequently, HeXie Jinfeng Holdings Limited (hehe Jinfeng Holding Co., Ltd., hereinafter referred to as “hehe Jinfeng”), an overseas investment entity subordinate to Tibet Jinchuan, invested in new Cayman company (a subsidiary established by Huisuan Cayman company in the Cayman Islands) with the capital reduction, and appointed a director to Huisuan Cayman company to vote on specific operation matters. After the completion of the transaction, Tibet Jinchuan held 107121% equity of new Cayman company through harmonious Jinfeng, and there was no substantial change in the entity equity owned by the company.
Direct investment projects have entered the rhythm of exit, and the investment income will increase by 250 million yuan in 2021. The subsidiary harmony Jinfeng began to gradually reduce the shareholding ratio of Huisuan Cayman company and new Cayman company, and lost the right to appoint directors and the ability to have a significant impact on Huisuan Cayman company; The withdrawal affects Sichuan Shuangma Cement Co.Ltd(000935) financial statements, and the change of accounting method will make the long-term equity investment of the company’s consolidated balance sheet – 173.5 million yuan, other non current financial assets + 358.8 million yuan, and investment income + 250 million yuan in 2021. The company’s investment goal has gradually entered the rhythm of withdrawal, and the investment expectation has begun to be realized gradually.
The invested projects have gradually entered the exit stage, and new funds will be raised in the future Sichuan Shuangma Cement Co.Ltd(000935) mainly provides private equity fund management services and direct investment in the project through its subsidiaries. We expect that at present, the company’s direct investment and private equity investment business will gradually enter the exit stage from the investment stage. At the same time, the revenue of private investment business will be increased by a single fixed management fee income, and there will be new fund raising in the future, which is worthy of attention.
Profit forecast and investment rating: we expect the company’s private equity management business to exceed expectations and give a “buy” rating. 1) We believe that Sichuan Shuangma Cement Co.Ltd(000935) ‘s building materials production business will maintain stable profits, and direct investment and private equity investment management business will become new performance growth points and usher in more than expected development. 2) We respectively give the net profit of private equity business in 2022 to 1.18 billion yuan and the net profit attributable to the parent company of building materials production business to 290 million yuan. 3) We predict that the net profit of Sichuan Shuangma Cement Co.Ltd(000935) attributable to the parent company from 2021 to 2023 will be 1.052/1.435/1.978 billion yuan respectively, corresponding to 18.74/13.74/9.96 times P / E respectively.
Risk tips: 1) tightening of regulatory policies related to private equity; 2) Repeated outbreaks have affected the company’s operation; 3) The macro economy is depressed, and the raising of private equity management business is less than expected; 4) The dignity of the capital market scene decreased, and the exit of the project was less than expected; 5) The cement business dragged down the company’s business.
