\u3000\u3 Shengda Resources Co.Ltd(000603) 956 Wpg (Shanghai) Smart Water Public Co.Ltd(603956) )
Key investment points
Event: the company issued a non-public offering report: this non-public offering raised a total of 970 million yuan from 14 institutions or individuals at an issue price of 11.76 yuan / share. The raised funds will be used to enrich the company's smart water product line and expand the company's business scale.
Private placement of 970 million yuan, overweight layout of the smart water industry chain, smart water integrators initially appeared: the company issued 970 million yuan to 14 institutions or individuals, and the issue price was locked at 11.76 yuan / share, The raised funds will be invested in the "smart water supply and drainage production and R & D base project with an annual output of 2000 sets of rural drinking water pump stations and pressurization equipment, 2000 sets of smart dosing system, 200 sets of container integrated water plants and 20 sets of large-scale fabricated water plants" and supplement working capital. This fund-raising is the inevitable choice for the company to layout the whole industrial chain of smart water. With the orderly development of the investment projects with the raised funds, the profitability and operating performance of the company will be further improved in the future.
In the context of large investment in the national water pipe network, we are optimistic about the development of the smart water industry: from the performance of mainstream smart water meter companies exceeding expectations in 2019 to the full swing and high performance of the water information industry in 2021, in the process of tracking the intelligent transformation line of the water pipe network, we have paid attention to the expansion of products and investment of smart water meter companies and water information (smart water companies) in the industry from bottom to top, It is observed that water companies have strong demands for intelligent transformation; On December 14, 2021, at the central economic work conference, the general secretary of Xi Jinping pointed out that during the 14th Five Year Plan period, pipeline reconstruction and construction must be taken as an important infrastructure project; This also means that the logic of top-down China's pipe network transformation is clear. In January 2022, the Ministry of water resources issued the guiding opinions on vigorously promoting the construction of smart water conservancy, which pointed out: promote the construction of smart water conservancy and promote the intelligent construction of major water conservancy projects. China smart water has also officially moved from intelligent water supply to intelligent water supply and drainage.
Industry level: water companies reached consensus on building smart water. (1) What is smart water? Smart water (from the source to the faucet): the informatization and intellectualization of the whole life cycle from the water source to the faucet, covering the intelligent management of the whole life cycle, such as the informatization management of the water source, the informatization management of the water plant, the informatization management of the water pipe network, the informatization management of the secondary water supply, and the informatization management of the water meter. (2) The intelligent construction of China's water system lags far behind the power grid and gas system. The current situation of water shortage + water quality safety requirements + refined requirements of water system make the water department must use the whole process digital management and refined supervision. The intelligent transformation process of China's water system has come.
Profit forecast and investment rating: we are optimistic about the process of intelligent transformation of industrial water pipe network. Superposition company is the smart water leader of deep ploughing water. We expect EPS to be 0.51/0.67/0.87 yuan from 2021 to 2023, corresponding to 24 / 18 / 14 times of PE from 2021 to 2023, maintaining the "buy" rating.
Risk tip: increased competition in the industry will lead to the decline of gross profit margin and the risk that the promotion of the company's smart water plant equipment is not as expected
