The “double carbon” policy has brought high vision to the power construction industry, and the expansion of the leading Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) ( Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) . SH) has accelerated.
On the evening of May 20, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) announced that the company plans to raise no more than 15 billion yuan for a number of engineering contracting projects, investment and operation projects, supplement working capital and repay bank loans.
Figure: Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) proposed fund raising project
The construction industry is a capital intensive industry, with a large amount of capital investment in the early stage of the development and operation of construction projects, and a long development cycle and investment payback period. The construction period of the project invested by this fund-raising varies from 2 to 6 years.
The project with the largest fund-raising investment – the general contracting project for the construction of Lot 1 of Shenzhen Huizhou intercity Qianhai Free Trade Zone Zhiping section of Shenzhen metropolitan area intercity railway in Guangdong, Hong Kong and Macao Dawan district (hereinafter referred to as Dawan district project) has a total investment of 11.471 billion yuan, and 4 billion yuan is planned to be invested with the raised funds.
Dawan district project has been started in November 2021 and is planned to be completed in November 2026, with an estimated gross profit margin of 14.74%.
The second project, the 350MW offshore wind power EPC project of No. 1 jin’ou in Vietnam, plans to invest 4.488 billion yuan, and plans to invest 1.5 billion yuan with raised funds. The total installed capacity of the project is 350 MW, which is divided into four wind farms of ABCD, of which the construction period of AB area is 15 months and that of CD area is 24 months. The gross profit margin of the four regions is expected to range from 10.15% – 11.32%.
The third project, Yunyang Jianquan pumped storage power station project, plans to invest 9.053 billion yuan and plans to invest 4 billion yuan with raised funds. The total construction period of the project is 6 years and 6 months, and the estimated internal rate of return is 6.50%.
Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) also plans to use the raised funds to purchase offshore wind power survey and construction business equipment, with the amount of 900 million yuan and 440 million yuan respectively.
With the covid-19 epidemic under control, the recovery of infrastructure industry has entered a high-profile cycle.
According to the annual report of Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) 2021, the company achieved an operating revenue of 448325 billion yuan during the period, with a year-on-year increase of 11.75%; The net profit attributable to shareholders of listed companies was 8.632 billion yuan, a year-on-year increase of 8.07%. The operating revenue and net profit of a single year reached a record high.
The high outlook of the industry has continued to this year According to the operation data released on Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) 5 May 19, the newly signed contract amount of the company from January to April this year was 333831 billion yuan, a year-on-year increase of 23.49%. Among them, the contract amount of domestic projects increased by 30.71%, and the contract amount of overseas projects decreased slightly by 5.23%.
Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) is not bad for money, but the industry attribute makes its asset liability ratio high and slightly higher than that of its peers.
By the end of the first quarter of this year, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) monetary fund balance was 83.239 billion yuan, but the consolidated asset liability ratio was 77.67%. According to Ifind data, there are 25 listed companies in Shenwan’s tertiary industry – infrastructure and municipal engineering, and Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) has the fifth highest asset liability ratio.
Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) also said that the expansion capacity of the company’s business scale is subject to the company’s overall capital and liabilities to a certain extent. After the completion of the funds raised from this non-public offering, it can reduce the asset liability ratio of the company and optimize the capital structure of the company.
Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) has also made a large fixed increase before. After the IPO, the company conducted two additional issues, raising 14.666 billion yuan in 2015 and 12 billion yuan in 2017.
In addition to issuing fixed increase shares, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) also raised funds through corporate bonds, medium-term notes and other means. On January 20 this year, the company issued bonds to raise 3 billion yuan; In 2021, bonds were issued three times, raising a total of 4.2 billion yuan.
Benefiting from the high outlook of the industry, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) said in the annual report that the construction market will maintain sustained and stable growth, accelerate the green and low-carbon transformation in the field of energy and power, and have broad market prospects in the field of water resources and environment. After the pending increase, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) may need to be financed through a variety of ways.
The high outlook of the industry also led to the rise of Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) share price, and the share price of the company increased by 104% in the past year.
