Baichuan Energy (600681): Gradually release performance momentum to complement the core area of Beijing, Tianjin and Hebei

Baichuan Energy (600681): Gradually release performance momentum to complement the core area of Beijing, Tianjin and Hebei
Event: Baichuan Gas, a wholly-owned subsidiary of Baichuan Energy, purchased 100% equity of Zhuolu Dadi Gas Co., Ltd. and Suizhong Dadi Natural Gas Pipeline Co., Ltd. held by Beijing Fengxianxiang 武汉夜网论坛 Investment Co., Ltd. in cash. The transaction amounts were RMB1.9.5 billion, 0.2.5 billion. Opinions: Complement the city gas business map of Beijing, Tianjin and Hebei, and continue to strengthen regional collaboration. Zhuoludi is the main target of this merger and is mainly responsible for operating the gas supply and installation business in Zhangjiakou, Cangzhou and Baoding, 1 2019In August, the operating income was 84.88 million yuan, and the net profit attributable to the mother was 4.68 million yuan. Another target, Suizhong Dadi, is currently under construction. After completion, the main gas supply project will be constructed and the business scope will cover some parts of Huludao City that have not yet been replaced.Area of natural gas pipeline network.The business operation areas of Zhuoludi and Suizhongdi belong to the core area of Beijing-Tianjin-Hebei coordinated development, which is an important supplement to the layout of the gas niche market of Baichuan Energy City. It has significantly expanded the company’s operating scale, and will also cooperate with the company’s existing operating areaForm previous synergies in pipe network, procurement and management. Channel and operational advantages help improve the profit margin of the target, increasing the company’s overall profit. Baichuan Energy is a leading domestic city gas service provider. Compared with the target company, it has significant advantages in both the gas purchase and operation ends.After the company acquired Fuyang Guoyan Gas in June 2018, it helped it achieve a net profit of 0 in the first half of 2019.9 trillion, accounting for 18% of the company’s total net profit, with a net profit margin from 15 in 2018.0% increased to 17.2%, significant improvement in profitability.After the completion of the acquisition, the company will still use its own channel advantages to help Zhuolu Earth reduce gas source costs, and at the same time use its rich urban pipeline gas operation experience to help the target to strengthen management capabilities and improve operating efficiency. The profit structure continues to be optimized. It is estimated that there is a lot of room for repair. Under the background of price reform, the scale of the company’s connection profit will remain stable, the overall engineering attributes of the company’s business will weaken, and city gas sales will gradually become the main driver of profit.The Beijing-Tianjin-Hebei integration strategy continues to advance. At the same time, the gasification rate in Fuyang has a large space. The growth rate of the company’s natural gas sales business will be higher than the national average. In addition, the gross margin repair of the gas sales business promotes the company’s gas sales profit ratio to continue to increase.It is estimated that the profit ratio of gas sales business in 2020 is expected to reach about 45%, which is basically consistent with the profit structure of similar companies.At present, the company is estimated to be the lowest level in the stock gas industry, PE is only 8-9 times, and PE in the same industry is about 16 times, and the length of the repaired space is estimated. Investment suggestion: The profit structure continues to improve, and the dividends are underestimated. We continue to strongly recommend that the company has paid dividends for more than 50% of its net profit for the second consecutive year. Assuming that the company’s dividends in 2019 will continue to reach 50% of its net profit, we will divide cash dividends according to our forecasts6.At 100 million US dollars, the company’s dividend yield will reach 5 based on the current market value of 10.5 billion.81%.The company has good profit quality and abundant cash flow. It is expected that M & A projects will continue to land in the future. We expect the company to return net profit to its parent in 2019-2112.200 million / 14.200 million / 16.800 million, corresponding to PE of 13.14 times / 7.40x / 6.25 times, high dividends and low estimates, continue to “strongly recommend” rating. Risk reminder: gas industry policy risk; natural gas gate station price and connection fee price fluctuation risk; market development and business 成都桑拿网 development are less than expected