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Potential Takeover Terminated, Downgrade to "Neutral" 潜在收购被终止，下调至“中性”

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Potential Takeover Terminated, Downgrade to 股 票 研 [Table_Title] Company Report: GCL New Energy (00451 HK) Jun Zhu 朱俊杰 究 (852) 2509 7592 Equity Research 公司报告： 协鑫新能源 (00451 HK) [email protected] 19 December 2019 [Table_Summary] Potential Takeover Terminated, Downgrade to "Neutral" 潜在收购被终止，下调至“中性” The potential takeover by China Huaneng Group was officially called off [Table_Rank] 公 in November 2019 and was replaced with a cooperation framework Rating: Neutral Downgraded agreement. We believe that termination of the potential takeover (majority 司 stake acquisition) of GNE and acquiring only certain assets from GNE is to 报 评级： 中性 (下调) avoid having too much indebtedness transferred from GNE to China 告 Huaneng. As of the moment, we are uncertain in regards to the consideration of the potential transaction and the scale of the solar assets that China 6[Table_Price-18m TP 目标价] : HK$0.22 Company Report Huaneng will acquire from GNE. More details regarding the cooperation Revised from 原目标价: HK$0.45 framework agreement will be needed for further analysis. Share price 股价: HK$0.172 Newly installed solar capacity in the domestic market is expected to fall substantially in 2019 as a result of solar tariff subsidy reduction. According to NEA of China, newly installed solar capacity in the first 9 months Stock performance of 2019 reached 15.99 GW, down YoY by 53.7%. In which, concentrated 股价表现 solar projects contributed 7.73 GW of new installations, while distributed solar [Table_QuotePic] 50.0 % of return projects added 8.26 GW during the period. As at the end of 9M2019, 40.0 nationwide cumulative installed solar capacity hit 190.19 GW, up YoY by 30.0 证 15.2%. We expect new solar installations in China to remain low onwards as 20.0 a result of tariff subsidy reduction, which has substantially reduced the 券 告 10.0 investment return of new solar projects. 0.0 研 报 We downgrade the investment rating to “Neutral” and cut our TP to (10.0) 究 究 HK$0.22. The profitability of the core business of GNE may be further (20.0) 报 weakened following the disposal of solar assets to China Huaneng Group. (30.0) 研 Our new TP corresponds to 4.8x/ 3.9x FY19/ FY20 PER or 0.6x/ 0.5x FY19/ (40.0) 告 (50.0) 券 FY20 PBR. Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Equity Research Report 中国华能集团的潜在收购于 2019 年 11 月被正式取消，取而代之的是一份合作框架协议。 HSI GCL-New Energy 证 我们认为终止对协鑫新能源控股股权的潜在收购而只选择收购公司的某些资产是为了避免 [Tab 过多的债务从协鑫新能源转移至中国华能。目前，我们不确定潜在交易的造价以及中国华 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 清 能将收购的太阳能资产的规模。需待获得更多关于合作框架协议的细节以做进一步分析。 le_I 洁 股价变动 1 个月 3 个月 1 年 Solar 由于太阳能电价补贴的减少，国内市场于 2019 年的新增太阳能装机预计将大幅下降。根 Abs. % nfo1 - 能 (21.8) (40.7) (40.7) 据国家能源局的数据，2019 年前 9 个月新增太阳能装机为 15.99 吉瓦，同比下降 53.7%。 绝对变动 % 源] 其中，集中式太阳能项目新增装机容量 7.73 吉瓦，分布式太阳能项目新增装机容量 8.26 吉 Rel. % to HS Index (24.4) (45.7) (48.1) 相对恒指变动 % 行 瓦。截至 2019 年 9 月末，全国累计太阳能装机容量为 190.19 吉瓦，同比增长 15.2%。由 Avg. Share price(HK$) 0.17 0.23 0.29 业 于电价补贴的减少将大幅削弱新太阳能项目的投资回报，我们预计中国的新增太阳能装机 平均股价（港元） - 将继续于未来保持在一个较低的水平。 Source: Bloomberg, Guotai Junan International. 太 我们下调投资评级至“中性”，并将目标价下修至 0.22 港元。在把太阳能资产出售给中国 阳 华能集团之后，协鑫新能源核心业务的盈利能力预计将会进一步被削弱。新目标价相当于 能 Clean Sector Energy 4.8 倍/ 3.9 倍的 2019 年/ 2020 年市盈率或 0.6 倍/ 0.5 倍的 2019 年/ 2020 年市净率。 Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 年结Profit ] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 le_I 12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%) 2017A 3,942 841 0.044 528.6 3.3 0.295 0.5 0.000 0.0 16.5 nfo2 2018A 5,632 470 0.025 (43.2) 6.0 0.322 0.5 0.000 0.0 8.0 HK) 中] 2019F 5,152 788 0.041 64.0 3.8 0.358 0.4 0.000 0.0 12.2 协 451 外 2020F 5,188 958 0.050 22.0 3.1 0.413 0.4 0.000 0.0 13.0 鑫 (00 2021F 5,261 987 0.052 4.0 3.0 0.472 0.3 0.000 0.0 11.7 运 新 [Table_BaseData]Shares in issue (m) 总股数 (m) 19,073.7 Major shareholder 大股东 GCL Poly Energy 62.3% 能输 Market cap. (HK$ m) 市值 (HK$ m) 3,280.7 Free float (%) 自由流通比率 (%) 27.7 源 3 month average vol. 3 个月平均成交股数 (‘000) 20,562.6 FY19 Net gearing (%) FY19 净负债/股东资金 (%) 376.9 52 Weeks high/low (HK$) 52 周高/低 (HK$) 0.420 / 0.156 FY19 EV/EBITDA (x) FY19 企业值/EBITDA (x) 7.3 Source: the Company, Guotai Junan International. GCL New Energy New GCL See the last page for disclaimer Page 1 of 6 [Table_PageHeader]GCL New Energy (00451 HK) The potential takeover by China Huaneng Group was officially called off in November 2019 and was replaced with a cooperation framework agreement. GCL Poly Energy, the parent of the Company, and] 1 GCLr a NewM t Energyh g i (“R GNE_ ”e orl theb a T [ Company) jointly announced in early June 2019 that a wholly owned subsidiary of GCL Poly Energy had entered into a cooperation intent agreement with China Huaneng Group, one of the largest energy conglomerates in China, in relation to the 9 potential sale of 9.73 billion ordinary shares of GNE, representing approximately 51.0% of the entire issued share capital of 201 GNE. However, after few months of due diligence and discussion, the potential takeover by China Huaneng Group was officially called off on 18th November 2019. GCL Group (i.e. GCL Poly and GCL New Energy) and China Huaneng Group mutually December agreed to terminate the cooperation intent agreement signed on 3rd June 2019 due to failure to enter into a formal agreement 19 regarding the potential takeover after several rounds of friendly negotiations. As such, the offer period was officially ended. Immediately after the termination of the cooperation intent agreement, GNE and China Huaneng entered into a cooperation framework agreement on 18th November 2019 regarding GNE's disposal of certain solar power plants in the PRC or certain project companies of GNE that operate power plants to China Huaneng or its subsidiaries. As China Huaneng Group decided to adjust the transaction structure to acquire the PRC assets of GNE, China Huaneng and GNE proceeded to pursue the possible transactions contemplated under the cooperation framework agreement. We believe that terminating the potential takeover (majority stake) of GNEand acquiring only certain assets from GNE is to avoid having too much indebtedness transferred from GNE to China Huaneng. As of the moment, we are uncertain in regards to the consideration of the transaction and the scale of the solar assets that China Huaneng will acquire from GNE. More details regarding the cooperation framework agreement will be needed for further analysis. All in all, we believe the assets disposal to contribute] 2 r ina M termst h ofg noni R -operating_ e l b a T [ income and deleveraging to GCL Group in 2019, which may somehow mitigate the operating pressure of GCL Group as a result of the plunging solar materials price in both 2018 and 2019. However, on the part of GNE, carving out high quality assets and leaving the indebtedness on the platform may further undermine the Company’s already weak profitability brought by its high gearing and expensive cost of debt. High gearing and high cost of debt are key causes of GNE’s low margins. Newly installed solar capacity in the domestic market is expected to fall substantially in 2019 as a result of solar tariff subsidy reduction. According to NEA of China, newly installed solar capacity in the first 9 months of 2019 reached 15.99 GW, down YoY by 53.7%. In which, concentrated solar projects contributed 7.73 GW of new installations, while distributed solar projects added 8.26 GW during the period. As at the end of 9M2019, nationwide cumulative installed solar capacity hit 190.19 (00451 HK) GW, up YoY by 15.2%. Concentrated solar projects and distributed solar projects made up 131.49 GW and 58.7 GW, respectively, of total installed solar capacity by the end of September 2019. Given that only less than 20 GW of new solar capacity was added in the first 3 quarters of 2019, we estimate the total new solar installations in 2019 to be between 20 GW and 30 GW, with the latter being our best case scenario projection. Despite a sharp decline in new installations in the China 协鑫新能源 market in 2019, we expect global new solar installations in 2019 to reach approximately 120 GW, implying YoY growth of 18%, as a result of stronger-than-expected overseas market solar installations. We expect the overseas market to contribute approximately 90 GW of new solar capacity in 2019, up YoY by 55.2% from 58 GW installed in 2018. Our aggressive overseas market new solar installation projection was based on solar module export figures. It is important to note that China exported an aggregate of 57.3GW of solar modules to overseas markets in the first 10 months of 2019, up YoY by 53.2%. Solar materials GCL New Energy demand from overseas markets may continue to surprise as a result of rising popularity and overall competitiveness of solar energy among different power sources. Rising module efficiency and rapidly falling solar materials price are key reasons behind the surging solar energy investment internationally. Domestically, we expect new solar installations in China to remain low onwards as a result of tariff subsidy reduction, which has substantially reduced the investment return of new solar projects.
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