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Talk on Potential Takeover Still Ongoing, Reiterate "Buy" 潜在收购的商谈仍在继续，重申“买入”

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Talk on Potential Takeover Still Ongoing, Reiterate 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] 16 August 2019 [Table_Summary] Talk on Potential Takeover Still Ongoing, Reiterate "Buy" 潜在收购的商谈仍在继续，重申“买入” Earnings in 1H2019 went up YoY by 18.8% to RMB410 mn, missing our [Table_Rank] 公 expectation. Revenues in 1H2019 beat but earnings were below expectation Rating: Buy Maintained mainly due to the sharp rise in finance costs and administrative expenses 司 during the reporting period. Gross margin in 1H2019 was down 1.2 ppts YoY 报 评级： 买入 (维持) to 67.5%. By the end of June 2019, total installed solar capacity and grid 告 connected solar capacity reached 7,182 MW and 7,038 MW, respectively. Sales volume of solar electricity in 1H2019 reached 4,577 mn kWh, up YoY by 6[Table_Price-18m TP 目标价] : HK$0.40 Company Report 22%. Average solar tariff in 1H2019 was RMB 0.75/kWh, down YoY by Revised from 原目标价: HK$0.45 approximately 3%. Share price 股价: HK$0.270 The potential takeover by China Huaneng Group is highly likely to take place in 2H2019. We believe that the probability of the transaction is quite high as GCL Poly needs to deleverage itself to fend against negative impact Stock performance brought by rapidly falling solar material prices in 2019. We think the disposal 股价表现 is in the interest of GCL Group and of its shareholders. High gearing and high [Table_QuotePic] 50.0 % of return cost of debt are the key causes of low profitability of GNE, but we believe things are about to change with Huaneng on board. 40.0 证 Earnings estimates trimmed under new assumptions. Under a series of 30.0 券 告 new assumptions, our revised EPS forecasts from 2019 to 2021 are RMB 20.0 0.041/ RMB 0.050/ RMB 0.052, respectively. 研 报 10.0 We trim our TP to HK$0.40 but reiterate the "Buy" investment rating. 究 究 0.0 Our new TP corresponds to 8.5x/ 7.0x/ 6.8x FY19 to FY21 PER or 1.0x/ 0.9x/ 报 研 0.7x FY19 to FY21 PBR. (10.0) 告 2019 上半年的净利润同比升 18.8%至人民币 410 百万元，差于我们的预期。期内的收入 (20.0) 券 Aug-18 Nov-18 Feb-19 May-19 Aug-19 Equity Research Report 好于预期但净利差于预期，主要是因为期内急剧攀升的融资成本以及行政支出。期内毛利 HSI GCL-New Energy 证 率同比回落 1.2 个百分点至 67.5%。截至 2019 年 6 月末，太阳能总装机及并网装机容量 分别为 7,182 兆瓦以及 7,038 兆瓦。期内的太阳能总售电量为 45.77 亿千瓦时，同比升 22%。 [Tab 期内的平均太阳能上网电价为人民币 0.75 元每千瓦时，同比跌约 3%。 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 清 le_I 洁 中国华能集团的潜在收购很有可能将于 2019 下半年内发生。我们相信该潜在交易发生的 股价变动 1 个月 3 个月 1 年 Solar Abs. % nfo1 - 概率相当之高，主要因为保利协鑫急需降杠杆以应对 2019 年光伏材料价格急跌所带来的 (16.9) 1.9 (8.5) 能 绝对变动 % 负面冲击。我们认为潜在的交易对于协鑫集团以及其股东们都是极有利的。高杠杆以及高 源] Rel. % to HS Index (6.2) 11.7 (1.8) 借贷成本一直都是导致协鑫新能源盈利能力低走的核心原因，但我们相信在华能入主之后， 相对恒指变动 % 行 一切都将被改变。 Avg. Share price(HK$) 0.30 0.29 0.30 业 平均股价（港元） - 我们在新的假设下调低了对公司的盈利预测。在一系列新假设的应用下，我们经调整后的 Source: Bloomberg, Guotai Junan International. 太 2019 至 2021 年的每股盈利预测分别为人民币 0.041 / 0.050 / 0.052 元。 阳 我们下调目标价至 0.40 港元但重申“买入”的投资评级。我们的新目标价相当于 8.5 倍 / 能 Clean Sector Energy 7.0 倍 / 6.8 倍 2019 至 2021 年市盈率或 1.0 倍 / 0.9 倍 / 0.7 倍 2019 至 2021 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 5.1 0.295 0.8 0.0 0.0 16.5 nfo2 2018A 5,632 470 0.025 (43.2) 9.5 0.322 0.7 0.0 0.0 8.0 HK) 中] 2019F 5,152 788 0.041 64.0 5.8 0.358 0.7 0.0 0.0 12.2 协 451 外 2020F 5,188 958 0.050 22.0 4.8 0.413 0.6 0.0 0.0 13.0 鑫 (00 2021F 5,261 987 0.052 4.0 4.6 0.472 0.5 0.0 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) 5,149.9 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) 11,162.0 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 / 0.241 FY19 EV /EBITDA (x) FY19 企业值/EBITDA (x) 7.7 Source: the Company, Guotai Junan International. GCL New Energy New GCL See the last page for disclaimer Page 1 of 7 [Table_PageHeader]GCL New Energy (00451 HK) Earnings in 1H2019 went up YoY by 18.8% to RMB410 mn, missing our expectation. GCL New Energy’s (the "Company") revenues in 1H2019 beat but earnings were below expectation, mainly due to the sharp rise] in1 financer a M costst h g andi administrativeR _ e l b a T [ expenses during the period. Gross margin in 1H2019 was down 1.2 ppts YoY to 67.5%. At the end of the reporting period, total installed solar capacity and grid connected solar capacity of the Company reached 7,182 MW and 7,038 MW, respectively. 9 Sales volume of solar electricity in 1H2019 reached 4,577 mn kWh, up YoY by 22%. Average solar tariff in 1H2019 was RMB 201 0.75/kWh, down by approximately 3% YoY from RMB 0.77/kWh for the same period of 2018. The decrease in average tariff was due to on-grid solar tariff cuts for new projects connected to the grid in 2H2018, as well as the competitive bidding tariff on August certain new projects. The Company disposed of approximately 1.6GW of solar assets over the last 10-month period in 4 16 separate transactions, in which 3 of them have already been completed with 1 pending for completion in 2H2019 (i.e. the deal with Shanghai Rongyao New Energy). Upon completion of the transaction, total installed solar capacity of GNE will be reduced by 977 MW. According to the Company, the 4 transactions will, in aggregate, reduce approximately RMB9.23 bn in existing borrowings and will bring in approximately RMB2.95 bn cash to further repay debt. We believe the transactions are in the interests of the Company as well as its shareholder as they are part of the deleveraging strategy of the Company. Taken away more than RMB10 bn in debt would mean finance cost savings of no less than RMB600 mn per year moving forward. To improve profitability, we expect GNE to continue to refinance its debt to lower its borrowing costs and to dispose of its solar assets (either majority or minority stake) to further deleverage itself should the ongoing talks with China Huaneng Group fail to happen (i.e. the potential takeover by Huaneng). ] 2 r a M t h g i R _ e l b a T [ Table-1: 1H2019 Operating Results and YoY Comparison (RMB mn) 1H2019 1H2018 YoY ∆ Comments Sales volume of the solar electricity in 1H2019 reached 4,577 mn kWh, Revenues 3,173 2,704 +17.3% up YoY by 22% COGS (1,032) (847) +21.8% Gross profit 2,141 1,857 +15.3% Gross margin was down by 1.2 ppt YoY Admin expense (374) (257) +45.8% A result of the rapid expansion Other income 150 126 +18.7% EBIT (Operating income) 1,917 1,727 +11.0% Non-operating income / (loss) 140 (163) -185.5% (00451 HK) Share from affiliate & JV 1 8 -91.7% Finance cost (1,419) (1,062) +33.5% Both the scale of debt and interest rate went up in 1H2019 Profit before tax 638 509 +25.4% Tax expense (67) (21) +225.5% 协鑫新能源 Minority interest (161) (143) +12.3% Net income 410 345 +18.8% Basic EPS (RMB) 0.0215 0.0181 +18.8% Margins (YoY comparison) YoY ppt ∆ GCL New Energy Gross margin 67.5% 68.7% -1.2 ppt Average solar tariff went down in 1H2019 EBIT margin 60.4% 63.9% -3.5 ppt PBT margin 20.1% 18.8% +1.3 ppt Net margin 12.9% 12.8% +0.1 ppt Source: the Company, Guotai Junan International. The potential takeover by China Huaneng Group is highly likely to take place in 2H2019. GCL Poly Energy, the parent of the Company, and GCL New Energy (GNE) jointly announced in early June 2019 that a wholly owned subsidiary of GCL Poly had entered into a cooperation intent agreement with China Huaneng Group, one of the largest energy conglomerates in China, in relation to the possible sale of 9.73 billion ordinary shares of GNE, representing approximately 51.0% of the entire issued share capital of GNE. The cooperation intent agreement is non-legally binding and no terms of possible transaction have been agreed among the parties at the date of the joint announcement. The completion of the possible transaction will lead to change in the control of GNE, and GCL Poly’s holding in GNE will decrease from 62.3% to 11.3%. GCL Poly may exit all its shareholdings in GNE if a good deal were to be reached, in our opinion. Over the last 10 months, GNE sold approximately 1.6 GW of solar assets in 4 separate transactions.
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