Guangxi State-owned Assets Supervision and Administration Commission to speed up the integration and restructuring of state-owned enterprise resources

SASAC website on October 20, Guangxi State-owned Assets Supervision and Administration Commission in the comprehensive deepening of the reform of state-owned enterprises, give full play to the role of state-owned enterprises as the main body of the market, and vigorously support the advantages of the enterprise across the region, cross-industry, cross-ownership implementation of asset restructuring, to further enhance the efficiency of resource allocation in state-owned enterprises, and to optimize the distribution of state-owned economic The company's strategy is to optimize the layout and structure of the state-owned economy and enhance the competitiveness of the enterprises.

First, to carry out resource reorganization and integration. In accordance with the autonomous region of Guangxi State-owned Assets Supervision Commission supervision of enterprises in 2017 before the integration and reorganization of the target of about 20, started in January, led by the Guangxi State-owned Assets Supervision Commission were merged, the whole merger, transfer into the way of Guangxi Urban Construction Investment Group, Tourism Development Group and other 9 enterprises were reorganized. in early May, the main body of Liuzhou Wuling Automobile Company Ltd. set up the establishment of the Guangxi Automobile Group. At present, is integrating equity trading, intellectual property trading heart, rural property rights trading and other types of property rights trading organizations to form the Guangxi property rights trading group, before the end of the year is expected to be established.

The second is to support the merger and acquisition of enterprises and capital reorganization. Support Guangxi LiuGong Group to steadily promote mergers and acquisitions and reorganization strategy, holding Shanghai Jintai Construction Machinery Co., Ltd., the acquisition of Polish HSW construction machinery business, the acquisition of 42% of the shares of Shougang Heavy Duty Truck, and the U.S. Cummins Inc. to introduce the international advanced technology joint venture production engine, and the private sector to set up cooperation with the establishment of Guangxi LiuGong advanced lubricants Co. Guangxi Beibu Gulf International Port Group integrates the resources of Qinzhou, Fangcheng and Beihai ports to introduce central enterprises and private enterprises to invest in the shares, focusing on the development of port industrial sector business. Guangxi Financial Investment Group introduced China Taiping Insurance and other financial enterprises to take shares in Guangxi Beibu Gulf Property Insurance Company, financial leasing companies, etc., to achieve rapid expansion of business scale.

The third is to guide the restructuring and reorganization of enterprises. Actively guide and promote Guangxi Liu Gang Group, Guangxi urban and rural property development company, Guangxi Honggui Group under the Ronggui Trade Company, Guangxi New Development Transportation Group Road and Bridge Corporation and other 10 enterprises through restructuring and the introduction of strategic investors to reorganize the resources, the establishment of a modern enterprise system, revitalization of the stock of enterprise assets, and promote the restructuring of the enterprise renewed new vitality. Among them, Guangxi Yufeng Group, Guangxi Beibu Gulf International Port Group, Guangxi LiuGong Group and other enterprises through the transfer of equity, withdrawal according to law, etc., more than 20 of the inefficient and ineffective assets belonging to the enterprise has been transferred to clean up, and further improve the efficiency of asset operation.

Some of the conceptual stocks of Guangxi state-owned enterprise reform: Liu Gong, Gui Dong Electric Power, Guohai Securities, Wuzhou traffic, Beibu Gulf Port, Liu Steel, Guilin Tourism, Guiguan Electric Power, Liu Chemical shares. (Source: Securities Times)

Individual stock research report

LiuGong: downstream demand continues to be weak, looking forward to the state-owned enterprises reform to promote

Performance is lower than expected

LiuGong 1H15 achieved operating income of 3.69 billion yuan, down 34.6% year-on-year, and achieved net income of 86.7 million yuan, down 45.9% year-on-year, corresponding to earnings per share of 0.08 yuan. 0.08 yuan. The downstream demand for construction machinery continues to be sluggish, operating income declined year-on-year, the overall gross margin improvement: 1H15 the company earth and stone machinery / other construction machinery and accessories / financial leasing operating income declined by 37.4% / 30.8% / 19.9% year-on-year, respectively, the gross margin of other construction machinery and accessories year-on-year growth of 12.7ppt, the earth and stone machinery / financial leasing gross margin declined by 1.6 / 11.5ppt, the company's gross margin declined by 1.6 / 11.5ppt. 11.5ppt. The company's overall gross profit margin increased by 2.8ppt year-on-year to 25.0%.

Expense ratio increased 6.3ppt to 22.6% year-on-year, and net profit margin decreased 0.5ppt to 2.3%: the company's sales/management/financial expense ratio increased 2.0/3.0/1.4ppt to 9.8%/10.2%/2.5% respectively, and the increase in financial expense was mainly due to the increase in net exchange loss and discount interest; due to the change in accounting policy, the company's impairment loss on assets decreased 1.0ppt year-on-year; the company's gross profit margin decreased 1.6ppt year-on-year. Asset impairment loss decreased by RMB150 million year-on-year; Non-operating income increased by RMB32.13 million year-on-year due to the increase in government subsidies; and the Company's net profit margin decreased by 0.5ppt year-on-year to 2.3%.

2Q15 operating cash flow net outflow decreased: 1H15 company inventory/accounts payable decreased by 360/430 million yuan respectively compared with the beginning of the year, and accounts receivable increased by 57.18 million yuan. 2Q15 company operating cash flow net outflow of 310 million yuan, 110 million yuan less than in 1Q15, and 1H15 company cash flow net outflow of 740 million yuan, 1.08 billion yuan more than year-on-year outflow. billion yuan.

Trends

Looking forward to the reform of state-owned enterprises, monetary easing, "One Belt, One Road" policy catalyst: at the beginning of this year, the chairman of the listed company was promoted to the chairman of the group, the interests of the group and the company are aligned, and the future will be expected to benefit from the reform of state-owned enterprises. The easing of domestic monetary policy will bring down financial expenses and balance sheet repair. In addition, the company followed the "Belt and Road" strategy, continue to expand overseas markets, future export growth is expected.

Earnings Forecast Adjustment

Considering the overall sluggish demand for construction machinery, the company lowered its 2015e/2016e EPS forecast by 60.8%/28.6% to RMB0.11/0.24.

Valuation and Recommendations

The current share price corresponds to 15e/16eP/B is 1.0x/0.9x respectively, due to the weak demand in the industry, we downgrade the company's target price by 41.4% to $9.73, corresponding to 15e1.2x target P/B, corresponding to the current share price has a 24% increase, maintain the recommendation.

Risk

New product expansion is less than expected. (CICC)

Gui Dong Power: active layout of the energy Internet future performance with imaginative space

Event Comments

Performance to achieve substantial growth is mainly due to the equity investment to obtain a larger income. 15 years in the first half of the company's self-supply of electricity slipped, the outsourcing of high-cost electricity increased, resulting in a 6.53% decline in revenue from electricity sales; non-electric power sales, Qinzhou Yongsheng sales scale expanded, sales revenue increased by 314.84%, driving an overall increase in revenue of 74.22%. However, affected by the increase in bad debt provision for large accounts receivable in previous years, resulting in a loss of 62.99 million yuan, adversely affecting the company's profit, in the reporting period, the company reduced its holdings of Guohai Securities to obtain investment income of 570 million yuan, bringing a big increase in performance.

Divesting loss-making assets and actively expanding energy internet. (1) In order to focus on the main business of electricity, the company and its subsidiaries transferred Gui Dong Electronics, which has suffered losses for three consecutive years due to the impact of high upstream costs. (2) Together with Jaeger Electronics, we will try distributed power access and smart microgrid solutions based on the demand side of electricity, and explore the energy Internet standards and models integrated with the smart grid.

The acquisition of Kaibao Heavy Industry, joined hands with Guangxi Zhenlong, began the layout of new energy vehicles. Guangxi Zhenlong is a set of new energy research and development, production, sales, service as one of the enterprises, the company began to layout the new energy automobile field with its cooperation. 2015 February due to the debt offset, the company's wholly-owned subsidiary Qinzhou Yongsheng transferred Liuzhou Zhengling Group "Kay Bow Heavy Industry" 100% equity; May 2015, the company signed a "cooperation framework agreement" with Guangxi Zhenlong, which stipulates that the company shall cooperate with Guangxi Zhenlong in the development of new energy automobile. In May 2015, the company and Guangxi Zhenlong signed a "cooperation framework agreement", which stipulates that after Guidong completes the registration of the equity of "Kai Bao Heavy Industry", its equity value will be added to Guangxi Zhenlong.

Half-yearly profit distribution of 10 to 10, turn 10, highlighting the company's confidence in future development.

It is expected that the company 2015 ~ 2017 EPS were 0.26, 0.35, 1.78, maintain the "recommended" rating.