China Jiaotong (601800) Company Comments: Proposed Transfer of CCCC Dredging Equity, Focus on Main Business and Optimize Capital Structure
It is proposed to transfer the wholly-owned subsidiary CCCC Dredging Equity to the controlling shareholder CCCC Group and strategic investors.
The company announced that it plans to transfer its wholly-owned subsidiary CCCC Dredging to the controlling shareholder CCCC Group34.
9.6 billion shares with a total transfer price of 86.
3.4 billion; CCCC Dredging intends to issue an additional 20 to CCCC through a non-public agreement.
2.4 billion shares, with a total capital increase of 5 billion yuan.
At the same time, it is proposed to be a strategic investor of CCCC Dredging through a publicly listed transfer on the stock exchange, and the total number of shares to be transferred does not exceed 55.
200 million shares, if the minimum listed price is 2.
47 yuan calculation, the transaction price of 136.
In addition, CCCC Dredging paid a special dividend of 4 billion pounds to existing shareholders on April 30.
After the transaction is completed, CCCC Group holds 40% equity of CCCC Dredging, listed companies hold no less than 20% equity, and strategic investors outside dating hold no more than 40% equity.
After the equity settlement, listed companies will no longer consolidate CCCC dredging.
In 2018, CCCC Dredging achieved operating income of 342.
30,000 yuan, net profit of 12.
USD 800 million, respectively accounting for 7% / 6 of the company’s revenue / net profit.
The transfer of CCCC Dredging will help the company to further focus on the main business and optimize the structure of assets and liabilities.
The impact of this transaction is: 1) The company is expected to receive a total of approximately 26.3 billion in cash. If the entire fund is used to repay bank loans, simple calculation based on 2018 balance sheet data can reduce the asset-liability ratio2.
7 pcts to further optimize the capital structure; if you follow 4.
5% interest rate calculation can reduce financial costs by about 1.2 billion yuan.
2) After the transaction, the company will replenish its capital, which will allow it to focus more on its main business, focus on resource input, speed up the implementation of projects in progress, and further enhance its core competitiveness in the infrastructure sector.
3) The transaction gains before tax deduction are expected to be 21.
70,000 yuan, accounting for 8% of profit before tax in 2018.
4) For CCCC Dredging, as one of the “Double Hundred Actions” enterprises in the state-owned enterprise reform, through this transaction and dating strategy, the investor will become a directly controlled subsidiary of CCCC, which can strengthen CCCC’sDredging management and control, innovating the state-owned capital authorized operating system, improving the efficiency of management and control, and enhancing the external market’s recognition of CCCC’s first-level professional subgroups, will also help CCCC dredging to gain more national policies through the size of CCCCThe support has prompted it to better cope with the competition in the dredging industry, while China Communications Construction still retains 20% equity to continue to enjoy its investment income.
Orders in Q1 accelerated significantly, with ample orders in hand, which directly benefited from the infrastructure supplementary short-board policy.
In 2019Q1, the company’s new highway bill was 2033 million US dollars, an increase of 13% year-on-year, an increase of 12 percentage points compared with the growth in 2018, a significant acceleration.
As of the end of 2018, the company has orders in hand1.
69 trillion yuan, which is 3% of the company’s annual revenue.
4 times extra extra.
In 2019, the company plans to increase the growth rate of new starting orders by no less than 8%, of which PPP investment project orders are 150 billion yuan; planned revenue growth is not less than 10%.
Recently, the central government issued a policy to clarify that some local government’s special debts can be used as capital funds, and support areas include national key railways and highway projects. The steady growth policy of infrastructure has been increased, and the company has directly benefited as an infrastructure leader.
Investment suggestion: Assuming that the transaction is completed in 2019, the company is expected to realize net profit attributable to the mother of RMB 228.22 / 26.6 billion from 2019 to 2021, an increase of 16% / 6% / 10%, and an EPS of 1.
64 yuan, the current sustainable corresponding PE in the next three years is 7重庆耍耍网 respectively.
7x, maintain “Buy” rating.
Risk reminder: risk of failure of this transaction, macroeconomic cycle risk, PPP policy risk, overseas operation risk, exchange rate risk, etc.