The hottest Pinggao electric company successfully

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PingGao Electric: treading the waves, successfully won Mengxi

Pinggao electric (600312)

Event: on November 15, 2018, the company announced that it had won the bid of 320million yuan in the bidding of GIS (closed combination apparatus) for the national power Mengxi Jinzhong 1000kV UHV AC transmission project

successfully won the first special GIS order in 18 years, and the average winning price rose sharply. The Mengxi Jinzhong project was approved by the national development and Reform Commission in March 2018, officially commenced on November 6, and is expected to be completed and put into operation in December 2019. The project will expand 1000kV substations in Mengxi and Jinzhong, and build 304km double circuit 1000kV Transmission lines, with a dynamic investment of about 5billion yuan. The two substations expanded in the project are designed to be equipped with six 1000kvgis bays. The company won the bid for four and new northeast electric won the bid for two. The average unit price of GIS also showed a significant rise. The average unit price of the company winning the bid was 79.95 million yuan/interval, and the bidding price of new Northeast Electric was 76.65 million yuan/interval. The bidding prices of both companies were significantly higher than the average price of 70million yuan/interval at the end of 2016

the ability to deal with trade protectionism has been strengthened, and the UHV construction has resumed its climax, with the peak delivery of main equipment in 19/20. On September 7, 2018, the Energy Administration approved 14 UHV lines in a centralized manner, with the intention of building a stable growth base. Qinghai Henan 800kV extra direct line project was approved by the national development and Reform Commission on October 25 and officially commenced on November 7. In terms of pace, 18/19 will be the year of approval, and the 3 direct delivery and 6 delivery projects will be approved and completed in 18q4. The total investment scale of 14 lines is expected to be more than 200billion, and PingGao Electric is expected to add more than 6billion UHV related orders. With the bid winning of 320million, the company's UHV orders on hand will exceed 4billion yuan. We judge that the delivery scale of UHV orders in the company is about 2billion, 2.5 billion, 4 billion and 1.5 billion, which is expected to bring great performance flexibility

power investment is inclined to distribution, and the company has sufficient orders on hand: in 2017, China's power investment below 110KV (including 110kV) reached 306.4 billion yuan, and the annual compound growth rate of investment reached 11.48. The proportion of exports to emerging countries will also be greatly increased, and the investment structure will account for 57.4%. From the perspective of industry dynamics, distribution automation, incremental distribution and power informatization will become the focus of investment. The company has sufficient orders for manual distribution. Since 2018, the company has successively won the bid in the field of medium and low voltage distribution, amounting to 4.08 billion yuan, 58% higher than the revenue of distribution related businesses in 2017. Pinggao group, the shareholder, is actively cooperating with provincial companies in power distribution business through the new business model, and has received 1.67 billion distribution orders from Zhejiang Province on September 21. With the launch of the new model, we expect the company to get more distribution orders in 18q4

investment suggestion: Buy-A investment rating, 6-month target price of 12.00 yuan. We expect the revenue growth rate of the company in 2018/19/20 to be 0.1%, 16.7% and 23.9% before and during the exhibition, and the net profit growth rate to be -30.3%, 63.3% and 64.6% respectively. Why do you regret buying test machines on a large scale? The resumption of construction will bring great performance flexibility to the company, and the allocation of investment is expected to strengthen the sustainability of performance. Maintain the Buy-A rating of the company, raise the target price to 12.00 yuan, and the target price corresponds to the dynamic p/e of 2018/19/20, which is 37/22/13x respectively

risk tips: 1) project approval time is delayed or industry competition intensifies; 2) The price of bulk raw materials rose sharply; 3) The bid winning rate of the order is lower than expected or the order is not delivered in time; 4) Risks of transnational operations and new business models

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