Elion Clean Energy (600277): plans to issue additional acquisitions of Elion ecological restoration + green industry synergies

Elion Clean Energy (600277): plans to issue additional acquisitions of Elion ecological restoration + green industry synergies

Event: Elion Clean Energy announced on the evening of July 24 that it will issue shares and pay cash to purchase assets and raise supporting funds and related party transaction plans (revised draft). The company intends to purchase Elion Group by combining the issue of shares and cash payment.Yili Ecology 87 held by Lily Holdings and Central Enterprise Poverty Alleviation Investment Fund respectively.

41%, 0.

88%, 11.

71%, a total of 100% equity, Yili Ecological’s 100% equity is expected to increase by 4.3 billion; of this, about 85% of which is intended to be paid by issuing shares, and the price of the issued shares is 8.

39 yuan / share. It is planned to pay about 15% by cash purchase.

4.5 billion, paid with Yili Group.

After the completion of the transaction, Yili Ecology will become a wholly-owned subsidiary of the listed company.

At the same time, the company intends to issue shares to no more than 10 (including 10) eligible investors to raise supporting funds to pay the cash consideration and transaction-related costs of the reorganization, invest in the construction of the target asset and construct the project, and supplement the target asset.Liquidity and debt repayment.

The size of the supporting funds to be raised in this transaction does not exceed the transaction price of the assets to be purchased through the issuance of shares. This transaction is deducted from the counterparty’s transaction in the six months before the suspension of the transaction and during the suspension of the transaction.100% after the price.

The lock-up period for the shares of the listed company obtained by Yili Group and Yili Holdings in this transaction is 36 months. The central enterprise poverty alleviation investment fund will re-sign an agreement with the listed company to agree on the lock-up period arrangements.

Opinions: 1. Yili Ecological Static City Surplus 7.

5 times, this transaction will significantly increase the performance of listed companies and increase the EPS level of listed companies. Yili Eco’s revenue from 2017 to 2018 will be 24.


0 million yuan, the net profit attributable to mothers was 2 respectively.

55, 5.

With an estimated profit of USD 7.5 billion, Elion Ecology’s 100% distribution is USD 4.3 billion, corresponding to an 18-year static price-earnings ratio of 7.

5 times.

Listed companies achieved operating income of 167 in 2017-2018.

6 (adjusted) and 173.

700 million, realizing net profit attributable to mother 5.

25 (adjusted) and 7.

700,000 yuan, the net profit 杭州桑拿网 of deducting non-attribution to mother is 4.

36 (adjusted), 5.

The US $ 7.7 billion acquisition of Elion Ecology will significantly increase the operating income and net profit level of listed companies, and the business scale and profitability will be further enhanced.

The listed company’s closing price on July 25 was 5.

07 yuan / share, corresponding to a market size of 139 trillion, corresponding to 18 years of EPS is 0.

28 yuan / share, corresponding to 18 years of static market surplus of 18.

0 times.

Listed companies intend to issue shares to purchase assets at a stock issue price of 8.

39 yuan / share, compared with today’s closing price of 5.

07 yuan / share premium pricing; if you do not consider the issue of shares to raise supporting funds, the corresponding 18-year EPS after the completion of the issuance is 0.

42 yuan / share, currently corresponding to 18 years of static market surplus of 12.

0 times; if only the proceeds from the issuance of shares are used to pay the cash consideration for this reorganization, the use of other matching funds is not considered, and the price of the issued shares is also assumed to be 8.

39 yuan / share, the corresponding EPS in 2018 after the completion of this additional issue is 0.

41 yuan / share, currently corresponding to 18 years of static market surplus of 12.

3 times.

Second, Elion has a leading level of ecological technology and complete qualifications. The demonstration effect of benchmarking projects is obvious, and sufficient orders in hand guarantee good future performance growth.
Elion Ecology was established in 2014. Its main business is ecological environment construction.
Elion Ecology is backed by accumulated cold resistance, drought resistance, salt and alkali resistance, poor-tolerance feed germplasm resource bank, biological fungus bank, and formed big data on soil, biology, geography, and climate information.There are organic integration of technology and engineering technology packages for ecological restoration and improvement, providing customers with overall solutions for land greening, ecological park development, comprehensive water environment management, and soil restoration services.

Yili Ecology has the largest germplasm resource bank in Northwest China, and supplements the National Forest Germplasm Resource Bank of the National Forestry and Grassland Bureau. It collects, cultivates and breeds more than 1,000 kinds of drought, cold, salt, alkali and aeolian sand.Barren-tolerant high-quality plant germplasm resources have been built into a 4.95 million mu germplasm resource base.

The target company holds a total of 71 authorized patents, including 25 patents in the field of water environment restoration, 23 patents in the field of mine soil restoration, 19 patents in the field of plant applications (including ecological construction in alpine regions), and 2 patents in the field of air purification.There are 2 waste disposal fields; Yili’s ecological patent holding index has wide coverage, and its technological level has a leading edge in the industry.

In terms of qualifications, Yili has complete ecological qualifications and higher qualifications. It has first-level qualifications for urban landscaping enterprises, first-level qualifications for general contracting of municipal public works, and first-level qualifications for general contracting of water conservancy and hydropower projects.

Elion’s iconic large-scale ecological restoration projects include the Winter Olympics · Beijing-Zhanghai Expressway (G6) Welcome Corridor Project in Zhangjiakou City, Hebei Province, key technology research and development and greening model demonstration projects for urban tree planting in Naqu, Tibet, and “Landscape, Forest and Lake” in Qilian Mountains, QinghaiThe projects, etc., demonstrate the core competitiveness of Elion Ecology with advanced ecological restoration system, multi-field comprehensive construction and construction capabilities, cross-region construction and operation organization capabilities, and the influence advantages of these brands.

Elion Eco’s 2016, 2017, 2018 and January-March 2019 add orders or contract amounts are 1.

5, 47.

1, 59.

9, 11.

At the end of the first quarter of 2019, Elion Eco has about 37 orders or contracts in hand, with a total scale of about 12 billion.

Elion Eco achieved rapid growth in revenue and performance in 2018, and achieved revenue of 43 in 18 years.

0 ppm, an increase of 75 in ten years.

8%, realizing net profit attributable to mother 5.

7.5 billion US dollars, a year-on-year increase of 126%; this additional issue plan re-discloses the performance commitment arrangement of the target company. The listed company and Yili Group and Yili Holdings will re-sign related agreements to conduct performance commitments and compensation related to the transaction.Promise.
Taking into account the outstanding strength of Yili Ecology in the field of ecological environment management and restoration, sufficient orders in hand, and strong funding support after the completion of the issuance, it is expected that future performance will maintain good growth.

Third, the main business of listed companies has developed steadily as a whole. The main businesses of listed companies with good cash flow include the circular economy and Jeneng environmental protection. Their performance contribution accounts for over 95%.

Among them, the circular economy takes the efficient and clean utilization of coal as the starting point, actively builds an integrated circular economy industrial chain with chlor-alkali and polyester industries as its core, and extends the supply chain service business. The main circular economy products include polyvinyl chloride (PVC).Caustic soda, calcium carbide, coal, etc. At present, the company’s projects in the circular economy industry are mainly wholly-owned companies with an annual output of 64 environmentally friendly calcium carbide projects located in the Dalat Circular Economy Park, with a controlled annual output of 50 PVC and 40 distilled caustic soda.The project, as well as the company holding an annual output of 60 distillates, 20 inches of methanol, 60 synthetic ammonia, 104 filler compound fertilizer and a planned 2.6 million tons carbon-based compound fertilizer project, are located in the Kubuqi Circular Economy Park.

In 2018, affected by the continuous deepening of supply-side reforms and the seriousness of environmental protection policies, the company’s main circular economy products, such as PVC, caustic soda, grains, and coal, remained at high levels. After entering 2019, the prices of PVC and coal remained relatively stable.However, the decline in cholesterol and caustic soda prices has dragged down the company’s performance.

The company’s environmental protection sector mainly includes two fields: clean heat and ecological photovoltaic.

In the field of clean heat, as of the end of 2018, the company has completed 13 clean heat projects or trial operations, totaling 1520T / H, 4 projects under construction, totaling 450T / H, 4 projects to be started, totaling 525T / H,With the advancement of projects under construction and the running of projects already in operation, the company’s clean heat industry has entered a healthy development stage of stable operation, and its profitability has steadily improved.

In the field of eco-photovoltaics, the Kubuqi 1GW eco-photovoltaic project proposed by the company is mainly solar power generation, planting, breeding, and grid-connected power generation of 510 MW; in 2018, Kubuqi ecological power generation3.

4.3 billion kWh, realizing electricity sales revenue2.

USD 5.7 billion. The company’s ecological photovoltaic business will maintain a good growth through the continuous increase of the scale of grid connection in the future.

The company’s cash flow is good, and the cash-to-cash ratio in 2018 was 93.

5%, the net cash flow from operating activities was 36.

1.9 billion US dollars, good cash flow provides a strong guarantee for the company’s future healthy development.

Fourth, unified on the platform of listed companies, ecological restoration and green industry bid farewell to the parallel development pattern; the two have obvious synergy and promote the promotion of the ecological industry service strategy to achieve long-term development. Billion Group has explored in 30 years of Kubuqi desert control experience.The innovative mode of “ecological industry service” is to increase the value-added income of land restoration (including agriculture, industry and urban land) through large-scale ecological restoration, and introduce a variety of internal green industries including clean energy environmental protection industry, cultural tourism industry, etc.Realize multiple ecological industry benefits, and create “temporary”, “medium term”, and “long term” income and cash flows from ecological restoration, land value-added benefits, and green industry introduction and operation.

The existing circular economy industrial park of the listed company also promotes this innovative model for Yili Group. Based on the core ecological restoration technology, the desert is turned into industrial land, and the industrial industry is introduced to establish an industrial park, thereby obtaining land value-added benefits and ecological restoration benefits.Outstanding results.

The listed company and Elion Ecology belong to the two core sectors of the Green Industry and Ecological Restoration under the “Ecological Industry Service” innovation model of Elion Group. After the transaction, they will be unified on the platform of the same listed company to break through ecological restoration and green industries.The pattern of parallel development.

Listed companies and Yili Ecology are complementary and synergistic in their business structures. Through this transaction, the business of listed companies will be extended upstream of the large ecological industry, which can further promote the green mining of the circular economy industry, clean and low-carbon utilization; and green industries.The stable cash flow will feed back ecological restoration, governance, and complementary advantages, and the long-term sustainable development of the businesses of both parties will be favorably supported.

V. Profit forecast and investment advice The company’s main business segment, meanwhile, the prices of chemical products such as plasma and caustic soda have declined, which has affected the performance to some extent, but the prices of PVC and coal have remained at a high level, and clean heat and ecological photovoltaic are expected toAchieve motherhood performance in 2019-2021. 8.

0, 8.


7 trillion, the current sustainable growth of the corresponding urban surplus17.

4, 15.

7, 14.

4 times.

If you consider the increase in performance brought by the acquisition of Yiwanli Ecology, and do not consider the subsequent dilution of supporting funds, the static market surplus of 18 years will be substituted.

0 times (Yili Ecological’s 19-21 year performance commitment has not been disclosed).
In the future, with the completion of the acquisition of 100% equity of Elion Ecology, the environmental appeal of ecological restoration and the strong cash flow of the green industry will form a joint force, solve the constraints of the merger model, and ultimately improve overall profitability. The long-term development prospects are promising.
Covered for the first time and given a “Highly Recommended-A” rating.

Sixth, the risk alert plan has not been approved by the CSRC to pass the risk; the project progress is not as expected, the project operation is not as expected, the risk of falling chemical prices, and the systemic risk of the broader market.