[HOLD评级]DATANG INTERNATIONAL POWER GENERATION(601991/00991.HK):ASSET INJECTION TO CONSOLIDATE CAPA.

时间:2017年12月07日 18:01:20 中财网


What's new
On December 7, Datang International announced itslong-anticipated power asset injection: it acquired 100% equityinterests in Datang Heilongjiang Power, Datang Anhui Power andDatang Hebei Power for a total consideration of Rmb18.1bn in cash.As of September 2017, Heilongjiang, Anhui and Hebei Power hadpower capacity of 3.9GW, 6.2GW and 2.9GW respectively.
Comments
Overpaid for transaction; worries over 2018 dividend payout. Thedeal’s total consideration was Rmb18.1bn in cash, of whichRmb5.88bn was for Heilongjiang Power, Rmb7.8bn for Anhui Powerand the remaining Rmb4.44bn for Hebei Power. The transaction priceimplies 1.5x–1.8x 2018e P/B, much higher than the 0.6x/1.3x ofDatang-H/-A. We expect its stock prices to face near-term pressuredue to the price premium and worries over its 2018 dividend payout.
Power capacity strengthened by 28%, a way to expand market shareunder tight controls over coal-fired power investment. As ofSeptember 2017, the company managed 47.1GW of total powercapacity, which is expected to increase by 28% to 60.2GW afterfactoring in 13.1GW from the target companies. The transaction willexpand its market share in North, East, and Northeast China andfurther strengthen its bargaining power within these regions. Ourpreliminary calculations suggest that the asset injection may lift its2018 earnings up by 14.1%.
Valuation and recommendation
We maintain our 2017/19 EPS forecasts at Rmb0.17/0.29. Wereiterate Datang-H’s BUY rating and target price of HK$3.45, andDatang-A’s HOLD rating and target price of Rmb4.53.
Risks
Asset acquisitions fail.
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