SWS Co. Ltd is a subsidiary of ShenwanHongyuan Securities. 99 East Nanjing Road, Shanghai +86 21 2329 7818 www.swsresearch.com Technology Hardware & Equipment Company Bringing China to the World 2 June 2016 BUY 全面进入 EMC 模式 Unchanged 同方泰德 (1206:HK) Market Data: June,1 Financial summary and valuation Closing Price (HK$) 4.06 Price Target (HK$) 6.50 HSCEI 8708 HSCCI 3618 52-week High/Low (HK$) 8.60/2.57 Market Cap (USD Mn) 407 Market Cap (HK$ Mn) 3157.6 Shares Outstanding (Mn) 778 Exchange Rate (RMB-HK$) 1.21 Price Performance Chart: Revenue (Rmb) YOY (%) Net income (Rmb) YOY (%) EPS (Rmb) Diluted EPS (Rmb) ROE (%) Debt/asset (%) Dividend Yield (%) PE (x) PB (x) EV/Ebitda (x) 2014 2015 2016E 2017E 2018E 1,394 737.0 167.1 973 0.296 0.268 14.16 54.4 12.8 1.8 7.7 1,693 21.4 776.5 365 1.068 1.009 38.69 22.3 3.4 1.2 5.0 2,037 20.3 240.7 (69) 0.311 0.283 12.86 24.9 12.1 1.2 4.4 2,548 25.1 285.8 19 0.369 0.336 12.91 28.2 10.2 1.0 3.4 3,163 24.1 341.5 20 0.441 0.401 19.45 32.4 0.1 8.6 0.9 2.5 Note: Diluted EPS is calculated as if all outstanding convertible securities, such as convertible preferred shares, convertible debentures, stock options and warrants, were exercised. 同方泰德 1206HK 已调整部门收入 并且把重心放在智慧交通 智慧建筑和热网 节能的 EMC 模式上 同方泰德开始从传统销售智慧设备转型为节能市场中的全面服 务领导者 Source: Bloomberg Analyst Vincent Yu A0230513070005 BAM599 yuwj@swsresearch.com (+86) 21 2329 7301 Contact Hunter Du (+86) 21 23297818 7421 Duhm@swsresearch.com Related Reports "Technovator(1206 HK) Intelligent structure" Mar24, 2016 The company does not hold any equities or derivatives of the listed company mentioned in this report ( target ), but then we shall provide financial advisory services subject to the relevant laws and regulations. Any affiliates of the company may hold equities of the target, which may exceed 1 percent of issued shares subject to the relevant laws and regulations. The company may also provide investment banking services to the target. The Company fulfills its duty of disclosure within its sphere of knowledge. The clients may contact compliance@swsresearch.com for relevant disclosure materials or log into www.swsresearch.com under disclosure column for further information. The clients shall have a comprehensive understanding of the disclosure and disclaimer upon the last page. 本研究报告仅通过邮件提供给 工银瑞信基金 工银瑞信基金管理有限公司(reports@icbccs.com.cn) 使用 1 EMC 模式下的智慧交通 中国政府鼓励一线和二线城市发展城市轨道交通网络 全国 现有 2723km 长的交通网络而政府计划于 2020E 完成 6000km 的目标 同方泰德的交 通业务于 2015 年从 EPC 模式中达到了 167%的收入增长 近期宣布了北京地铁 8 号 和 9 号线 EMC 项目的新合同 总计 28 个地铁站 在 EMC 合同下 公司将会为地铁 站节约约 60%能源 其中 80%的缩减的节能开支将为同方泰德的利润分享 我们从管 理层获悉 同方泰德计划于 2018E 拿下 200-300 个地铁站的合同 我们相信公司的智 慧交通板块的利润率也会随着合同数量上升 城市供热潜在增长 公司持有城市供热网络中监管控制系统中超过 50%的市场份额 覆盖了中国北部和东北部大约 8 亿平方米的供热系统 在公司去年的资产注入后 我 们预计公司将从中国热供暖市场私有化中获利 同方的业务模式通常使用设计 采购 施工(EPC)和 EMC 模式 将会为公司带来约 30%的毛利 智慧建筑行业稳定利润率上升 由于房产业需求下滑 SBB 板块利润率从 23.4%降到 19.5% 同时营业收入从 63%降到 40.7% 然而 同方泰德计划实施更高利润率并且 易复制的项目 例如高端酒店 智慧设施和数据中心 同时 与发达国家绿色建筑渗透 率 50% 相比 中国绿色建筑渗透率仍维持于较低水平 约 10% 随着中国绿色 建筑标准落实 作为节能建筑的标准制定参与者之一 同方泰德将从绿色建筑上升的 市场规模中获利 维持买入评级 基于房产需求下滑的现状和同方泰德新的战略计划 我们将公司 16E 每 股净利润从 0.29 元人民币调至 0.28 元人民币 同比减少 71% 17E 每股净利润从 0.38 元调至 0.34 元 同比增长 19% 公司现估值为 2016 年 12 倍市盈率 被明显 低估 由于深港通临近 我们维持目标价至 6.5 港币 隐含 2016 年 18 倍市盈率 有 60%的上升空间 我们维持我们的买入评级
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 2 Technovator has reorganised its revenue structure to emphasise its energy management contracts (EMC) model segment with a focus on smart transportation, smart buildings and urban heating projects, marking the company s transition from a seller of smart equipment to offering comprehensive energy saving services suite. EMC starts in smart transit. The government is encouraging tier-1 and -2 cities to develop urban rail transit networks, targeting a 6,000km network by 2020E (vs current network length of 2,723km). Technovator s revenue from engineering, procurement and construction (EPC) services for transit projects rose 167% YoY in 15A. In the year to date, the company secured new EMC contracts for 28 stations on Beijing metro lines 8 and 9, pledging a c.60% energy saving, for which Technovator will retain 80% or resulting cost savings. Company management targets to secure 200-300 stations by 18E and we expect its margin on such projects to widen as it grows its portfolio of contracts. Potential boom in urban heating. Technovator holds more than a 50% share of the market for supervision and control systems within urban heating networks, providing heating for c.800m m 2 of housing in northern and northeastern Chinese regions. After injection of assets from its parent last year, we expect the company to benefit from moves to privatise the thermal heating market. Both EPC and EMC models are commonly applied in the market, typically earning a gross margin of c.30%. Building up margin. As real estate demand has weakened, the company s smart building segment gross margin has fallen from 23.4% in 14A to 19.5% 15A and segment contribution to overall revenue fell from 63% to 40.7% in the same periods. However, Technovator management notes it is shifting emphasis to higher-margin easy-to-replicate projects such as high-end hotels, intelligent complexes (such as industrial parks) and data centres. Meanwhile, with the proportion of buildings meeting green standards relatively low (c.10%) vs in developed countries (50%), we expect continued growth in demand as China becomes more green. Maintain BUY. To adjust for weaker property demand and the company s reoriented strategy, we lower our EPS forecasts from Rmb0.30 to Rmb 0.28 in 16E (-72% YoY), from Rmb 0.38 to Rmb 0.34 in 17E (+21% YoY) and from Rmb 0.51 to Rmb 0.40 in 18E (+18% YoY). The company is currently trading at 12x 16E PE, which we see as significantly undervalued. Furthermore, we see it as fitting the preferred profile for mainland investors, of small cap growth stocks, suggesting the launch of the Shenzhen-Hong Kong Stock Connect, anticipated this year, will serve as a significant catalyst. We maintain our target price of HK$6.5, implying 18x 16E PE. With 60% upside, we maintain our BUY rating. Please refer to the last page for important disclosures Page 1
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 3 Appendix Fig 1: Technovator sales, by segment, 15A Fig2: Technovator operating profit by segment, 15A Urban heating, 19.60% Smart buildings, 43.40% Urban heating, 22.30% Smart buildings, 40.70% Smart transportation, 37.00% Smart transportation, 37% Source: Company data, SWS Source: Company data, SWS Fig 3: China urban transit total kilometers from -2020E 7,000 (km) 6,000 5,000 4,000 3,000 2,000 1,000 0 2011 2012 2013 2014 2015 2016F...2020F Source: Company data, SWS Fig4: EMC business model ESCos subsidy Government Subcontract of implementation & maintenance Integrated solution with capital, technology & product facilitation payment instruction Capital flow Information flow Local SMEs Local market resources Resource Integration Energy saving market incubator Localized implementation & maintainance Jointly Market development; business negotiation; signing contract; Capital & product & technology Customers Project implementation & operation Reduce energy consumption achieve energy saving benefit Source: Company data, SWS Please refer to the last page for important disclosures Page 2
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 4 10/2011 01/2012 04/2012 07/2012 10/2012 01/2013 04/2013 07/2013 10/2013 01/2014 04/2014 07/2014 10/2014 01/2015 04/2015 07/2015 10/2015 01/2016 Fig 5: China EMC market Capex, 2014-20F Fig6:China EMC market turnover, 2014-20F 200 180 160 140 120 100 80 (Rmbbn) 2014-20 Cagr 13% 121.6 104.7 90.1 137.9 153.3 169.4 185.7 300 250 200 150 (Rmbbn) 2014-20 Cagr 15% 174.4 150 123.6 202.5 229.6 255.4 282.1 60 40 100 20 0 2014 2015 2016 2017 2018 2019 2020 50 0 2014 2015 2016 2017 2018 2019 2020 Source: Forward-looking, SWS Source: Forward-looking, SWS Fig 4: EPS forecast changes (US$m) New Old Change 16E 17E 16E 17E 16E 17E Revenue 2,037 2,548 2,023 2,447 0.70% 4.10% Gross profit 495 584 488 615 1.40% -5.10% Net profit 241 286 228 296 5.60% -3.40% EPS (US$) 0.28 0.34 0.31 0.38-9.40% -11.70% Source: SWS Fig 4: Technovator forward PE HK$ 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 1206 HK Forward PE band 1206 HK Equity PE 4x PE 8x PE 12x PE 16x Source: SWS Please refer to the last page for important disclosures Page 3
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 5 10/2011 01/2012 04/2012 07/2012 10/2012 01/2013 04/2013 07/2013 10/2013 01/2014 04/2014 07/2014 10/2014 01/2015 04/2015 07/2015 10/2015 01/2016 Fig 5: Technovator forward PB HK$ 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 1206 HK Forward PB band 1206 HK Equity PB 1x PB 2x PB 3x PB 4x Source: SWS Please refer to the last page for important disclosures Page 4
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 6 Table 1: Consolidated Income Statement Rmb Mn 2014 2015 2016E 2017E 2018E Revenue 1,394 1,693 2,037 2,548 3,163 Cost of Sales -1,023-1,297-1,542-1,964-2,453 Gross Profit 371 396 495 584 710 Other Income 26 60 73 92 114 Distribution expenses -68-70 -93-101 -129 Adminstrative expenses -109-144 -165-205 -250 EBITDA 300 334 421 507 613 EBIT 220 241 309 370 444 Finance Costs -22-35 -41-51 -63 Profit before tax 198 207 268 319 381 Income tax expense -42-21 -28-33 -39 Minority interests 30 8 0 0 0 Profit for the year 167 777 241 286 342 Source: SWS Table 2: Consolidated Cash Flow Statement Rmb Mn 2014 2015 2016E 2017E 2018E Profit before taxation 197 785 268 319 381 Plus:D&A 79 93 112 138 169 Finance cost 20 14-21 -28-33 Losses from investments 79-513 0 0 0 Change in working capital -273-273 -207-47 -64 Others -46-35 -28-33 -39 CF from operating activities 56 71 125 348 414 CAPEX -160-151 -171-214 -266 Other CF from investing activities -92 466 21 28 33 CF from investing activities -252 314-150 -186-233 Equity financing 3 613 0 0 0 Net change in liabilities 209-184 111 155 217 Dividend and interest paid 0 0 0 1 2 Other CF from financing activities 14 #REF! 0 0 0 CF from financing activities 226 413 111 155 217 Net cash flow 30 799 86 317 398 FCFF -92-68 71 279 323 FCFE 391 20 389 481 604 Source:SWS Table 3: Consolidated Balance Sheet Rmb Mn 2014 2015 2016E 2017E 2018E Current Assets 1,934 3,187 2,908 3,514 4,258 Please refer to the last page for important disclosures Page 5
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 7 Bank balances and cash 455 1,262 1,347 1,665 2,062 Trade and other receivables 927 1,213 865 1,082 1,343 Inventories 186 284 266 339 423 Long-term investment 656 680 680 680 680 PP&E 342 267 279 298 326 Intangible and other assets 347 256 304 361 430 Total Assets 2,916 3,965 3,745 4,428 5,268 Current Liabilities 1,269 1,755 1,293 1,691 2,189 Borrowings 626 446 557 712 928 Trade and other payables 856 1,460 887 1,130 1,411 Other current liabilities 23 19 19 19 19 Long-term liabilities 231 35 35 35 35 Total Liabilities 1,736 1,959 1,497 1,895 2,393 Minority Interests 30 8 8 8 8 Shareholder Equity 1,181 2,007 2,248 2,533 2,875 Share Capital 630 1,247 1,247 1,247 1,247 Reserves 521 752 992 1,278 1,620 Equity attributable 1,151 1,999 2,239 2,525 2,867 Total Liabilities and equity 2,916 3,965 3,745 4,428 5,268 Source: SWS Table 4: Key Financial Ratios Ratios per share (US$) 2014 2015 2016E 2017E 2018E Earnings per share 0.296 1.068 0.311 0.369 0.441 Operating CF per share 34 97 0.161 0.450 0.535 Dividend per share 0 0 0 0 0 Net assets per share 1.89 2.75 2.90 3.27 3.71 Key Operating Ratios (%) ROIC 7 8 12 12 12 ROE 14 39 13 13 19 Gross profit margin 27 23 24 23 22 EBITDA Margin 21 20 21 20 19 EBIT Margin 16 14 15 15 14 Growth rate of Revenue(YoY) 737 21 20 25 24 Growth rate of Profit(YoY) 973 365-69 19 20 Debt-to-asset ratio 54 22 25 28 32 Turnover rate of net assets 118.1 84.3 90.6 100.6 11 Turnover rate of total assets 47.8 42.7 54.4 57.5 6 Effective tax rate (%) 21.1 10.3 10.3 10.3 10.3 Dividend yield (%) 0.1 Valuation Ratios (x) PE 12.8 3.4 12.1 10.2 8.6 PB 1.8 1.2 1.2 1.0 0.9 EV/Sales 1.7 1.0 0.9 0.7 0.5 EV/Ebitda 7.7 5.0 4.4 3.4 2.5 Source: SWS Please refer to the last page for important disclosures Page 6
本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 8 Information Disclosure: The views expressed in this report accurately reflect the personal views of the analyst. The analyst declares that neither he/she nor his/her associate serves as an officer of nor has any financial interests in relation to the listed corporation reviewed by the analyst. None of the listed corporations reviewed or any third party has provided or agreed to provide any compensation or other benefits in connection with this report to any of the analyst, the Company or the group company(ies). A group company(ies) of the Company confirm that they, whether individually or as a group (i) are not involved in any market making activities for any of the listed corporation reviewed; or (ii) do not have any individual employed by or associated with any group company(ies) of the Company serving as an officer of any of the listed corporation reviewed; or (iii) do not have any financial interest in relation to the listed corporation reviewed or (iv) do not, presently or within the last 12 months, have any investment banking relationship with the listed corporation reviewed. Undertakings of the Analyst I (We) am (are) conferred the Professional Quality of Securities Investment Consulting Industry by the Securities Association of China and have registered as the Securities Analyst. I hereby issue this report independently and objectively with due diligence, professional and prudent research methods and only legitimate information is used in this report. I am also responsible for the content and opinions of this report. I have never been, am not, and will not be compensated directly or indirectly in any form for the specific recommendations or opinions herein. Disclosure with respect to the Company The company is a subsidiary of ShenwanHongyuan Securities. The company is a qualified securities investment consulting institute approved by China Securities Regulatory Commission with the code number ZX0065. Releasing securities research reports is the basic form of the securities investment consulting services. The company may analyze the values or market trends of securities and related products or other relevant affecting factors, provide investment analysis advice on securities valuation/ investment rating, etc. by issuing securities research reports solely to its clients. The Company fulfills its duty of disclosure within its sphere of knowledge. The clients may contact compliance@swsresearch.com for the relevant disclosure materials or log into www.swsresearch.com for the analysts' qualifications,the arrangement of the quiet period and the affiliates shareholdings. Introduction of Share Investment Rating Security Investment Rating: When measuring the difference between the markup of the security and that of the market s benchmark within six months after the release of this report, we define the terms as follows: Trading BUY: Share price performance is expected to generate more than 20% upside over a 6-month period. BUY: Share price performance is expected to generate more than 20% upside over a 12-month period. Outperform: Share price performance is expected to generate between 10-20% upside over a 12-month period. Hold: Share price performance is expected to generate between 10% downside to 10% upside over a 12-month period. Underperform: Share price performance is expected to generate between 10-20% downside over a 12-month period. SELL: Share price performance is expected to generate more than 20% downside over a 12-month period. Industry Investment Rating: When measuring the difference between the markup of the industry index and that of the market s benchmark within six months after the release of the report, we define the terms as follows: Overweight:Industry performs better than that of the whole market; Equal weight: Industry performs about the same as that of the whole market; Underweight:Industry performs worse than that of the whole market. We would like to remind you that different security research institutions adopt different rating terminologies and rating standards. We adopt the relative rating method to recommend the relative weightings of investment. 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本研究报告仅通过邮件提供给工银瑞信基金工银瑞信基金管理有限公司 (reports@icbccs.com.cn) 使用 9 The Company possesses all copyrights of this report which shall be treated as non-public information. The Company reserves all rights related to this report. Unless otherwise indicated in writing, all the copyrights of all the materials herein belong to the Company. In the absence of any prior authorization by the Company in writing, no part of this report shall be copied, photocopied, replicated or redistributed to any other person in any form by any means, or be used in any other ways which will infringe upon the copyrights of the Company. All the trademarks, service marks and marks used herein are trademarks, service marks or marks of the Company, and no one shall have the right to use them at any circumstances without the prior consent of the Company. This report may be translated into different languages. The Company does not warrant that the translations are free from errors or discrepancies. This report is for distribution in Hong Kong only to persons who fall within the definition of professional investors whether under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the SFO ) or the Securities and Futures (Professional Investor) Rules (Chapter 571D of the laws of the Hong Kong under the SFO). This report is for distribution in the United Kingdom only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) order 2001 (as amended) (the Order ) or (ii) are persons falling within Article 49(2)(a) to (d) ( High Net Worth Companies, Unincorporated Associations, etc ) of the Order (All such persons together being referred to as Relevant Persons ). This document is directed only at Relevant Persons. Other Persons who are not Relevant Persons must not act or rely upon this document or any of its contents. Distribution in Singapore If distributed in Singapore, this report is meant only for Accredited Investors and Institutional Investors as defined under Section 4A of the Securities and Futures Act of Singapore. If you are not an Accredited Investor or an Institutional Investor, you shall ignore the report and its contents. The Singapore recipients of the report are to contact the Singapore office of ShenwanHongyuan Singapore Private Limited. at 65-6323-5208, or 65-6323-5209 in respect of any matters arising from, or in connection with, the report. Please refer to the last page for important disclosures Page 8