I. 2018 performance

2018,Public utilityThe operating income was 4.942 billion yuan, an increase of 7.38% over the same period of the previous year; the net profit attributable to the owner of the parent company was 478 million yuan, an increase of 0.92% over the same period of the previous year. The main business remained stable. The revenue growth was mainly driven by the 5.65% increase in revenue from the pipeline gas business. At the same time, the sewage treatment business volume and processing price increased significantly, resulting in a year-on-year increase of 50.88% in wastewater treatment business revenue. Gas supply remains the main source of revenue, accounting for 83.85% of total main business revenue.

Public utility is an established utility company. Its main business includes public utilities and financial venture capital business. The two businesses go hand in hand and constitute the company's main source of profit. Among them, public utilities include urban gas, sewage treatment, urban transportation, infrastructure investment operations, logistics and transportation; financial ventures include financial services and venture capital.

Second, the public utilities are rising steadily

Public utility and financial ventures are driven by two-wheel drive, and utilities provide stable cash flow.

In terms of city gas business, Volkswagen is one of the most important gas suppliers in Shanghai and even in East China. It is currently the only pipeline gas supplier in the southwest of Shanghai Pudong and Nantong City in Jiangsu Province, and it is an absolute monopoly leader. Its city gas business is relatively mature, and it has maintained a steady growth trend in the past five years.

In May 2018, Volkswagen publicly indirectly acquired 37.2255% of Jiangyin Tianli by acquiring shares in Shanghai Dugong and Shanghai Huiyi. The business scope of Jiangyin Tianli includes LNG liquefaction production and sales, LNG and LPG packaging sales, LNG and CNG filling station business, and gas engineering installation. Jiangyin Tianli has built 1.5 million cubic meters of LNG storage facilities, 2700 cubic meters of LPG storage center, 3 LNG vehicle filling stations, 3 CNG vehicle filling stations, 4 first stations, 2 gate stations, 2900 natural gas pipelines. There are 240,000 gas users of various types, and the gas supply and economic benefits are among the highest in the domestic cities.

Volkswagen Public has expanded its gas business landscape through a series of mergers and acquisitions. In 2001, Volkswagen acquired a 50% stake in Shanghai Volkswagen Gas. Shanghai Volkswagen Gas has 1.34 million gas customers, which accounts for about 40% of Shanghai Gas's market share. Since then, Volkswagen has acquired Nantong Volkswagen Gas in 2003 and acquired the stake in Suchuang Gas (1430.HK) in 2016. These two mergers have brought stable income to the public, and the gas sector has been further expanded.

In 2018, Volkswagen Public acquired 80% of the shares of Volkswagen. Volkswagen Operation is the only LPG transportation company in Shanghai that has the second class of flammable gas dangerous goods transportation capacity and is expected to carry out LNG transportation. The public utility has increased the gas distribution business and has an important synergy with the existing gas business.

In the sewage treatment business, the public utility treatment of domestic and industrial sewage is a regional franchise, and naturally has high barriers.

In 2018, the Volkswagen Public Holding subsidiary won the bid for the first phase of the transformation and operation of the Qingshan Spring Wastewater Treatment Plant in Jiawang District, Xuzhou City, Jiangsu Province, and the second phase expansion operation procurement project. The sewage treatment business has been thickened. In addition, in 2018, the expansion of the sewage Jiading wastewater has been fully completed to meet the Class A standard; and the completion and environmental acceptance of the third phase of the project and the sludge drying project has been completed, increasing the sewage treatment capacity and increasing the emission standards.

In 2018, the public sewage treatment revenue reached 264 million yuan, an increase of 50.88% compared with 2017, and the sewage treatment business developed strongly.

Third, the financial venture capital business is eye-catching

In terms of financial services business, Volkswagen Publicly owns or owns a number of different types of financial services companies, mainly including financial leasing and prepaid card business.

The main sources of income for the finance leasing business are interest income and commission and commission income. Among them, interest income includes rental income, interbank borrowing interest income, etc.; fee and commission income mainly includes rental fee income. According to the public public financial report, the public interest income of the public in 2018 reached 126 million, an increase of 28.6% compared with the year of 2017.

The Volkswagen e-passcard was approved by the People's Bank of China and was elected as a member of the Standing Committee of the China Payment and Clearing Association Prepaid Card Committee in 2018. It covers the online and offline clothing, food and beverage consumption and online shopping platforms related to residents' lives.

In terms of venture capital business, public public performance is bright.

Volkswagen has four venture capital platforms, including Shenzhen Innovation Investment Group Co., Ltd., Shanghai Huasheng Equity Investment Fund Partnership (Limited Partnership), Chinese Cultural Industry Investment Fund through direct investment of wholly-owned subsidiary Volkswagen Capital, Shanghai Xing烨 Venture Capital Co., Ltd.

1, deep venture capital

Public Public has a 13.93% stake in Shenzhen Venture Capital.

Shenzhen Venture Capital was established by the Shenzhen Municipal Government in 1999 and guided the establishment of social capital. The registered capital was 5.42 billion yuan, and the total size of various funds was about 333.414 billion yuan. Among them, Shenzhen Venture Capital took the lead in establishing and managing 107 government-directed venture capital funds, and also managed the first entity fund of the 6 billion yuan SME Development Fund, the 100 billion Shenzhen Municipal Government Guided Parent Fund, and the 10 billion Foshan Municipal Government. Chuangxin Funding Co., Ltd. participated in the management of the Baidu Shandong Province Finance Red Soil PPP Fund, and served as the sole institutional partner of Qianhai Equity Investment Fund, and managed a number of Sino-foreign joint venture funds and commercialization funds.

From the perspective of investment project classification, Shenzhen Venture Capital Investment covers information technology,the Internet/new media,biomedicine,new energy/Energy saving, chemical / new materials,High-end equipmentIndustry sectors that are supported by national policies such as manufacturing, consumer goods/modern services.

From the investment stage, the investment of Shenzhen Venture Capital is mainly based on investment growth enterprises. By matching the investment portfolio, the risk is minimized and the maximum profit is maximized. The IRR is as high as 40.32%.

As of the end of February 2019, the number of enterprises invested by Shenzhen Venture Capital and the number of listed companies in the investment industry ranked first in the domestic venture capital industry. 973 projects have been invested, with a total investment of about 42.4 billion yuan, of which 144 investment companies are listed in 16 global capital markets, 89 are listed on the New Third Board, and the exit rate is leading in the industry.

In addition, many projects invested by Shenzhen Venture Capital have become the leader and even the absolute leader in its segmentation, representing the most advanced level of the industry. List of some projects:

Mindray Medical(300760.SZ): The leading domestic medical equipment company, the market value has surpassed 150 billion. Mindray Medical is the world's third largest manufacturer of guardianship in the field of monitoring. It is far ahead of other domestic and foreign companies with a market share of 65% in the country; the most advanced color ultrasound in the field of ultrasound; it is the leader in in vitro diagnostics, including the domestic market of blood cells. The share is second only to Sysmex.

Huada Gene(300676.SZ): Gene detection leader, through genetic testing and other means, for medical institutions, scientific research institutions, enterprises and institutions to provide genomics diagnosis and research services. On July 14, 2017, it was listed on the Shenzhen Stock Exchange.

Jiejie Microelectronics (300623.SZ): Power semiconductor discrete device leader, specializing in the development, design, production and sales of power semiconductor discrete devices. Shenzhen Stock Exchange on March 14, 2017gemListed.

Helitai(002217.SZ), the production and sales of new flat panel display devices, touch screens, cameras and their peripheral derivatives. On January 23, 2014, the SME board of the Shenzhen Stock Exchange was listed.

Chau Ming Technology(300232.SZ): LED industry leader, high quality, high performance LED application products and solutions provider. On June 22, 2011, it was listed on the GEM of the Shenzhen Stock Exchange.

Xinwei Communication (300136.SZ): The scale and technical strength are leading domestic mobile terminal antennas. On November 5, 2010, it was listed on the GEM of the Shenzhen Stock Exchange.

Ou Feiguang(002456.SZ): Leading optical optoelectronic thin film components. On August 3, 2010, it was listed on the SME board of Shenzhen Stock Exchange.

2. Chinachem Fund

As of the end of 2018, the public utility accounted for 49.02% of the total amount paid by Huaying Fund.

Volkswagen Public invested 560 million yuan in Shanda Games through Huaying Fund. Grand game wasCentury Huatong(002602.SZ) M&A, the major asset restructuring was successfully held on February 20, 2019. Century Huatong acquired Shanda Games for RMB 29.8 billion, becoming the first large-scale M&A case of the game industry after the Spring Festival, which brought a new round of promotion to the public public valuation.

3. Chinese culture

Volkswagen Public holds a 12.5% ​​stake in the Chinese Cultural Industry Investment Fund through its wholly-owned subsidiary, Volkswagen Capital. The Chinese culture was established in 2010 with a fund size of RMB 2 billion. The investment strategy of Chinese culture is to carry out long-term value investment. In the short run, the current investment return cannot be compared with the deep venture capital, but the excellent quality of the project is the guarantee of future investment returns.

Among them, Shanghai Canxing Culture Media Co., Ltd., a veteran variety show producer of the phenomenon-level variety show "China Good Songs", "Golden Star Show" and "Meng Masking Guessing Guess", has been in December 2018. The China Securities Regulatory Commission website pre-disclosed the prospectus. In addition, the Chinese culture has also invested in IMAX China, Oriental DreamWorks, Renren.com, Emerald Oriental (TVBC), B Station, Iqiyi, Fasthand, Fun Headlines, SNH48, Quick Watch Manga and other media and entertainment companies, as well as hungry. Internet technology and consumer companies such as eggshell apartments, one, and the Fauvism. These companies are leaders in the field of segmentation. In addition, Chinese culture also owns the equity of the Premier League team Manchester City Club and the joint venture with Hollywood Warner Bros. Entertainment.

In addition, Dazhong Technology, which has invested 30 million US dollars through Volkswagen Hong Kong, completed in 2018.RefinancingThe valuation has been further enhanced to prove that the value has been recognized by the market; the game live broadcast platform led by Volkswagen Hong Kong, which invested 10 million US dollars, has been applied for in the US IPO; the Junyao Health Drinks Co., Ltd., which directly invested 35 million shares, also The IPO will be launched in 2019.

Fourth, the science and technology board is good, the public value of the public is waiting to be released

1. The science and technology board system was launched

On November 5, 2018, Kechuang Board officially announced its establishment. On March 1, 2019, the rules were issued. On March 18, the stock issuance and listing review system officially accepted the application. On March 22, the first batch of accepted enterprises was released. In just four months, the science and technology board experienced argumentation, opinion collection, rulemaking, and official operation, showing the country's determination to promote the science and technology. Within two weeks of the official implementation of the Science and Technology Board, the applications of 50 companies were accepted. As of April 4, the Shanghai Stock Exchange accepted 50 enterprises, 9 of which have entered the inquiry stage, and the efficiency of the board has far exceeded expectations. It is expected to be listed in batches in a short time.

Science and Technology Boardinformation Technology, big data, cloud computing,artificial intelligenceEight major industries, including new energy, energy conservation and environmental protection, high-end equipment, biomedicine and new materials. These enterprises are still in a stage of rapid growth. Due to the investment in technology research and development and the need for equipment renewal, the short-term capital demand, short-term profitability, difficulty in obtaining the conditions for the listing of the main board, and the long-term listing process of the main board often need to wait until At least matured to complete the listing. The innovation and rapid review efficiency required by the board's listing system will help these science and technology enterprises to achieve listing in a shorter period of time.

Figure: Industry distribution of accepted enterprises as of April 4

2, science and technology projects are fully stocked, and the value of Dongfeng is expected to be released

The science and technology board system is undoubtedly a major positive for the public. The most direct impact is that the public direct or indirect investment of enterprises has increased the exit route and shortened the exit time. Compared with the exit of the main board, the time of the board is short, which is conducive to the exit of the development period; The three boards, the science and technology board, have better liquidity and higher average valuation. In addition, the launch of the science and technology board makes the project's exit expectations more certain, and the valuation is positive. For the project itself, the project will meet the needs of re-financing through the science and technology board, which will facilitate timely access to funds and support further development in the future. The east wind of the science and technology board is conducive to the substantial release of the value of public utilities.

Public utilities are rich in direct investment and indirect investment projects in the science and technology sector. For example, in the case of Shenzhen Venture Capital, which has a public shareholding of 13.93%, at present, four of the projects invested by Shenzhen Venture Capital have been in the process of declaration.

In addition, according to the disclosure of China Securities Journal, Shenzhen Venture Capital also participated in the investment of Sister, Western Superconductor, and Jiuri New Materials, which are listed on the board of the company. And Shenchuang Investment also participated in the investment of the flexible screen unicorn enterprise Rouyu Technology.

3. The A-share and H-shares have large differences, and the H-share valuation is lower.

Chart: Public A-share trend

Chart: Volkswagen Public Hong Kong Stocks

On November 5, 2018, the Science and Technology Board officially announced its establishment. This benefit brought the share price of public public A shares and H shares up. A shares from the low of 3.02 yuan per share to the highest point of 8.72 yuan per share. The closing price on April 11 was 7.00 yuan. Hong Kong stocks from the low of 2.36 yuan per share to the highest point of 3.57 yuan per share, the closing price of April 11 was 3.09 yuan per share. According to the closing price on April 11, the public's public AH premium rate is 164.68%, the same day.Hang Seng AThe H-share premium index (HSCAH) is 125.37, that is, all companies with both A-shares and H-shares use the stock price of their A-shares/H-shares to calculate the average premium rate. The premium rate is 25.37%, which is much lower than The public has a 164.68% AH premium rate. Compared with the A-share valuation, the public H-shares have a relatively large upside potential and can continue to pay attention.