We believe that the company's business will enter a period of rapid growth starting in 2014. There are a number of reasons: first, Huoshen ushered in the “50355 ultra-low emissions” generation, and the company's dust removal business corresponded to a 150% expansion of the market model. The reason is that Juhua Group injected the lack of hazardous waste qualifications, assets and provincial resource platforms, and Feida transformed into a comprehensive environmental protection platform that is deeply involved in Quzhou and radiates Zhejiang. A number of new businesses such as desulfurization, denitrification, waste incineration, and sewage will develop rapidly. The company has good growth and great business potential. Investors are advised to focus on it.
Investment highlights:
“50355 Ultra Low Emissions” has doubled the market capacity of thermal power flue gas treatment, and Feida's main dust removal business is growing at an accelerated pace: Huoshen started the “50355 Ultra Low Emission” era. Five years later, Huoshen's emissions of non-combustible gas turbines in key regions were on par with the “50355” emission standards for non-combustible gas turbines. The dust removal market capacity increased by 18.9 billion to 47.1 billion in 14-17, and terminal wet dust removal was the mainstream. Feida is a domestic wet dust removal leader. It has completed a number of demonstration projects. In 14-17, the dust removal business ushered in a period of accelerated growth. Interest rates in the dust removal business have been rising steadily, and profits are growing even faster.
Qingtai has scarce hazardous waste treatment qualifications, targeting the environmental protection needs of the Quzhou Industrial Park where Juhua is located: the Quzhou Green Industry Cluster Area was upgraded to a national park with great potential for investment and expansion. Qingtai, a subsidiary of Juhua, has the only hazardous waste treatment qualification in Quzhou, and hazardous waste management in Quzhou has been tightened. It is expected that Qingtai's annual hazardous waste treatment capacity will grow rapidly from the current 3,000 tons. It is expected that within the next few years it will reach 15,000 tons to meet Quzhou's current hazardous waste emission level, which translates into net profit contributing 20 to 30 million per year.
Juhua injected provincial platforms and capital, and Feida transformed into a comprehensive environmental protection processing platform for key areas. Many new businesses, such as desulfurization and denitrification processes, domestic solid waste treatment, and sewage treatment, developed rapidly: 350% of orders for denitrification in 2013, 14H1 industrial profit 93% year on year; the Quzhou waste incineration project is expected to build 1,200 tons/day mold in the future; Qingtai will become the Quzhou sewage treatment EPC and operation and maintenance platform, and has already begun undertaking projects. Feida Group also has sewage treatment assets that can be injected into listed companies.
Profit forecasts are not rated: According to the 14-year increase schedule, it is estimated that the 14-16 EPS was 0.15, 0.30, and 0.46 yuan. After completing the valuation switch at the end of the year, the current stock price corresponds to 39/25 times 15/16 EPS. The company has good growth and great business potential. The target price is 15.50, corresponding to 34 times 16 years of EPS. Highly recommended.
Risk warning: Determination of waste incineration project start/operation schedule, fluctuating steel prices
