Event: the company released its first-quarter report, in line with expectations
Today, the company released its first-quarter report: realized operating income was 576.75 million yuan, an increase of 26.96% over the same period last year; net profit attributable to shareholders of listed companies was 15.25 million yuan, up 155.89% over the same period last year; net profit attributable to shareholders of listed companies was 13.36 million yuan, an increase of 149.48% over the same period last year; and basic earnings per share EPS was 0.07 yuan per share, in line with our expectations.
Our comments and analysis
Performance is in line with expectations
The company's first-quarter results were in line with expectations: benefiting from the increase in orders due to the upward trend of the dust removal and transformation industry, the company's revenue increased by 26.96% compared with the same period last year; under cost control, the gross profit margin also increased significantly to 17.04%, an increase of 1.49 percentage points over the previous period. The expense rate of the company is basically controlled at the level of the same period, so the net profit rate has increased by 1.33 percentage points under the influence of the increase in gross profit margin. Since the previous net interest rate of the company was low only 1.31%, it directly reflects the high elasticity of performance.
. Maintain investment logic: turning point of transformation, great potential for promotion, and ushering in investment opportunities
The turning point of the transformation: the shareholder platform has been promoted, and the business expansion platform has been transformed-after Juhua settled in, the shareholder platform has changed from Zhuji to Zhejiang State-owned assets: at present, the company's non-public offering plan to Juhua Group has been examined and approved by the board of directors. in the future, if it can pass the examination and approval of the general meeting of shareholders and the Securities Regulatory Commission, the company's shareholder platform will be transformed from Zhuji SASAC to Zhejiang SASAC.
1) Zhejiang Province has made comprehensively deepening the reform of state-owned enterprises as an important task this year. If the level of Feda environmental protection shareholders can be successfully upgraded from Zhuji City to Zhejiang Province, it will become a state-owned environmental protection enterprise of Zhejiang Province. thus it is very hopeful to become an environmental protection platform enterprise in Zhejiang Province.
2) Zhejiang will make every effort to deepen the reform of state-owned enterprises and vigorously develop the economy of mixed ownership, the core contents of which include the reform of the property right system represented by asset securitization, market-oriented operation mechanism, market-oriented assessment and incentive mechanism, and so on. in order to effectively improve the operation quality and efficiency of state-owned enterprises.
Business transformation-the field of atmospheric dedusting is extended to the field of sewage and solid waste to build a full environmental protection industry chain: the company's existing business is mainly based on the field of atmospheric treatment based on dedusting. Through this non-public offering, Juhua Group's environmental protection-related assets (solid waste, sewage treatment, etc.) will be injected into the company, so that the company's business will expand from dust removal and other areas of atmospheric treatment to sewage treatment, solid waste treatment and other areas of environmental protection. It has opened up full coverage in the three major areas of environmental protection, namely, atmosphere, solid waste and water treatment.
Great potential for improvement: highly flexible profitability potential for profitability and technology
Performance improvement-low net interest rate and potential room for improvement: the company's existing business is mainly for the sales and installation of environmental protection equipment such as dust collectors, with a net interest rate of only 1.7% and a ROE of only 3.5%. The profitability is significantly lower than Longjing Environmental Protection, which has a similar product structure. We believe that with the improvement of the top-down top governance structure and the efficiency improvement brought about by the deepening of the reform of state-owned enterprises, the company's profitability will have great potential in the future.
Technical upgrading-high barrier wet dust removal, if the future standards become stricter or become mainstream again: the company occupies a leading position in the electrostatic precipitator market and reserves a variety of efficient dust removal technologies, such as rotating electrode precipitator, electric bag precipitator, high frequency power supply, and so on. can be used in the thermal power industry of the existing electrostatic precipitator transformation The Mitsubishi wet electrostatic precipitator technology introduced by the company in the past 13 years has become one of the few domestic enterprises with power plant wet electrostatic precipitator technology.
Profit forecast and investment advice
We maintain our previous profit forecast that from 2014 to 2015, the net profit of the company belonging to the parent company is 83 million yuan and 136 million yuan respectively, and the EPS is 0.411 yuan and 0.668 yuan respectively, with a year-on-year growth rate of 112.71% and 62.58% respectively.
At present, the corresponding valuation of the company's stock price is 48 × 14PE and 30 × 15PE, although the valuation is on the high side, but we think that the company belongs to the transitional period, the net interest rate is flexible, and it is in the early stage of the improvement trend. at this stage, if the valuation is judged only by the performance corresponding to the current lower net interest rate level, the potential elastic value of the enterprise will be underestimated. And considering that if the non-public offering of Juhua is successful, the major shareholder cost is 19 yuan, and the current price has established a sufficient margin of safety.
At the current price, we give the company investment advice, the risk-reward ratio is still very high, the main logical point is that the current price has the safety margin laid by the cost of major shareholders, the three major investment opportunities in the future are: 1, shareholder hierarchy adjustment and the expected profitability improvement brought by the reform of state-owned enterprises; 2, haze forced dust removal standards are stricter, the market will change from order-driven to technology-driven, the company has significant advantages. 3. After Juhua successfully settled in, it will create a large environmental protection platform for atmosphere, sewage and solid waste.
