The company releases three quarterly reports for 2016
The company released its three-quarter report of 2016, with an operating income of 86.84 million, an increase of 169.65% over the same period last year, a net profit of-33.73 million and a loss of 44.64% over the same period last year. The increase in revenue is mainly due to the merger and increase of subsidiaries, and the net profit is a loss, mainly because: 1) after the adjustment of the main business, the company is still in its infancy, and the management expenses after the merger and increase of subsidiaries are as high as 55.75 million, an increase of about 15.8 million over the same period last year. With the gradual development of follow-up business, revenue is expected to be improved, so as to reduce the impact of management expenses on performance. 2) the planned projects of the Institute of clear Control and Human Settlements generally reflect the benefits only at the end of the year. The net cash flow of operating activities was reported to be-68.65 million in the three quarters, an increase of 53.64% over the same period last year, mainly due to a sharp increase in cash paid for the purchase of goods and services.
Won the bid Suining sponge city construction PPP project, sponge city business is the next city
In September, the consortium including the company won the bid for the first phase of sponge city construction in Hedong New area of Suining City and the PPP project of alliance river system governance, with a total investment of 1 billion, a return on investment of 6.95%, and a construction period from 2016 to 2017, which is good for the company's business performance. Suining, one of the first batch of sponge cities, will enjoy an annual financial subsidy of 400 million yuan, so it will play a certain role in ensuring the profits of the project. The cooperation of this project is beneficial for the company to bid for the follow-up sponge city project in Suining, because Suining has the growth potential because the total investment expected in the first batch of pilot list is 5.83 billion. At the same time, the company actively participated in the planning of the second batch of sponge city pilot projects, expanding potential partners, so that the company has a certain advantage in opening up the high-quality market of sponge city construction.
Adjust the private offering scheme to improve the enforceability
The company has revised the non-public stock offering plan, and the investment of Sponge City has been changed to "Qian'an, Pingxiang and Suining" to enhance the feasibility of the pre-plan. This revision is in line with our expectations and has been awarded the Qian'an and Suining projects. At the same time, the company plans to invest 1.107 billion in intelligent drainage systems and 498 million in new soil remediation projects to distribute emerging markets. The two businesses not only create profit points, but also cooperate with sponge city business.
The development of sponge city industry is improving, and the project begins to land gradually.
By the end of June 2016, there were 35 projects in Sponge City, with a total investment of 68 billion, an increase of 48.47% compared with the end of March. It is the fastest growing sub-industry in the direction of municipal environmental protection, which is related to the gradual solution of the profit point problem of Sponge City. Among the third batch of PPP demonstration projects announced in October, there are five sponge city projects, with an investment of 20.9 billion, accounting for 8.1% of the total investment in environmental protection.
China Control Saige has made substantial progress in the direction of Sponge City, and it will take time to maintain its "buy" rating.
Although the company's performance is still at a loss, the company has made substantial progress in the direction of sponge city, made Qian'an and Suining sponge city construction projects, increased the scope of cooperative cities, and revised the fund-raising plan to enhance the feasibility. But Sponge City is not an immediate project, and it takes time to cash in. We maintain a "buy" rating on China Control Saige, with an estimated EPS of 0.03max 0.26max 0.41 yuan from 2016 to 2018.
Risk hint: policy promotion is not up to expectations; industry competition intensifies.