New shares in the garden sector, with a high proportion of municipal gardens: Tianyu Ecology was listed in March 2017, with a total share capital of 173 million shares and raised 632 million yuan. Luo Weiguo, the company's largest shareholder, and Shi Dongwei, who acted in concert, together hold 49.51% of the company's equity, and the proportion of major shareholders is relatively concentrated.
The company's main business is the construction of municipal garden and real estate garden ecological engineering, and provides integrated services of design, construction and maintenance industry chain from seedling planting to garden ecological engineering. In 2016, the company achieved revenue of 826 million yuan, of which municipal gardens and real estate gardens accounted for 82.01% and 11.46% respectively.
Sufficient orders on hand, layout of PPP+ eco-environmental protection business: by the end of 2016, the company's landscape ecological engineering construction business had unfinished orders of 2.368 billion yuan, 2.89 times the 2015 operating income of 820 million yuan. From January to March 2017, the company and its subsidiaries signed 14 new project contracts with a total amount of 134 million yuan. the company has sufficient orders on hand to ensure the release of follow-up performance. At the same time, the company actively develops PPP business, undertakes a number of ecological restoration projects, has rich experience in project experience, and has accumulated experience in design, construction, operation and management in the field of ecological restoration. At the same time, the company has established technical cooperation with the National key Laboratory of Environmental Protection soil Environmental Management and pollution Control, the National Plateau Wetland Research Center and other institutions around water and soil treatment. Lay a good foundation for the expansion of the company's main business.
Urbanization construction drives the demand for greening, and PPP garden enterprises benefit: in 2016, China's urbanization rate reached 57.35%, and the urbanization rate of China's resident population reached 60% in 2020 in the 13th five-year Plan. China's urbanization rate is increasing year by year, driving the demand of municipal garden industry. At the same time, by the end of March 2017, a total of 12287 PPP projects had been stored nationwide, with a total investment of 14.6 trillion yuan, of which 1491 were ecological and environmental protection-related projects, accounting for 12.13%; the investment was 1.6427 trillion yuan, accounting for 11.25%, and the proportion of ecology-related PPP projects was relatively high. From a regional point of view, the number of key projects in the southwest region of the company is 3185, accounting for 25.92%; the amount of storage is about 3.89 trillion yuan, accounting for 26.79%. The southwest region provides the market for the company's PPP strategy.
"large industries and small companies", there is more room for growth: the garden industry is a typical "large industry and small companies", the industry concentration is low, and the industry structure is relatively scattered. At present, the total number of garden enterprises in China has exceeded 16000, and there are more than 1200 landscape planning and design institutes and design companies. As of June 30, 2016, there are 1348 enterprises with first-class qualification for urban landscaping, 292 enterprises with special Grade A qualification for landscape engineering design, and about 1348 companies with the above two qualifications. As of May 26, 2017, among the 12 listed garden companies, Oriental Garden, as a leading enterprise in the industry, ranks first with a market capitalization of about 42.8 billion yuan, while the total market capitalization of Tianyu Ecology is relatively small, about 5.6 billion yuan, which is in the lower and middle level of the industry. The company successfully completed the IPO, abundant funds will help the company to achieve business expansion.
Investment advice: buy-An investment rating, 6-month target price of 40 yuan. The company is a landscape engineering sector listed in March 2017, with a current market value of about 5.6 billion yuan, with a small market capitalization and large growth space in the garden sector. The company has plenty of orders on hand, which will provide a guarantee for the release of performance this year and next year. At the same time, the company has launched PPP, laying out ecological restoration areas, including water treatment, to further open up the future growth space of the company. We are optimistic about the growth of the company. It is estimated that the operating income of the company from 2017 to 2019 will be 1.289 billion yuan, 1.784 billion yuan and 2.304 billion yuan respectively, an increase of 56.2%, 38.4% and 29.1% respectively over the same period last year, while the net profit in the same period is 173 million yuan, 242 million yuan and 323 million yuan respectively, with year-on-year growth rates of 57.5%, 40.0% and 33.5% respectively. For the first time, it is given an investment rating of Buy-A, with a six-month target price of 40 yuan, equivalent to a dynamic price-to-earnings ratio of 40 in 2017.
Risk hints: economic downside risk, urbanization advance less than expected risk, order landing less than expected risk, PPP promotion less than expected risk, and so on.
