Main points of investment:
The first big single landing in the field of township sewage treatment. On February 13, 2017, the consortium formed by the company and Wisdom Village won the bid for the concession project for sewage treatment and operation management of 277 administrative villages in Guantao County. The project adopts the PPP model, with a total amount of 180 million yuan, with an implementation period of 33 years, including 3 years of construction and 30 years of operation. This project is the company's first landing project in the field of township sewage treatment. So far, the company has landed projects in the areas of environmental protection and smart city, the company's business transformation is smooth, and performance reversal is imminent.
"Internet of things + environmental protection", enter the township sewage treatment market. 1) in September 2015, the company took a 10% stake to establish Chongqing Environmental Protection Fund Company, and launched the first phase of the 1 billion Chongqing Environmental Protection Industry Fund, subscribing for 100 million. The current focus of Chongqing Huantou Company is to promote township sewage treatment with PPP mode, and to achieve full coverage of sewage treatment plants in the city's established townships and withdrawing and merging towns by 2017. Through cooperation with Chongqing Huantou Company, the company has entered into the field of sewage treatment in villages and towns in Chongqing. 2) at the same time, the company invests to set up Zhicheng Cambo, which participates in Chongqing Huantou Ecology by 7%, and monitors the ecological environment. 3) in November 2015, the company carried out strategic cooperation with China Energy Saving and Environmental Protection (Jiangxi) in the areas of sewage treatment, energy consumption management, safety services and smart cities in Jiangxi Industrial Park.
The Heilongjiang Wisdom Animal Husbandry Project is progressing smoothly, and the performance has improved and turned losses into profits in the first quarter of 2017. 1) in the past 15 years, the company has successively signed strategic cooperation agreements with founder and dawning companies to actively lay out smart cities. At present, two projects have been launched, namely, the "Smart City Management" project in Wansheng Economic Development District of Chongqing and the intelligent animal husbandry project of Heilongjiang Hengyang Group, with a sum of 20.41 million and 167 million respectively. In the smart city project, the company mainly focuses on R & D and sales layout in the field of pipe network and public safety. 2) the intelligent animal husbandry project of Heilongjiang Hengyang Group is progressing smoothly, which has a positive impact on the performance in the first quarter of 17 years. The company expects to turn losses into profits in the first quarter of 17 years, with a profit of 15 million yuan to 20 million yuan, compared with a loss of 20.75 million yuan in the same period last year.
Profit forecast and valuation. From 2016 to 2018, the company is expected to achieve all the net profits attributed to the parent company-6494 yuan, 6450 yuan and 109.53 million yuan, corresponding to EPS of-0.39,0.39,0.65 yuan respectively. Considering the reversal of the company's performance and the expansion of its own business in underground galleries and the Internet of things, with reference to the comparable company's valuation, the company was given a buy rating of 80 times PE in 2017, corresponding to the target price of 31.20 yuan.
Risk hint. (1) the continuous downturn of the coal industry affects the expenditure of coal mine safety products. (2) Bad debts occur when the proportion of accounts receivable is too high. (3) the transformation of the company is not up to expectations.
