Event: the company recently announced that it will invest in the construction of Jiangyin Qinwangshan industrial waste comprehensive utilization project (regular line) and Jiangyin Qinwangshan industrial waste comprehensive utilization project (emergency line), with a total investment of about 550 million yuan.
Core viewpoints
Hazardous waste project landed to make up for the lack of local hazardous waste disposal capacity: the company began to expand the hazardous waste solid waste business at the end of 2015. The landing of the Qin Wangshan project is a substantial progress made by the company in this field. The annual output of industrial solid waste in Jiangyin area is nearly 7 million tons and hazardous waste is nearly 630000 tons. In the future, with the development of Qinwangshan Industrial Park and the progress of local economy, the output of industrial solid waste and hazardous waste will further increase. However, there are only 15 local units with "Hazardous waste Operation license", and there is no centralized incineration and disposal facility for hazardous waste in the city, so the disposal capacity is increasingly insufficient. Therefore, the construction of Qin Wangshan project is very necessary. This project consists of two parts: regular line and emergency line. The annual treatment scale of primary waste in conventional line is 91000 tons, including 20, 000 tons of hazardous waste incineration, 1000 tons of medical waste treatment, 40, 000 tons of stabilization / solidification scale, 40, 000 tons of hazardous waste safe landfill scale, and 30, 000 tons of general industrial solid waste pre-treatment scale. The total investment of the first phase of the project is 430 million yuan. The annual treatment scale of the emergency line is 10,000 tons, with a total investment of 120 million yuan. The construction of Qinwangshan project will effectively alleviate the lack of local hazardous waste disposal capacity.
The economic benefit is good, and the performance is expected to increase: according to estimates, the regular line of the dangerous waste project will bring an annual income of 162 million yuan under full load operation, and the annual income of the emergency line will be 35 million yuan, with a total annual income of 197 million yuan, which is 23% of the company's 2015 income. In terms of net profit, the regular line and emergency line can contribute 41 million yuan and 5.3 million yuan per year respectively, totaling 46.3 million yuan, corresponding to a 17% increase in performance in 2015.
It has a significant effect on performance improvement.
The main business operation advantage is remarkable, the environmental protection transformation advances steadily, the comprehensive platform can be expected: the company has always been an excellent local water enterprise, with the advantages of intelligent management, the main industry has maintained a high profit level; at the same time, the company has actively expanded the environmental protection industry chain in the past two years, and has made breakthroughs in the fields of sewage treatment, water environment treatment, solid waste and hazardous waste, and the transformation layout has been steadily advancing. The company is determined to transform, the direction is clear, and the local platform has significant advantages, so the comprehensive platform of local environmental protection can be expected in the future.
Financial forecasts and investment suggestions
Maintain the profit forecast, that is, the attributable net profit in 16-18 years is 4.14,5.80 and 759 million yuan respectively, and the corresponding EPS is 0.44,0.62,0.81 yuan. With reference to the comparable company's current valuation of 20 times PE in 17 years, give the target price 12.40 yuan, "buy" rating.
Risk hint
The risk that the project schedule and profitability are not up to expectations
