Events:

At noon on January 3rd, the company announced that it had received the bid winning notice of the third Division Tumushuke Construction Project, which confirmed that the company was the winning bidder of the PPP project (mechanical and electrical equipment and services) of Tumushuke Textile Industrial Park sewage treatment Plant of Xinjiang Hongda Huaneng Water Science and Technology Development Co., Ltd.

Main points of investment:

The winning bid amount is 149 million yuan, accounting for 24.64% of the company's 15-year revenue.

The winning project is the mechanical and electrical equipment and service part of the 30,000 t / d sewage treatment plant, including thick and thin grille, flocculation sedimentation tank, air flotation tank, MBR tank and so on. The amount of the project accounts for about 24.64% of the company's 15-year revenue. At the same time, the 10-month project cycle, if successfully implemented, will have a positive impact on the company's 17-year performance.

Recently, the expansion of projects in other places has obviously accelerated, and the orders on hand are full.

The company is currently actively carrying out remote development, winning the bid Ningxiang PPP project in June, Xi'an Weibei EPC project in August and signing Guizhou Ziyun County PPP investment framework agreement, in December and Jiucheng environmental protection joint venture company in Jiujiang City, signed a cooperation agreement in Guizhou, the next city in Xinjiang, remote expansion is significantly accelerated, in June so far the project won the bid of about 540 million yuan, cooperation framework agreement of about 1.5 billion yuan However, the income of the company's engineering business in the past 15 years is only 435 million yuan, which is more flexible in the future.

In the process of acquiring Jiangsu Kemi and Jinqiao Water Science, there is strong cooperation, and it is optimistic that the Company Development Company intends to acquire 1.427 billion yuan of shares in Jiangsu Kemi and Jinqiao Water Science. At present, the application for administrative license has been accepted by the CSRC. The merger and acquisition of Jiangsu Cami will consolidate the technical advantages of the company's membrane products. Jiangsu Cami is mainly engaged in organic tubular membrane and inorganic ceramic membrane, which is mainly used in food, medicine and other fields. after the acquisition, the listed company will become the most complete domestic company with membrane technology. Jiangsu Cami promised net profit of 60 million yuan, 75 million yuan and 93.5 million yuan in 16, 17 and 18 years. The merger and acquisition of Jinqiao Water Division will enhance the company's engineering capacity. Jinqiao Water Department is a well-known water treatment engineering company in Northwest China with complete qualifications in design, general contracting and engineering consulting. The advantage of traditional technology mainly lies in tap water treatment, which has a better effect on high turbidity water in Northwest China. After the completion of the acquisition, the engineering qualification of listed companies is made up, and the engineering capacity is enhanced. At the same time, the sewage treatment technology of listed companies is also expected to enhance the competitiveness of Jinqiao Water Branch in the sewage treatment market. Jinqiao Water Science promised net profit of 25 million yuan, 32.5 million yuan and 42.25 million yuan in 16, 17 and 18 years. After the completion of the merger and acquisition, the profitability of the company will be significantly enhanced, at the same time, business cooperation will be strong, and the company will be optimistic about further engineering expansion in the future.

Maintain the recommended rating

Suppose the company completes the acquisition in mid-17 years and starts the merger in July. It is estimated that the EPS of the company from 2016 to 2018 is 0.22,0.50 and 0.90 yuan respectively, corresponding to the current price-to-earnings ratio of 85,38 and 21 times for 2016-2018 respectively. Considering the core competitiveness of the company's membrane products, there is strong business cooperation between the merger and acquisition and the target, there is more room for future performance development, and the "recommended" rating is maintained.

Risk hint

The ban on restricted shares is lifted; the progress of the project is not as expected; the acquisition and integration are not up to expectations.