Main points of investment

Core idea: in 2015, the company's revenue grew rapidly and gross profit margin continued to improve, mainly due to the Chinese government's atmospheric governance policy dividend and the downward price of raw materials, and the atmospheric governance policy will continue to be tightened during the 13th five-year Plan period. the company is expected to gain more market opportunities. Tianjie Environment PE 6.2 times in 2015, taking into account the continuous improvement of the industry and the company's growth potential, the current valuation is low, investors are advised to pay active attention.

The rapid growth in income has benefited from the Chinese government's policy on atmospheric governance. In 2015, Tianjie Environmental recorded a total revenue of 920 million yuan, up 17.66% from the same period last year, mainly due to strong sales demand for dust collector related equipment. Due to the continuous tightening of the Chinese government's atmospheric control policy, dust removal business is expected to continue to grow during the 13th five-year Plan period.

Costs have fallen and gross margins have continued to improve. During the reporting period, the company's comprehensive gross profit margin was 20.28%, up 1.97 percentage points over the same period last year. The continued improvement in gross profit margin is mainly due to the optimization of production links and lower prices of raw materials such as steel.

Administrative expenses have increased. Administrative expenses during the reporting period totaled 33.1 million yuan, up 87.83 percent from the same period last year. In addition to the increase in expenses brought about by listing, it is mainly due to the rapid growth of accounts receivable and the expansion of asset impairment losses.

Sufficient reserve orders and the introduction of new capacity will increase income growth. In 2015, the company signed a new contract of 852 million yuan, and the total value of outstanding contracts reached 1.452 billion yuan. The production capacity of the Pinghu and Turpan plants will accelerate the growth rate of translating orders into performance.

Risk Tip: the acquisition of new orders is lower than expected and the RMB continues to depreciate.