Baguio Green Group (the “Company” or “Baguio”) had a team of 6,732 professionals and over 350 special purpose vehicles as of 31 December 2013. The company provides a full range of environmental services including cleaning services, pest management services, gardening services, and waste management and recycling services.

Environmental services in Hong Kong include: 1) general cleaning, 2) waste management and recycling, 3) gardening services, and 4) sensitive document handling. According to the Ipsos report, these sectors are expected to have compound annual growth rates of 5.5%, 6.5%, 13.5%, and 9.9%, respectively, in 2009-2018.

We expect the company's revenue to increase from HK$1,029 million in 2014 to HK$1,315 million in '17, or a compound annual increase of 8.5%. We expect gross margin to increase from 9.5% in 2014 to 10.2% in '17. We expect the company's adjusted net profit to increase from HK$31 million in 2014 to HK$47 million in 17, or a compound annual increase of 14.9%.

For the first time, we provide earnings forecasts per share of HK$0.084, HK$0.100 and HK$0.113 respectively for the 15-17 year, or an adjusted earnings per share compound growth rate of 14.9% for 2014-17. We gave a target price of HK$1.50, corresponding to the expected price-earnings ratio for 2015/2016/2017 of 17.9/15.0/13.3 times. Its main risks are intense competition and heavy reliance on key customers.