Main points of investment
~ events: the company expects to achieve a net profit of 25 million yuan to 30 million yuan attributable to shareholders of listed companies in the first half of 2017, compared with a loss of 30.9306 million yuan in the same period in 2016. In this regard, our comments are as follows:
The old tree blossomed new flowers, the transformation achieved results, and the performance reversed losses compared with the same period last year. 1) Coal prices have bottomed out and coal mine safety business has picked up. After falling from 2012 to 2015, coal prices bottomed out in mid-2016 and are now at a high year on year. The gradual stability of the coal industry and the state's attention to coal safety have a positive impact on the company's traditional mine safety monitoring and monitoring business, both business contacts and sales orders have increased significantly, and the growth momentum for the whole year is expected to continue. 2) Wisdom animal husbandry orders quickly contribute to profits. In December 2016, the company won the bid for the intelligent animal husbandry project of Heilongjiang Hengyang Group, with a contract performance period from December 2016 to December 2019. The total contract amount is 167 million yuan, including 45.91 million yuan for equipment purchase, 41.09 million yuan for intelligent monitoring system, and 80 million yuan for application system construction and software development. The implementation of the project is expected to have a significant impact on the company's first-half performance. The company's traditional business has regained its growth momentum, and new business orders have quickly released profits. It is expected that the net profit attributed to shareholders of listed companies in the first half of the year will be 25 million to 30 million yuan, turning losses into profits compared with the same period last year.
Layout of the rural sewage market, looking forward to more business blossoms. 1) to open the rural sewage treatment market during the 13th five-year Plan. With the urban sewage treatment rate reaching a high point, the national environmental protection policy began to transfer to villages and towns and rural areas. In July 2013, Xi Jinping proposed beautiful rural construction for the first time. Since then, rural environmental protection policies have been issued one after another, and many ministries have jointly issued rural sewage policy documents, which has greatly improved the management system. At the same time, with the technological progress, Mayanson and other enterprises make rural sewage treatment feasible through distributed treatment methods. According to the results of expert feedback and our calculations, it is estimated that the overall rural sewage market space is more than 700 billion yuan, and the market size is nearly 60 billion yuan in 2020. 2) Meanson rapidly arranges the rural sewage market. In April 2017, the consortium of Mayanson and Wisdom Rural Technology Co., Ltd. won a bid of 180 million yuan for Hebei rural sewage PPP. The project involves the treatment of rural sewage from 277 administrative villages in four towns and four townships, with a contract amount of 180 million yuan and a project operation period of 30 years. The company signed a strategic cooperation framework agreement with Guoxing Investment, an investment and financing platform under Baoding City Investment Company, to make use of the investment advantages of Guoxing Investment in Baoding to jointly develop the sewage treatment market in Baoding. The company has business layout in many places throughout the country, and we look forward to more blossoms of rural sewage business.
Chairman Ma increased his stake in the company by 1.5% to 1.86% within 12 months, showing firm confidence. Ma Yan, the company's controller and chairman, plans to increase his stake by 1.5% to 1.86% within 12 months from April 28, 2017, based on his confidence in the company's future development prospects. and promised not to reduce the company's shares during the increase period and within 6 months after the completion of the increase, reflecting strong confidence in the company.
Investment advice: maintain the overweight rating! The company is expected to make a net profit of 150 million and 230 million from 2017 to 2018. The company's coal mine safety products have bottomed out and rebounded, and intelligent animal husbandry orders have quickly contributed to the performance; the rapid layout of the rural sewage market has opened the 13th five-year high growth path; and the actual controller and chairman of the board of directors plans to increase his stake in the company by 1.5% to 1.86% within 12 months, reflecting the confidence that the company will return to the growth track after two consecutive years of losses. To sum up, maintain the overweight rating!
Risk hint: the progress of new business development is lower than expected.
