1H2017 performance forecast greatly increased, net profit mainly comes from the disposal of real estate
The company is expected to achieve a net profit of 24.24 million-27.88 million yuan in the first half of 2017, an increase of 100% over the same period last year. At the same time, it is estimated that the impact of non-recurrent profit and loss on the company's net profit is 21.22 million yuan ~ 26 million yuan (compared with 9.6691 million yuan in the same period last year). The company's net profit of returning home increased significantly in the first half of 2017, mainly due to the profit on the disposal of rental properties (1Q2017 disposal of non-current assets was 27.42 million yuan). Other reasons include: 1) a substantial increase in orders for low-nitrogen burners in the science and technology environment Sales revenue of energy-saving ignition business has increased significantly. 2) the decline in bank borrowing reduces financial costs.
Epitaxial mergers and acquisitions to improve industrial layout and create a comprehensive environmental protection service platform
Recently, the company announced that it plans to buy 100% equity in Yongbao Environmental Protection with 385 million yuan in cash. The transaction is divided into two stages: 70% equity in this transaction, the remaining 30% equity in 2019, and the performance commitment to deduct non-net profit of not less than 45 million yuan / 55 million yuan in 2018, corresponding to 12 times PE in 2017, at a reasonable price. Always maintain environmental protection mainly engaged in hazardous waste treatment, comprehensive utilization and water pollution treatment, hazardous waste treatment qualification of 185000 tons / year, this acquisition significantly enhanced the company's strength in the field of hazardous waste management. Prior to this, the company entered the field of water pollution control through the acquisition of Inrogren, and frequently extended mergers and acquisitions to improve the company's business plate, which has formed the business layout of flue gas treatment, water treatment and solid waste treatment, and become a comprehensive environmental protection service platform. the competitive strength has been greatly improved.
Equity incentive gathers power, and shareholders increase their holdings to show confidence.
After the change of the actual controller in June 2016, the company carried out equity incentive, granting 13 million stock options to 182 core personnel, the exercise price was 7.53 yuan, and the exercise condition was that the net profit in 2017 and 2018 was not less than 15,000,000 yuan, which effectively enhanced the cohesion and enthusiasm of the core staff. In April this year, the chairman of the company announced that Dong, Jian and Gao proposed to increase their holdings by 100 billion yuan and the price ceiling by 15 yuan per share. Compared with the closing price of 7.89 yuan per share, the increase of high specification premium has enhanced the management and control ability of the company's senior management. It also shows the company's senior management's determination to improve the company's performance, and the firm confidence of being optimistic about the company's future development.
Promote industrial layout and set up industrial funds
In July this year, the company announced that it would jointly launch an industrial investment fund with Zhongtao Financial Holdings. It will be used to acquire sewage treatment enterprises, sewage treatment operators, solid waste treatment enterprises, solid waste treatment operators, domestic waste cleaning, collection and transportation enterprises and hazardous waste projects with stable cash flow and core technology.
The total size of the fund is no more than 2 billion yuan, and the size of the first phase is 1 billion yuan. The establishment of the industrial fund will promote the strategic development of the company, meet the needs of the layout of the industrial chain, help to cultivate new growth points in the business field, improve the company's core competitiveness, and lay a good foundation for the company's long-term development.
The industrial layout is smooth and the "neutral" rating is maintained
The company's 1H2017 performance forecast is good, at the same time, the layout of the industrial chain is advancing smoothly, equity incentives and shareholder holdings enhance the company's healthy development expectations, and recurrent profits are expected to improve. We maintain the company's earnings forecast for 2017-2019 EPS of 0.22-0.36-0.40, and the current share price corresponds to the 2017-2019 PE of 36.63-21.76-plus 19.71. Maintain the target price of 7.7-8.4 yuan (corresponding to 35-38 times the target PE in 2017) and maintain the "neutral" rating.
Risk hint: the project does not reach the expected risk.
