Set up Suzhou environment of Tongfang to deepen the layout of environmental protection business
July 22nd, the company issued an announcement: with its own funds to contribute 50 million yuan to use Tongfang firm to set up a wholly-owned subsidiary Tongfang Suzhou Environment (tentative name). The firm used to set up a wholly-owned subsidiary comes from Tongfang shares, which is mainly engaged in information technology and technology environmental protection, and the controlling shareholder is Tsinghua Holdings, which is involved in related party transactions. The new subsidiary will benefit from the brand image of "Tongfang". The business scope of the new subsidiary covers environmental consulting, water environmental treatment, solid waste treatment and disposal, soil remediation, environmental monitoring and testing, etc., which will further deepen the layout of the company's environmental protection business and meet the company's strategic needs for the development of environmental protection business.
Continuous transformation, incarnation of Tsinghua Department of Environmental Protection Industry platform
The company's initial main business is the production of electronic components and LCD TV products, and then there are operational difficulties, looking for opportunities for asset restructuring. The change of the actual controller was realized in 2013, and Huarongtai became the actual controller. Since then, Huarongtai began to clean up the company's traditional business, looking for a breakthrough in transformation, and obtained a 70% stake in the Institute of Clean Control and Human settlement in 2015, formally incarnating the Tsinghua Department of Environmental Protection Industry platform. After that, Beijing Central Century was acquired in September 2015, and through the acquisition and continuous transformation, it actively laid out the construction of sponge city and other related environmental industries, forming a complete industrial chain of "financing + planning + design + construction + operation". The company is expected to become the leader in the field of sponge city construction by relying on the clearing and control department.
Bathing in the east wind of the sponge city, the performance is expected to meet the harvest time.
In the process of high-speed urbanization, China is facing a serious problem of shortage of water resources. At the same time, in recent years, urban waterlogging and water shortage occur frequently in our country, the infrastructure of traditional urban water system is backward, and systematic solutions are urgently needed. Sponge city is a new mode of urban development and construction. Benefiting from the national sponge city construction pilot policy, the company relies on the cleaning and control department, with its technical patents and rich experience, takes the lead in seizing the sponge urban planning consulting and engineering construction market. With the announcement of sponge city construction pilot cities one after another, the company focuses on participating in the construction of Qian'an, Pingxiang, Suining and other pilot city projects. With the demand of sponge city consultation and planning, and under the background of a large number of environmental planning projects in the first year of the 13th five-year Plan, the performance is expected to usher in the harvest period.
Sponge city has obvious first-mover advantage, maintaining the "buy" rating.
The company relies on clear control of human settlements, with project experience and leading technology, obvious advantages in the field of sponge city, with the policy increase, sponge city welcome landing opportunity. Considering that the PPP projects of Qianan 1.12 billion, Suining 1 billion and Yuxi 1.41 billion will start on a large scale in 17 years, and the future project landing will help the performance to improve, we raise the company's 17-19 year return net profit forecast, EPS is 0.16 EPS 0.31 EPS 0.47 in 2017-2019 (the previous forecast is 0.12 EPS 0.26 in 17-18), and the current stock price corresponds to 2017-2019 PE is 40-20-14 times. With reference to the average annual valuation of comparable companies in the water treatment industry at 32 times over the past 18 years, we have lowered the company's 18-year PE to 30-34 times (the previous 40-41 times) and the target price to 9.3-10.5 yuan (the previous time is 10.40-10.66 yuan), maintaining the "buy" rating.
Risk hint: the progress of the project is not as expected.