Matters: the company announced that it signed the "Cooperation Framework Agreement on Investment and Construction of Fang Bamboo Industry, Culture and Tourism Project in Tongzi County, Zunyi City, Guizhou Province". The total investment of the project is about 3.5 billion yuan, and it is planned to cooperate with PPP, EPC and other modes.
Signed a framework agreement, the project investment is high: the company announced that it signed a cooperation framework agreement with Tongzi County, which is the first framework agreement for the company since its listing, and the two sides intend to use PPP model and PPP+EPC model for cooperation. The agreement stipulates that the total investment of the project is 3.5 billion yuan, which is 4.24 times of the company's operating income of 826 million yuan in 2016. the landing of the follow-up project is expected to help the company release its performance in 2017. Tongzi County, as a precise counterpart to poverty alleviation in Putuo District, Shanghai, has accumulated 740 million yuan in assistance funds from the Zunyi Municipal Government and 17 million yuan in Shanghai Putuo District; in 2016, the public budget of Tongzi County reached 3.235 billion yuan, of which 1.087 billion yuan was earmarked for transfer payments. It is expected that the county government has a strong ability to pay, and the follow-up progress of the project is guaranteed.
The proposed investment in bamboo industry is expected to be good in the future: the company signed a framework agreement with the people's Government of Tongzi County, Guizhou Province, with a total investment of 3.5 billion yuan, including cultural tourism project investment of about 2.5 billion yuan and square bamboo industry project investment of about 1 billion yuan. As for the square bamboo industry project, the company plans to set up a square bamboo shoot processing joint venture with the Tongzi county government, with a total investment of 200 million yuan, of which the company contributes 160 million yuan and holds 80% of the shares. Square bamboo industry is a characteristic industry in Tongzi County. According to the official website of Tongzi County government, the planting area of square bamboo in Tongzi County has reached more than 430000 mu, accounting for more than 60% of the national total, and the output has reached about 50,000 tons. It is expected that the income will be good in the future.
The layout of cultural tourism projects is expected to achieve the extended layout of the industrial chain: in addition, the framework agreement also includes cultural tourism projects such as the construction project of Jiuba residential and health demonstration base in Tongzi County and the tourism project of Yueliang River Basin in Xiaoshui Township. According to the government report of Tongzi County in 2017, the local government will "make every effort to build a health-preserving holiday base" in the next five years, and strive to receive more than 15 million tourists a year, with a total tourism revenue of more than 10 billion yuan. The company is expected to benefit from the cultural tourism project this time. The signing of the framework agreement covers a wide range of contents, which is conducive to the diversification of the company, and the industrial chain extends to the direction of literature and travel.
There are plenty of orders on hand, covering a wide range of areas: since 2017, the company has announced orders (including framework agreements) totaling 4.954 billion yuan, six times the 2016 operating income of 826 million yuan. Among them, the total amount of winning orders is 1.454 billion yuan, and the amount of framework agreement reaches 3.5 billion yuan. The company has sufficient orders on hand, covering many areas such as landscaping engineering, ecological wetland restoration, comprehensive management of river and lake environment, and so on. And the signing of the framework agreement is expected to extend the company's business to the field of cultural tourism, and the company covers a wide range of orders, indicating that the company has a strong ability to obtain orders.
Investment advice: buy-An investment rating, 6-month target price of 40 yuan. The company has plenty of orders on hand, and the layout of ecological restoration and cultural tourism, including water treatment, is expected to further open up the future growth space of the company. We are optimistic about the growth of the company. We expect the company's operating income to increase by 56.2%, 38.4% and 29.1% year-on-year from 2017 to 2019, while net profit will increase by 57.5%, 40.0% and 33.5% over the same period last year, maintaining the company's buy-An investment rating. The six-month target price is 40 yuan, which is equivalent to 40 times the dynamic price-earnings ratio in 2017.
Risk hint: the risk that the landing of the framework agreement is not as expected, the PPP advance is not as expected, the interest rate continues to rise and so on.
