Events:
In the first three quarters of 2016, the company's revenue and return net profit were 1.332 billion yuan and 152 million yuan respectively, up 117.85% and 144.64% respectively from the same period last year. Due to factors such as the G20 meeting and order execution in the third quarter, the performance was lower than expected.
Main points of investment:
The company's results in the first three quarters were lower than expected. In the first three quarters of 2016, the company's revenue and return net profit were 1.332 billion yuan and 152 million yuan respectively, up 117.85% and 164.64% respectively from the same period last year. The third-quarter results were lower than expected due to factors such as the G20 meeting and order execution in the third quarter. The growth of the company's operating income and net profit is mainly due to the consolidation of the wholly-owned subsidiary Zhongyi Ecology since March, as well as the continuous growth of the original dredging business, municipal sewage and industrial wastewater business.
The advantages of the layout of the whole industry chain are highlighted, and then the large PPP reflects that the company's replication and expansion model has been further verified, and is optimistic about the future performance release. The company announced the 2.5 billion framework agreement signed with Zhaoan County in September 15, and won the bid for the PPP project of water supply and drainage project on September 28, 16, with a total investment of 1.12 billion yuan. We expect the Wenzhou 800 million Project on August 22 and the 1.1 billion Zhaoan Project to be just the beginning, and we look forward to the future company taking advantage of the east wind of the PPP industry to use the successful case operation template to quickly achieve sustained performance release brought about by rapid replication and expansion.
Have the ability to undertake the general contract of PPP project, cooperate to improve the net profit margin. After years of mergers and acquisitions to complete the industrial chain, the company is vertically comprehensive in the field of water treatment industry chain, and is one of the few environmental managers with overall solutions in the market. And the general contract model can reduce the middleman link and improve the overall project profit margin of the company. With reference to existing cases, the net profit margin of the water treatment package model can be as high as 15-20%. The company's net interest rate in 2015 is 11.7%, which still has a lot of room to rise.
The company is active in mergers and acquisitions and expansion, transforming providers and service providers of integrated environmental and energy-saving technology solutions. In the past 15 years, the company has invested in the establishment of Xingyuan energy-saving subsidiary, which mainly deals with the comprehensive treatment of organic waste gas and waste liquid and resource recovery; controls Yinjiang environmental protection technology to obtain the manufacturing capacity of energy conservation, water treatment and other equipment; acquires part of the equity of Shanghai Haocang and increases its capital to enhance the information strength of environmental protection business; and acquires Chinese art ecology, layout ecological restoration and landscaping. Holding Hon Hai Environmental Protection, focusing on long-distance quality control of water quality monitoring equipment; M & A, three times three equipment, conducive to market development and acquisition and implementation of ppp projects; Xingyuan Jujin M & A Fund has completed its investment in solid waste industry. At present, the company gradually completes the layout of the upstream and downstream of the industry, and makes an active horizontal expansion of the hot industries of environmental protection at the same time, gradually building itself into a provider and service provider of comprehensive environmental and energy-saving technology solutions.
Investment rating and valuation: due to factors such as the G20 meeting in the third quarter and order execution not up to expectations, we lowered 16-18 net profit to 3.47,5.98 and 891 million yuan (originally 4.75,7.17,1.018 billion yuan), and EPS was 0.68,1.18,1.75 yuan per share, corresponding to 69 and 40 times valuation for 16 and 17 years. We believe that with the help of the capital platform and relying on the strength of the core environmental protection equipment, the company has gradually transformed into an environmental protection system integrator and an integrated environmental governance service provider, with clear strategic thinking, great potential for PPP orders in the future, high flexibility in performance growth and market value growth, and maintaining a "buy" rating.
