The company mainly provides garden "integration" integrated services, with the launch of the strategy of "ecological landscape + green environmental protection + intelligent people's livelihood", the business covers residential landscape, municipal landscape, Internet marketing, environmental protection and vacation landscape. According to 17H1 data, residential landscape accounts for the largest proportion, accounting for 54%, Internet marketing business accounts for 15%, and environmental protection business accounts for 9%, but as the business advances, the proportion of Internet marketing and environmental protection business will increase.
The extension acquisition enters the environmental protection, the future investment space is considerable: the company cuts into the environmental protection field of solid waste treatment through acquisition, according to the data, the scale of solid waste treatment market will account for 30% of the total environmental protection investment in the future. Using the experience of the United States for reference, the investment in environmental protection accounts for about 2% of GDP. Assuming that China's GDP is calculated at an average annual compound growth rate of 6.7%, the investment in environmental protection will reach 1.93 trillion yuan in 2020, and the investment in solid waste treatment will reach 580 billion yuan, with a compound growth rate of about 17%.
The acquired Deep Blue Environmental Protection has advantages in technology, management and so on. Deep Blue Environmental Protection original stock Oriental promised to achieve net profit of 3200, 4640, 6728 and 90.82 million yuan respectively from 2015 to 2018. Deep Blue Environmental Protection fulfilled its performance commitment in 2015 and 2016, while 2017H1 achieved a net profit of 23.2278 million yuan. If completed in 2017 and 2018, it will effectively enhance the company's performance.
The other pole of the development map, continuous acquisitions lay the foundation: as the other pole of future development, the company acquired Boris Seth with 958 million yuan and planned to acquire Baisheng technology, which laid a solid foundation in the field of mobile digital marketing. China's mobile advertising market is growing very fast. The size of the mobile advertising market will reach 484.25 billion yuan in 2019, nearly double that of 16 years. Bursese committed 6700 yuan, 8710 yuan and 113.3 million yuan respectively from 2016 to 2018, including 68.2268 million yuan in net profit in 2016 and 44.5179 million yuan in net profit in 2017H1, accounting for 51.11% of the promised profit. If Boris Seth fulfills its performance commitment, it will significantly thicken the company's performance.
Continue to cultivate the traditional main business and benefit from the wave of PPP development. As one of the leading real estate garden companies, the main business has continued to grow steadily since it was listed. The company acquired Guangdong Jianda Design Institute Co., Ltd., indirectly participated in the well-known design company Pan-Asia Environment (International) Co., Ltd., enhanced the design capacity and improved the industrial chain. In addition, with the extensive application of the PPP business model, the company will also benefit. In May 2014, the company signed the first municipal garden project based on PPP mode in the industry; in April 2015, the company announced the first PPP order with a value of 516 million yuan, becoming the first batch of enterprises in the industry to obtain PPP orders; in 2016, the company announced PPP orders of 4.169 billion yuan, and the company continued to move forward on the road of PPP development.
The company implements the strategy of "ecological landscape + green environmental protection + intelligent people's livelihood". Each territory is promoted in an orderly manner, and employee stock ownership shows confidence. We estimate that in 17 and 18 years, the company's EPS will be 0.15,0.23 yuan per share, respectively, and the corresponding PE will be 34.7 and 23.5 times, respectively. "strongly recommended-A" rating for the first time.
Risk tips: real estate investment and municipal investment is not as expected; PPP project landing is not as expected; transformation of environmental protection and Internet marketing is not as expected; payback risk.