Union of things as the outline, carrying "Municipal Ecology + Industrial Environmental Protection" to go hand in hand
Different from other ecological and environmental protection companies, Jinglan Technology has established its foothold in the Internet of things since its inception, taking technology as the key link, successively acquired Jinglan Muhe and Northern Garden, and built a strategic closed loop of "tmai G-end municipal ecology + tmae B-end industrial environmental protection", demonstrating strong resource integration ability and finally realizing the transformation of operation-oriented mode. It is estimated that the net profit CAGR for 2017-2019 will reach 34%, covering the "buy" rating for the first time, with a target price of 14.79-15.78 yuan (target 30-32x 2017E Pmax E).
Water-saving irrigation, embrace the blue sea of the Internet
The implementation plan of adding 100 million mu of high-efficiency and water-saving irrigation area in the 13th five-year Plan clearly defines the increase of 100 million mu of high-efficiency and water-saving irrigation area during the 13th five-year Plan period, with a total investment of about 127.9 billion yuan. Jinglan Muhe is a leading water-saving enterprise in China, adopting the model of "engineering construction + material sales". In 2016, the sales revenue of water-saving irrigation construction contracts and water-saving materials products accounted for 84% and 13%, respectively. At present, the main market areas are in the eastern part of Inner Mongolia and Northeast China (the income accounts for more than 95%). Waifu expansion is accelerating, and intentional cooperation has been reached in Guangxi, Hebei, Yunnan and other places. In the future, water-saving business intelligence and agricultural product quality tracking will be realized through "water-saving cloud + traceability cloud". The net profit commitment of the company from 2015 to 2018 is 0.91 / 1.20 (actual 1.24) / 1.45 million RMB respectively.
Northern garden, make up the big ecological jigsaw puzzle
The acquisition of Northern Gardens was completed in September 2017. The Northern Gardens has unique technology in soil saline-alkali improvement and water ecological restoration. The trader promises that the cumulative net profit for 2016-19 is not less than 423 million yuan, and the completion of the acquisition will strongly thicken the company's performance. As the two senior generals of the company's water ecological business, Northern Garden and Jinglan Muhe have strong cooperation in business and regional resources.
It is expected that the northern garden will expand rapidly with the help of the financing capacity of listed companies in the future.
Industrial environmental protection, the project has entered the harvest period
Subsidiary Jinglanengke has unique solutions in four aspects: flue gas waste heat recovery of industrial enterprises, cogeneration of industrial tail gas, transformation and upgrading of coking enterprises, and comprehensive treatment of chemical waste liquid. At present, there is a certain degree of cooperation with the main ecological industry, and the conversion of biogas slurry into fertilizer can be realized in the water and fertilizer integration project. The project adopts EPC+F or BT, BOT and other models. At present, the Qinyang and Guxian projects are basically completed and begin to contribute to the performance. It is estimated that the net profit of Jinglanengke in 2017 and 2018 will reach 0.70 million yuan.
Covers the "buy" rating for the first time, with a target price of 14.79-15.78 yuan
Considering only the endogenous growth, it is estimated that the EPS of the company in 2017-2019 is 0.490.72 26x/18x/15x per share, and the current stock price is 12.6 corresponding to the 26x/18x/15x in 2017-2019.
Compared with the median valuation level of comparable companies, the company's technology builds a closed loop of the industrial chain based on large ecology and great environmental protection, and should enjoy a certain valuation premium, giving the 2017 30-32x target Pmax E, corresponding to the target price of 14.79-15.78 yuan, covering "buy" for the first time.
Risk hint: the landing speed of the PPP project is not as fast as expected, and the loss of bad debts of accounts receivable increases.