Events:
As the lead party of the consortium, Jinglan Muhe, a subsidiary of the company, won the bid with the Puzhihei High efficiency Water Saving Irrigation Government and Social Capital Cooperation (PPP) project in Qiubei County, Inner Mongolia, with a total investment of 132 million yuan, using BOT model, with a cooperation period of 16.5 years (including construction period of 1.5 years).
Main points of investment:
Expand the business territory of high-efficiency and water-saving irrigation. The company's original water-saving irrigation projects are mainly concentrated in Inner Mongolia and Hebei. The bid-winning Qiubei County project will have a positive impact on the company's business expansion to Yunnan, Sichuan, Guangxi and other regions. In 2017, the company added 4.146 billion yuan in water-saving irrigation orders (excluding framework agreements), an increase of 398% compared with 833 million yuan in 2016, indicating that Jinglan Muhe is increasingly competitive in the field of water-saving irrigation, and sufficient orders ensure the company's performance growth.
Create an Internet of things platform and broaden the commercial space for water-saving irrigation. On November 3, the company released the Beijing Blue Internet of things platform, and signed a strategic framework cooperation agreement with Xintian Science and Technology, Sanji Environmental Protection, and the National Water Saving Irrigation Center to apply the Internet of things to smart agriculture and intelligent water conservancy, and establish big data's sharing mechanism. we will further expand the eco-agricultural industry chain and create a leading water-saving irrigation service model at home and abroad. The Beijing Blue Internet of things platform integrates planting services, drone services, white strip business, production materials, agricultural products docking, block chain traceability, information services, etc., which broadens the commercial space of traditional water-saving irrigation and leads the development direction of intelligent water-saving irrigation. Help to further promote the company's "investment, construction, management and service" integrated business model.
Rapidly integrate the northern garden business to help the company form a large ecological pattern. On September 15, 2017, the company completed the transfer of 90.11% of the equity of Northern Gardens. Since then, the Northern Garden (and its consortium) successively won the bid for Weifang High-tech Zone PPP Phase IV Project and Huaming High-tech Zone Road Comprehensive renovation Project Greening and upgrading Project in October, with a total investment of 1.08 billion yuan. It shows that the management integration of the company is smooth, and the ecological restoration business is expected to expand rapidly.
Profit forecast and valuation. Through the acquisition of Muhe water-saving and northern gardens, the company has gradually improved the layout of the "big ecology" field. At the same time, the company's clean energy sector business has also made rapid development.
We are optimistic about the influence of the company in the field of water-saving irrigation and the capital operation ability and execution ability of the management. It is estimated that the EPS of the company from 2017 to 2019 is 0.43,0.65 and 0.85 yuan respectively, corresponding to 29.32,19.68 and 14.93 times PE respectively.
Risk hint: the progress of the project is not as expected; the rate of return of the project is lower than expected