Event

Subsidiary company Jinglan Muhe won the bid 132 million PPP project

The company issued an announcement announcing that its subsidiary, Jinglan Muhe, had received a "bid winning notice" issued by Yunnan Yunling Engineering cost Consulting Co., Ltd., confirming that the consortium composed of Jinglan Muhe and Liaohe Engineering Bureau was the winning bidder of the PPP project of the government and social capital cooperation in Puzhihei, Qiubei County, with Jinglan Muhe as the leader of the consortium and Liaohe Engineering Bureau as a member of the consortium.

Brief comment

Jointly with Liaohe Engineering Bureau to promote the landing of the project.

The total investment of the Puzhihei high-efficiency water-saving irrigation project in Qiubei County, which won the bid, is about 132 million yuan, and the cooperation period is proposed to be 16.5 years (including the construction period of 1.5 years). The project adopts the "BOT (Construction-Operation-transfer)" model, and the income return method is the feasibility gap subsidy. Among them: part of the user payment comes from the irrigation and water supply income of the project, and the feasibility gap subsidy comes from the general public budget of the finance at the same level.

In May 2017, Hangzhou Zhenfu, a subsidiary of the company, Jing Lan Youdao, Inc, successfully acquired 98.71% of the equity of Liaohe Engineering Bureau, which is a professional provider of comprehensive services for the development and utilization of water resources and water environment renovation. It has the first-class qualification of general contracting for water conservancy and hydropower projects and many high-quality performance projects, which is helpful to improve the company's ability to take orders.

We believe that the winning bid, on the one hand, is the embodiment of the synergistic effect of the market development of the company and the Liaohe Engineering Bureau; on the other hand, it is an important achievement of the company in opening up the Yunnan market, which increases the local market share and brand influence of Jinglan Muhe. At the same time, it further increases the certainty of performance.

The three major layouts fall to the ground, and the pattern of "big ecology" is taking shape.

Relying on the advantage of unique resources, the company has rapidly completed the expansion of the industrial chain through the strategy of "three steps" in a short period of time. The industrial pattern of "big ecology" supported by "agricultural water saving", "Internet +" and "ecological restoration" has appeared. 1) in the aspect of "agricultural water saving", Muhe water saving through mergers and acquisitions will gain the dividend of industry development as a leader. 2) in terms of "Internet +", fully combine the ecological industry with the Internet, and actively explore the use of Internet platform model to promote the construction and operation of ecological projects and enhance the added value of the industry; 3) in terms of "ecological restoration", the company's acquisition of northern gardens has been conditionally approved by the CSRC, the business chain will be rapidly expanded, and another important chess piece in the industrial layout has landed.

Many policies continue to be good, and the PPP model of agricultural water saving is promoted rapidly.

The 13th five-year Plan for Water Conservancy Reform and Development proposes to increase the effective irrigation area of farmland by 30 million mu and increase the area of high-efficiency water-saving irrigation by 100 million mu. According to the investment of 2500 yuan per mu of high-efficiency water-saving irrigation, the space of water-saving market will exceed 250 billion yuan by 2020. there are broad prospects for development. The "opinions on promoting the Comprehensive Reform of Agricultural Water Price" proposes that it will take about 10 years to establish and improve the formation mechanism of agricultural water price, and the increase in water price will force farmers to control water expenditure from the point of view of cost, adopt water-saving technology, and increase the area of water-saving irrigation.

Since 2016, the agricultural water-saving irrigation PPP project has shown a momentum of accelerated landing, with a rapid growth in number and scale. PPP brings two changes to the industry:

1) the investment scale of the project is large, and the requirement for the comprehensive ability of enterprises is higher; 2) to enhance the participation of farmers and enhance the awareness of water saving. Under the background of the rapid development of the PPP model, the situation of "small, scattered and chaotic" competition in the industry in the past will be completely changed, the concentration of the industry will increase rapidly, and the company will directly benefit as the representative of the industry leader.

Cut into the field of clean energy, Beijing Laneng is expected to become another performance growth point.

In terms of clean energy, the company has cut into the field of clean energy services through the establishment of Beijing Laneng Branch, and its management team has rich experience in the industry. It has quickly acquired superior technology through cooperation at home and abroad, and has undertaken a number of industrial energy-saving projects in a short period of time, involving waste heat power generation, industrial exhaust gas, coke dry quenching, energy control and chemical industry upgrading, with a total amount of 1.131 billion yuan. Demonstrate the excellent management ability and order taking efficiency of the management team. The clean energy sector is expected to become a new profit growth point for the company.

Take advantage of capital operation and actively distribute industrial investment

Through the enterprise innovation incubator to train high-quality entrepreneurial projects and technologies in vitro, to provide listed companies with good talents and project reserves; in addition, the company actively creates a comprehensive business platform for ecological industry investment, construction, operation and management, and sets up Jinglan Jianxin Industrial Fund to provide strong financial guarantee for PPP projects.

Investment advice and rating

The management of the company has high-quality management ability and strong resource endowment, showing strong advantages in capital operation and order landing; the industrial pattern of "big ecology" has initially emerged and is expected to become a scarce leader in the field in the future; the recent increase in the holdings of major shareholders further demonstrates the confidence of development, and the inflection point of rapid growth of performance has come. It is expected that the company will achieve operating income of 42.41 yuan and 6.58 billion yuan in 17 and 18 years, with net profits of 3.52 yuan and 596 million yuan respectively, maintaining the "buy" rating.