Investment logic
Water-saving, energy-saving, garden plate coordinated performance turning point to ensure high-speed growth. In 2017, new orders exceeded 9 billion yuan (excluding frames), about 2.6 times the 17-year revenue, while on-hand orders exceeded 16 billion yuan (excluding frames), with non-PPP accounting for about 50 percent. From 2016 to January 2018, the number of new orders was 22.4 billion yuan (including frames), and the number of orders was 66, of which Jinglan Muhe / Jinglan Nengke / Jinglan Ecology / Northern Gardens received orders of 73 billion yuan respectively.
Executives continue to increase their confidence and improve the margin of safety. Recently, the company's Chief Financial Officer / General Manager / Vice President respectively increased their holdings by 5 million yuan / 3 million yuan / 1.25 million yuan, and the price of the increase was about 12 yuan, reflecting the company's executives' sufficient confidence in performance growth.
Enter the northern garden, "ecological environment + Internet" another son. China's current urbanization rate is 57.4%, which is still a large gap from more than 80% of developed countries, and the demand for landscaping in the middle and later stages of urbanization continues to release. In September, the company acquired 90.11% equity of Northern Garden with 721 million yuan, paid 530 million yuan for 39.24 million shares per share, paid 190 million yuan in cash, and raised 510 million yuan for matching funds. The Northern Garden has promised that the net profit of non-return from 2016 to 2019 is not less than 423 million yuan, and the cumulative operating cash flow from 2017 to 2019 is not less than 174 million yuan, so as to further improve the company's "ecological environment + Internet" industry chain.
The energy-saving output value of the 13th five-year Plan is set at 3 trillion yuan, and Beijing Lannengke has opened up the industrial energy-saving market. The National Strategic emerging Industry Development Plan of the 13th five-year Plan requires that the output value of high-efficiency and energy-saving industries should reach 3 trillion yuan in 2020. China's industrial energy consumption accounts for about 70% of the country's total energy consumption, which is a key area of the energy-saving industry. In April 2015, the company established Beijing Lannengke and controlled 51% of the company, and mastered seven industrial energy-saving solutions, such as flue gas waste heat recovery in industrial enterprises, cogeneration of industrial tail gas, transformation and upgrading of coking enterprises, and so on. In 2017, Beijing Laneng Co., Ltd. added more than 1.2 billion new orders, successfully opening up the industrial energy saving market.
Investment suggestion
Water-saving, energy-saving, garden plate coordinated performance turning point, sufficient orders for a high proportion of non-PPP, ensuring rapid performance growth. According to estimates, in 17-18-19, the company is expected to return to the parent net profit of 3.4,4.7 and 620 million yuan, EPS 0.51,0.65,0.85 yuan, corresponding to PE of 27,22,16 times, maintaining the "buy" rating.
Risk hint
Risk of landing schedule of water-saving irrigation policy; risk of signing PPP order and landing schedule; risk of delay in recovery of accounts receivable from some projects; risk of fluctuation in obtaining energy-saving orders