Dynamic event
The company issued an annual performance forecast for 2017. In 2017, the company's net profit attributable to shareholders of listed companies was 218.4045 million yuan to 253.631 million yuan, an increase of 55% and 80% over the same period last year.
Main viewpoints
Performance increased by 55% and 80% in advance.
According to the company's performance forecast, in 2017, the company's net profit attributable to shareholders of listed companies was 218.4045 million yuan to 253.631 million yuan, an increase of 55% and 80% over the same period last year. The growth in performance is mainly due to the orderly construction of domestic and international projects and the completion of a certain amount of work, which meets the conditions for revenue recognition, thus contributing greatly to the profits of 2017.
From the composition of the company's revenue in the first half of 2017, the company's income is mainly from the sponge city and seawater desalination business, which should be the good progress of the Cangzhou 100000-ton seawater desalination project and the Taian PPP ecological project.
Successive bid-winning projects exceeding 1 billion
By June 30, 2017, the company had added 76.67 million engineering (EPC) orders, with a total of 153 million yuan for EPC orders at the end of the period, 544 million yuan for new franchise orders (BOT, BOO, DBO, etc.), and 1.05 billion yuan for BOT orders under construction.
In November 2017, the consortium composed of the company, Zhongyifeng Construction Group Co., Ltd., Guangzhou Environmental Protection Engineering and Design Institute Co., Ltd. And Southwest Nonferrous Kunming Survey and Design (Institute) Co., Ltd., won the bid for the No. 1 factory and three networks PPP project in Yiliang County, Kunming City, with a winning bid amount of 330 million yuan.
In December 2017, the consortium formed by the company and Jiangsu Shenlong Ocean Engineering Group Co., Ltd. pre-won the bid for the PPP project of comprehensive reconstruction of the first ring water system in Cao County, with a total investment of 1.28 billion yuan.
In January 2018, the company won the bid for the PPP project of urban road network construction and upgrading in Qinyang City, with a total investment of 1.162 billion yuan.
The company has sufficient orders on hand, which is conducive to the continued growth of performance.
Promote the strategy of internationalization
The company promotes the strategic layout of internationalization. In 2017, the company signed an agreement to acquire shares in Doosan HydroTechnology LLC.100% (referred to as "DHT"). DHT is an international company specializing in desalination, municipal sewage treatment, waterworks and oil field zero-discharge engineering design, technical services and membrane technology, equipment, equipment assembly and automation solutions. With a rich engineering record, it has more than 200 design projects in 25 countries and has won various international awards. At present, DHT has officially changed its name to SafBon WaterTechnology (Baan Water Technology Company).
Since 2015, the company has acquired KWI Corporate Verwaltungs GmbH100% equity, Larive Water Holding AG21.6% equity, ItN Nanovation AG67.65% equity, Doosan Hydro Technology LLC.100% equity. The company introduces international and domestic advanced technology and high-end equipment by means of investment and mergers and acquisitions, which is conducive to enhance the company's core competitiveness.
Equity incentive and employee stock ownership
We launched the equity incentive scheme in 2016: based on 77.1 million of deducted non-net profits in 2015, the growth rate of deducted non-net profits from 2015 to 2019 was not less than 85 per cent (about 142 million), 190 per cent (about 223 million), 308 per cent (about 314 million) and 420 per cent (about 400 million). At the same time, the weighted average return on assets is not less than 9%, 10%, 11% and 12%.
In 2017, the company launched an employee stock ownership plan. By the close of trading on September 6, 2017, the ESOP plans to buy a total of 12.8135 million shares of the company through competitive trading in the secondary market, with a transaction amount of 134 million yuan and an average transaction price of 10.43 yuan per share. The lock-up period for stocks purchased is from September 7, 2017 to September 6, 2018.
Risk factors.
The market competition risk, the project does not meet the expected risk and so on.
Investment advice:
Maintain a "cautiously overweight" rating over the next six months.
We predict that the company's net profit attributed to the parent company from 2017 to 2018 is 224 million yuan and 326 million yuan respectively, an increase of 59.19% and 40.66% over the same period last year, and the corresponding diluted earnings per share are 0.34 yuan and 0.47 yuan, respectively, and the corresponding dynamic price-to-earnings ratio is 19.43 times and 14.71 times. The valuation of the company is slightly lower than the industry average. We believe that the company has sufficient orders on hand, its performance continues to grow, and the company's "prudent overweight" rating is maintained.