Peace viewpoint:
Focus on green industry, deep ploughing environmental protection + new energy. In December 2017, the company adjusted its strategy, spun off the traditional real estate business, focused on photovoltaic new energy and ecological environmental protection business, and created an integrated business service platform. to provide a package of green development solutions such as eco-environmental governance, as well as a variety of clean energy generation and distribution integrated smart energy operation services. In 2017, the company's new energy business achieved revenue of 5.435 billion yuan, an increase of 148.36% over the same period last year, accounting for 66.84% of revenue, which is currently the company's main source of income; environmental protection income of 803 million yuan, accounting for 9.88% of revenue, rapid development.
Photovoltaic operation is expanding rapidly, and project contracting is becoming more and more large-scale. The company makes great efforts to expand photovoltaic power station construction, operation and other new energy business, with strong funds and professional development team. If the second non-public offering is successfully completed, the company's own capital available for the development of photovoltaic power stations raised through two non-public offerings will reach 14.35 billion yuan, which is expected to support the development of photovoltaic power stations beyond 4GW. By the end of 2017, the scale of the company's grid-connected photovoltaic power station exceeds that of 1GW, and the photovoltaic power station project about 5GW has been completed for the record accumulatively, and the future photovoltaic business revenue will be gradually released, contributing to a significant profit increase. In terms of the general contract of the project, it is estimated that the total contracted project scale of the photovoltaic power station in 2017 is close to 1GW, which is the main source of income for the current new energy business.
The comprehensive layout of ecological and environmental protection, and the comprehensive platform has gradually taken shape: in recent years, the company has carried out a series of layouts around the comprehensive service industry chain of environmental protection and new energy. In 2017, it acquired Starscape Ecology to enter the ecological environmental protection industry, and invested 146000 tons of hazardous waste disposal project in western Jiangxi. The ecological and environmental protection industry now covers four business sectors: ecological restoration, watershed management, water treatment and hazardous waste treatment. At present, the company has more than 22 billion yuan in PPP projects and agreements, and signed about 7.241 billion yuan in PPP projects in the first quarter of 2018, with a rapid growth, and is expected to complete 25 billion yuan of orders for the whole year.
Investment advice: we predict that the EPS of the company from 2018 to 2020 will be 1.35,1.35,1.67 yuan respectively, an increase of 231.8%, 0.3% and 23.5% respectively over the same period last year (the decline in performance growth in 2019 is mainly due to higher non-recurrent investment income from the divestiture of the real estate business in 2018), and the corresponding PE is 9.9,9.8 and 8.0 times respectively. Considering the bright future of new energy and environmental protection industry, the company's photovoltaic operation and environmental protection business will usher in rapid development, giving a "recommended" rating for the first time.
Risk tips: (1) domestic photovoltaic newly installed is less than expected risk. At present, the uncertainty of whether the industrial and commercial distribution is included in the index management may lead to less than expected new installation, and then affect the general contract of the photovoltaic power station project and the distributed project originally planned and developed. (2) the risk of untimely payment of subsidies. At present, the seventh batch of new energy subsidy catalogue has not been released one after another. on the whole, the time limit for photovoltaic projects from commissioning to receiving subsidies has been extended. It may take a long wait for the photovoltaic projects that the company launched last year and this year to be included in the subsidy catalogue and received subsidies, affecting the company's cash flow and sustainable development capacity to a certain extent. (3) the construction progress of PPP project is lower than the expected risk. At the end of 2017, affected by the clean-up of PPP, some banks tightened the examination and approval of PPP project loans, which may have an impact on the company's PPP project construction progress to a certain extent, and then affect the company's future performance.
