I. Overview of events
The company recently released its 2018 annual report, with revenue of 10.993 billion yuan, + 17.48% compared with the same period last year, and net profit of 643 million yuan, 48.53% compared with the same period last year. At the same time, the company announces that it intends to change the name of the company to enlightening environment.
II. Analysis and judgment
Clean-up and rectification led to a decline in performance in 2018, sanitation and recycling business is still a bright spot
The growth rate of income in 2018 was stable, but the return net profit declined sharply, mainly due to the tightening of the financing environment, the gross profit margin of municipal works declined, while the financial expenses increased by nearly 200 million yuan compared with the same period last year, resulting in an increase in the overall expense rate. At the same time, taking into account the problem of bad debts of accounts receivable, the impairment of assets increased by 250 million yuan over the same period last year.
From a business point of view, the sanitation and recycling business vigorously promoted by the company still has bright spots, in which the sanitation service business ushered in a relatively large growth rate of nearly 89%, while the gross profit margin increased by 2.13 percentage points to 19.21%. Revenue from the recycling business increased by 15.06% over the same period last year, with a gross profit margin of 15.06%, + 7.37% compared with the same period last year.
The management team has been replaced and is expected to usher in a "year of quality improvement" in 2019.
The company announced the appointment and dismissal of the chairman and general manager at the same time, and the new management team comes from the enlightenment department of the company's real controller, which is expected to lead the company to better cooperate with major shareholders. In addition, the company announced in March that the fund controlled by Xiongan Group and / or Xiongan New area Management Committee and Tsinghua Holdings have become the largest shareholder of Enlightenment Holdings, and are expected to gain a larger market share in the process of ecological and environmental protection construction in Xiongan New area in the future. In 2019, the company will focus on promoting the construction of contracted projects, raising the income level of operating projects, and actively promoting the coordinated promotion of water, sanitation, solid waste (including hazardous waste and medical waste), utilization and recovery of renewable resources, and environmental protection equipment and sanitation vehicle manufacturing, so as to enhance the added value of the ecological industry chain.
Be optimistic about the Internet sanitation + easy renewable O2O model
In 2018, a total of 19 project companies engaged in waste disassembly business, the total number of scrapped cars dismantled reached 32000, the annual disassembly volume of electric waste is about 12.31 million. We expect to introduce policies related to renewable resources this year, including a reduction in value-added tax and a certain freight subsidy for the transportation of waste electrical and electronic products. If the introduction of relevant policies to the industry leader is expected to bring greater business promotion, optimistic about the renewable O2O platform, enlighten Sander "Internet +" new resource recovery model new business type is worth looking forward to.
III. Investment suggestions
Optimistic about the company's leading position in the field of sanitation equipment and recycling, it is worth looking forward to the development of the company after the change of management. It is estimated that the company's EPS in 2019-2021 is 0.63x0.74 EPS 0.79, corresponding to the current stock price PE 23 19max 18x.
The company's current PB is only 1.48x, below the historical 5% quantile, and there is more room for repair in the future. It will be covered for the first time and given a "recommended" rating.
Fourth, risk tips:
1, the landing of the project on hand is not as expected; 2, the financing environment has not improved.
