Events:
We have recently conducted a survey and tracking of the company.
Main points:
Mergers and acquisitions are injected into sanitation assets to open up the company's solid waste upstream and downstream industrial chain.
The company's new senior management team took office in March this year and announced an outline of its development strategy for the next three years. In July this year, the company planned to use 236 million yuan in cash to accept the 95.50% stake in Mingcheng Science and Technology held by Zhonghui Group, a major shareholder of the company, proposed to inject sanitation assets, and began to lay out the company's strategic ideas. At present, it has been approved by Zhongshan SASAC. The famous city science and technology business mainly covers the cleaning and cleaning, transportation and landfill, medical waste disposal and other businesses in the central urban area of Zhongshan City, which forms a certain coordination with the waste incineration project held by Tianyi Energy of the company. it initially has an integrated solid waste industry chain of "collection-transfer-incineration-landfill". With the acceleration of sanitation marketization, the company superimposes the capital advantages of listed companies with the help of famous city science and technology sanitation platform, and garbage removal projects in other provinces and other cities are expected to land quickly.
Two-wheel drive of industrial operation and capital operation, actively expand the business outside the province
The company has established the strategic thinking of "industrial management + capital operation" two-wheel drive. From the perspective of industrial operation, the company focuses on large environmental protection business, specifically for the three cores of water environment governance, hazardous waste treatment and sanitation services, changing from the old business chain to "relevant diversification" business, the company is increasing and active layout. From the perspective of capital operation, the company has promoted mixed reform in the past 14 years, successfully introduced Fosun Group as the second largest shareholder, made up for the company's shortcomings in investment, broadened the sources of projects, and enriched the investment team. In addition, the company cooperates with Guangfa Xinde to set up a M & A fund to invest in industries such as energy conservation and environmental protection, with a total of 9 investment projects. At present, the company's business is mainly concentrated in Zhongshan City, after the establishment of two-wheel drive development strategy, actively seek active business development. With the help of capital strength, the company focuses on sewage treatment and sanitation business in villages and towns, and launches multi-field investment layout for the whole country.
Profit forecast and valuation
The company has stable cash flow and low asset-liability ratio. after establishing the two-wheel drive development strategy, we will gradually establish and improve the investment management mechanism and expand the business territory. At present, the injection of sanitation assets has been approved by Zhongshan SASAC, and the future performance is expected to reach a new level. We estimate that the EPS of the company from 2017 to 2019 is 0.44,0.50,0.55 yuan respectively, and the corresponding PE is 10.80,9.01,7.71times respectively.
Risk hint
Macro policy risks; business development is not as expected; long-term equity investment returns are lower than expected.