Summary of the report
Company overview
The company develops and operates a large-scale industrial park specially for the electroplating industry in China. The company currently has two electroplating industrial parks in China, Guangdong Huizhou Park began operation in 2007, the company holds 100% interest; Tianjin Bingang Park began operation in 2016, the company holds 51% interest. Guangdong Huizhou Park is the only electroplating industrial park in Huizhou and one of the six large-scale electroplating industrial parks in Guangdong Province. Tianjin Bingang Park is the only large-scale electroplating industrial park in Tianjin.
In terms of 2018 revenue, the company ranks first among the operators of China Electroplating Industrial Park in terms of total revenue, with a market share of 7.4%. This market is extremely fragmented, with the market share of the top five participants being 14.7% in 2018.
The company's business models include: industrial park development, leasing and management; provision of wastewater treatment and public utilities (including water, electricity and steam); supporting business (including raw material procurement and gas emission), etc.
FY2016-18, the company's income is RMB1.98 billion yuan, RMB 302 million yuan and RMB 480 million yuan respectively, CAGR is 55.8%; operating profit is RMB 43 million yuan, RMB 58 million yuan and RMB 106 million yuan respectively, CAGR is 57.4%; net profit is RMB 16 million yuan, RMB 0.2 billion yuan and RMB 48 million yuan respectively, and CAGR is 71.1%. The operating profit margins during the period were 21.7%, 19.3% and 22.1%, respectively. The net interest rates are 8.3%, 6.7% and 10.0%, respectively.
Industry status and prospects
The Chinese government tends to centralize the management of electroplating enterprises, and more and more electroplating enterprises enter the electroplating industrial park.
In 2018, the income of enterprises in the electroplating park reached 1747 billion RMB, accounting for 49.5% of the industry. It is estimated that the income of enterprises in the industrial park will reach 3538 billion RMB in 2023, accounting for 72.4% of the industry. 2018-23 CAGR15.2%
There are 28 and 2 electroplating industrial parks in Guangdong Province and Tianjin respectively. Jinmaoyuan Environmental Protection Park is one of the six large parks in Guangdong Province and the only large park in Tianjin. Its Jingzhou project in Hubei Province is also expected to become the only large-scale park in Hubei Province.
Advantages and opportunities
The tendency of government regulation is gradually guiding electroplating companies to move their business to industrial parks. The company benefits from this industry trend as an industrial park operator in the electroplating industry.
The customer base of the electroplating industrial park tends to be stable. The enterprises in the park relocate the design and production facilities and invest heavily in the transportation cost of delivering products to major customers.
Weakness and risk
Rely on the overall performance of the electroplating industry. Rely on the level of economic development of the region where the project is located.
The company's business performance depends on the operating performance and financial position of its major customers.
Investment valuation
The IPO price is between HK $1.08 and HK $1.44. The company's 2018 exam market net ratio reached 3.0-3.1 times. The net profit of the company in 2018 is 47.94 million yuan. The issue price corresponds to the fully diluted price-to-earnings ratio of 22.2-29.6 times in 2018, we believe that although the company has development potential, the valuation of listing in Hong Kong shares is higher than that in the industry, and the initial operation of Hubei Park may have a negative impact on the overall performance, so it is given a special rating of IPO 5.
