Company profile:
Jin Maoyuan Environmental Protection is a large-scale industrial park development and operator designed for the electroplating industry. Its income mainly comes from (1) rental income, (2) wastewater treatment and public utility services. In 2018, the company ranked first among the operators of China Electroplating Industrial Park in terms of total revenue, with a market share of 7.4%. Jinmaoyuan Environmental Protection currently has two electroplating industrial parks in China: (1) Guangdong Huizhou Park, which has 100% interest and started operation in 2007, and (2) Tianjin Bingang Park, which has 51% interest and began operation in 2016, the total rentable area is 574000 square meters, and the total occupancy rate is 82.9%.
Sino-Thai point of view:
The government controls the pollution of the electroplating industry, and there is a demand in the industrial park: the electroplating industrial park industry benefits from the gradual implementation of the government policy, requiring electroplating enterprises to move their business to the industrial park, otherwise they will be ordered to close down. According to the industry consultant report, electroplating enterprises located in industrial parks accounted for about 49.5% of the total revenue of the electroplating industry in 2018, and this percentage is expected to increase to 72.4% in 2023. The electroplating industrial park not only helps local governments to control the pollution caused by the electroplating industry, but also enables electroplating enterprises to focus their efforts and resources on their core business without having to worry about being ordered to stop operations for failing to meet pollutant emission standards. This basic advantage supports the continuous development of the electroplating industrial park industry.
Operating results: the company's total revenue increased by 142.7% from RMB 198 million in 2016 to RMB 480 million in 2018, because in the same period (1) rental and facility use income and (2) wastewater treatment and public utilities and supporting business income increased by 106.7% and 185.5%, respectively. The average daily rented area increased from 263000 square meters in 2016 to 458000 square meters in 2018, while the average daily wastewater treatment capacity increased from 6189 tons to 8220 tons in the same period.
Valuation: there is no relevant environmental protection industrial park Hong Kong stocks in the market. According to the business model, logistics industrial park / trade center operators are relatively close to comparable counterparts. Environmental protection industrial park and logistics industrial park / trade center operators rely on two major sources of income: (1) real estate income and (2) operating service income. Based on 1.12 billion shares after the global public offering, the company's market capitalization is HK $12.10-1.613 billion, lower than its Hong Kong counterparts; the company's 18-year price-to-earnings ratio is about 25.233 times, higher than the industry average; and the price-to-book ratio is about 3.00-3.13 times, higher than the industry average. In terms of profitability, the 18-year ROE and ROA were 10.9% and 1.6% respectively, which were also higher than the industry average. The company's profit performance is better, but the valuation is also higher. Considering the company's industry status, performance and valuation, we give it a score of 63, with a rating of "neutral".
Risk tips: (1) the company relies heavily on the performance of the electroplating industry (2) the risk of customer delay in payment
