Core ideas:
The results for the third quarter increased by 78.78% over the same period last year, and the annual report increased by 145%. The company disclosed that in the third quarter of 2019, the company realized operating income of 2.535 billion yuan (year-on-year + 20.09%, the same below), net profit of 231 million yuan (+ 31.43%), revenue of 946 million yuan (+ 29.93%) and net profit of 97 million yuan (+ 78.78%) in the third quarter. The change in performance is mainly under the background of environmental protection inspectors in the same period last year, the decline in hot demand of enterprises in the park led to a decline in performance in the same period, and the company's performance picked up significantly this year due to the closure of competitors in Fuyang Park and the recovery of downstream thermal demand. With the production of new projects, the company's annual performance is expected to increase by 145% Mel 175% compared with the same period last year. The company's gross profit margin remained stable at 19.4 per cent, while net profit margin rose 0.7pct to 9.1 per cent year-on-year.
With the acquisition of Pului Energy and Zhongmao Shengyuan, Cogeneration Co., Ltd. has completed the industrial and commercial change registration of 850 million yuan for the acquisition of 85% equity interest in Puli Energy, and announced in September that it intends to purchase 100% equity interest in Shandong Zhongmao Shengyuan with its own capital of 110 million yuan. Platinum Rui Energy is currently working on seven cogeneration projects. Shandong Zhongmao Shengyuan has a heating capacity of 150 steam tons per hour. It is estimated that after all the above acquisition projects are completed and put into production, the company's thermoelectric capacity will be close to 6000 steam tons per hour. With the help of acquisition, the company is expected to go out of Jiangsu and Zhejiang and further expand the layout of cogeneration in different places.
Affected by the increase in foreign investment, the company's asset-liability ratio rose to 45%. Affected by the increase in company investment, the company's long-term equity investment increased by 862 million yuan compared with the beginning of the period, and the company's financial expenses increased by 52.79% in the first three quarters compared with the same period last year, mainly due to an increase of 880 million yuan in short-term borrowing in the first three quarters. The company has 390 million yuan in cash on hand, which is 1 billion yuan less than the reported amount for the construction of fixed assets. By the third quarter of 2019, the company's asset-liability ratio had risen to 45%.
Hot demand recovery + remote expansion capacity release, profits continue to rebound, maintain the "buy" rating without considering the acquisition of Pului Energy and Zhongmao Shengyuan equity, we estimate that the company's EPS in 2019-2021 is 0.38,0.47 and 0.57 yuan per share, respectively, and the corresponding PE is 20,16,13 times according to the latest closing price. Out of prudence, we give 2019 24 times PE valuation, corresponding to 9.03 yuan / share reasonable value, the company's remote layout is accelerated, "local integration + remote expansion" continues to advance, and the layout of waste incineration power generation is involved in the field of solid waste tail disposal, large buybacks demonstrate management confidence and maintain the "buy" rating.
Risk hint
The fluctuation of thermal demand leads to the fluctuation of profit margin; the progress of project expansion is lower than expected; the improvement of environmental standards leads to the increase of operating costs; and the impairment of assets is uncertain.
