Events:
Fuchun Environmental Protection recently announced that the share buyback plan approved by the company's shareholders' meeting on November 15, 2018 expired and completed on November 14, 2019. The original plan to buy back the company's shares was 2.0-400 million yuan. The repurchase price was no more than 7 yuan per share (adjusted to no more than 6.95 yuan per share after the implementation of the 2018 profit distribution plan), and the actual cumulative repurchase shares were 5.212 million shares. The transaction price is 4.32-6.66 yuan per share, and the total amount paid is 31.54 million yuan. The reason why the total repurchase amount announced by the company does not reach the lower limit of the repurchase amount proposed in the repurchase plan is mainly affected by many factors, such as the disclosure of periodic reports, the sensitive period for planning major events, and the fact that the company's stock price is higher than the upper limit of the predetermined price. as a result, there are fewer opportunities for the company to actually implement the buyback operation.
On December 4, 2019, the shareholders' meeting of the company approved the plan to buy back the shares of the company, and the repurchased shares shall be used for cancellation, and the repurchase price shall not exceed 220 million yuan per share; the specific number of repurchases shall be based on the actual number of shares repurchased at the expiration of the repurchase period, and the repurchase period shall be 6 months from the date of consideration and adoption of the repurchase plan by the shareholders' meeting.
Comments:
1. It is proposed to buy back 1.7-220 million yuan of shares, demonstrating the management's confidence in the future of the company. as of November 14, 2019, when the repurchase period expired and completed, the company accumulated 5.212 million shares with a transaction price of 4.32-6.66 yuan per share, with a total payment of 31.54 million yuan. the company launched the share buyback plan again this time. It is proposed to buy back 1.7-220 million yuan for the cancellation of shares, and the repurchase price shall not exceed 10.50 yuan per share. It shows the optimism and confidence of the management of the company. If calculated according to the lower limit of the repurchase amount of 170 million yuan and the upper limit of the repurchase price of 10.50 yuan per share, it is estimated that the total redeemable shares will be 16.19 million shares, accounting for about 1.82% of the total share capital of the company. If it is calculated according to the upper limit of the repurchase amount of 220 million yuan and the repurchase price of 10.50 yuan per share, it is estimated that the total number of shares that can be repurchased is 20.95 million shares, accounting for about 2.36% of the company's total share capital. The repurchased shares will be cancelled, which will help to improve the level of earnings per share of the company.
two。 Recovery of downstream demand, reduction of asset impairment, rapid recovery of performance, annual performance forecast high increase in 2018 due to the decline in heating demand of downstream enterprises in the park where the company is located, the higher overall price of coal, poor management of its small loan companies, more impairment of assets, more impairment of goodwill of other subsidiaries and other factors, income and profits have been greatly affected. Since 2019, the adverse effects of the above factors have been eliminated to varying degrees, the company's main business has been carried out smoothly, downstream demand has recovered, and revenue and profits have been better restored. The company's income and net profit in the first three quarters were 25.4 yuan and 231 million yuan respectively, an increase of 20.1% and 31.4% respectively over the same period last year. The company expects a net profit of 3.07-345 million yuan in 2019, an increase of 145-175% over the same period last year.
3. Promote the circular economy model of "solid waste disposal + energy saving and environmental protection", endogenous + extension to promote business layout and ensure long-term development
The company now has five industrial bases of Fuyang, Quzhou, Changzhou, Liyang and Nantong. By the end of 2018, the company has a power transfer capacity of about 292.5 megawatts and a steam supply capacity of about 2820 t / h. At present, it has formed a daily garbage disposal capacity of 1000 tons and sludge disposal capacity of 7000 tons. The scale of solid waste disposal is the leading in China. The company plans the production capacity in advance, continuously improves the project management level, actively expands the downstream customers in the park, and realizes the steady growth of cogeneration business income in the existing park; the company is currently under construction with a generating capacity of 75 MW and heating capacity of 620t/h, effectively protecting the needs of new users downstream.
The company focuses on the main business and promotes the circular economy model of "solid waste disposal + energy saving and environmental protection". While promoting endogenous growth, the company adheres to both epitaxial expansion and endogenous growth, and actively expands and distributes environmental protection business. to promote the sustainable development of the company's main business and operating performance.
The company announced in July and the consortium formed by Everbright International won the PPP project of municipal solid waste incineration and disposal in Hangzhou Fuyang District Circular economy Industrial Park, and formally signed the contract in September. The total investment of the project budget is 1.376 billion yuan, and the unit price of waste disposal service fee is 180 yuan / ton. The winning bid is for the company to promote and copy "solid waste disposal + energy saving and environmental protection".
The important breakthrough of the circular economy model strategy can effectively promote the company's income growth, further increase the scale of solid waste disposal and the proportion of the main industry of environmental protection, and help to improve the company's comprehensive competitiveness and industry influence.
The company announced in August that it intends to invest a total of 850 million yuan to acquire a total of 85% of the shares of Pului Energy and Environmental Engineering Co., Ltd. (Perui Energy), and has completed the industrial and commercial change registration. Platinum Energy is an important circular economy and clean energy solution industry chain platform under CITIC Industrial Fund, focusing on technology research and development, system construction and operation management of clean energy power. the main business areas are cogeneration, central heating, waste heat, waste pressure, waste heat and comprehensive utilization of waste, etc., with good consistency and cooperation with the company's strategy and business. The acquisition of Pului Energy will help the company to expand the scale of its main business and enrich and improve the company's industrial chain. After the completion of this transaction, the company's industrial scale has doubled on the existing basis.
The company announced in September that it plans to use its own capital of 110 million yuan in Zhongmao Shengyuan. Zhongmao Shengyuan has an integrated project of cogeneration, comprehensive sewage treatment and pulp-paper recycling of 150t/h, which is expected to become a new performance growth point of the company through this acquisition and subsequent grafting management, technology and resources.
4. Profit forecast and investment advice
The company focuses on the main business, focusing on solid waste disposal, comprehensive utilization of resources and energy-saving industries, insisting on both epitaxial expansion and endogenous growth, and actively arranging environmental protection business. In the future, with the continuous increase of customers downstream of the company's industrial park, the continuous warming of demand, the continuous commissioning of new production capacity, and the continuous landing of extension expansion projects, the company's revenue and performance are expected to maintain sustained growth.
Regardless of the company's impact on the acquisition of Pului Energy and Zhongmao Shengyuan, the company's 2019-2021 net profit is expected to be 3.2,3.8 and 430 million yuan, with a valuation of approximately 23, 19 and 17 times PE, which is cautiously recommended and rated.
5. Risk hint: stock buyback does not meet the expected risk, downstream demand does not meet the expected risk, coal price increases lead to the decline of profitability risk, project operation risk, market systemic risk.
