This report is read as follows:
The company has signed a strategic cooperation agreement with China Energy, and plans to participate in the public listing of 35% of CIMC's equity with no more than 577.5 million of its own funds in the first phase. The 140000 ton hazardous waste harmless project of China Machinery Technology in Maoming, Guangdong Province has been approved by EIA.
Events:
Investment advice. Maintain the forecast company's net profit from 2020 to 2022, 7.8,8.8 and 1.05 billion, corresponding to EPS1.09, 1.23,1.47 yuan. The transformation logic of the company's hazardous waste is accelerated, and 2020 is the big year for the project to be put into production, and the sustained and rapid growth of the performance of the hazardous waste sector can be expected; the flexibility of the performance of the cement sector brought about by the rise in cement prices since this year can not be ignored. Maintain the target price of 16.35 yuan and maintain the "overweight" rating.
Event: company announcement, 1) sign the Strategic Cooperation Framework Agreement with China Energy Engineering Group Co., Ltd. And its wholly-owned subsidiary China Energy Engineering Group Capital Holdings Co., Ltd., and intend to reach strategic cooperation with its development in the field of environmental protection business. 2) carry out equity cooperation on China Machinery Technology in the first phase. China Energy plans to apply to the property Exchange for a public listing of its 35 per cent stake in CIMC by September 30, 2020, and the company is willing to participate in the public listing process with its own capital of no more than 577.5 million yuan. The project of Maoming Circular economy demonstration Center of China Machinery Technology has been approved by EIA.
The development of the central enterprise blessing company, the company's operation has entered a new stage. 1) China Energy is a comprehensive energy service group under China Machinery Industry Group Co., Ltd., which integrates energy investment and operation, energy engineering construction, energy technology research and development, energy trade services. 2) the two sides will actively cooperate in project acquisition, project management and other aspects around the field of environmental protection. At the level of ① strategic development, China Energy will actively help Jinyuan to promote the development of environmental protection business. At the level of ② operation management and technical cooperation, China Energy will make use of its own technology and management advantages to provide professional guidance to Jinyuan's management and research and development, urge the company to continuously pay attention to the research and development of core technologies, and at the same time ensure the continuous stability of the company's operation and management.
At the level of ③ business cooperation, China Energy and Jinyuan will give priority to each other as partners in the upstream and downstream industries of solid waste and hazardous waste treatment. At the level of ④ resource integration, China Energy and Jinyuan will actively find suitable acquisition targets for both sides, and jointly become bigger and stronger by including but not limited to equity cooperation.
It is planned to invest in the Maoming hazardous waste project of China Machinery Science and Technology, which is a high-quality and large-scale harmless project in the regional market with high scenery and bearing. The optimistic situation can increase the net profit by 0.5-70 million yuan. 1) the Maoming Circular economy demonstration Center project submitted for approval by the company is one of the 31 key hazardous waste disposal projects in China, which is located in Maoming City, Guangdong Province. After the completion of the project, it is planned to dispose of 140000 tons of 36 categories of hazardous waste annually, including incineration 60,000 tons, physicochemical 10,000 tons, and landfill 70,000 tons. The project was approved by EIA on December 8, 2018. 2) the prosperity of Guangdong hazardous waste market is high, the demand is sufficient and the disposal price is high. The net profit per ton of the production capacity of the incineration-landfill technology route in this area is 1000-1500 yuan, and the high price can ensure higher capacity utilization at the same time. After the project is put into production, the total net profit is about 150-200 million yuan, and the net profit of the thickening company is 0.5-70 million yuan.
Risk hint: the production progress or operating status of the hazardous waste project is lower than expected; the cement price is lower than expected.