Overview of events
During the reporting period, the company realized operating income of 1.481 billion yuan, down 2.55% from the same period last year; net profit belonging to ordinary shareholders of listed companies was 122 million yuan, down 13.62% from the same period last year; and basic earnings per share was 0.34 yuan per share.
Analysis and judgment:
Under the epidemic, the order increment was insufficient, and the performance declined.
In the first half of 2020, affected by the epidemic, the company and upstream and downstream enterprises generally delayed the resumption of work, the progress of project construction slowed down, and the company's performance declined. During the period, the company's revenue and profits declined one after another, down 2.55% and 13.62% respectively from a year earlier. The main reason: the epidemic hindered the bidding process of the project, and the company's new orders in the first half of the year were lower than expected. Judging from the company's main EP and EPC orders, the total amount of orders for 40 new EP projects in the first half of the year was only 80 million yuan, far less than the 976 million yuan in the same period last year. In terms of EPC orders, the total amount of 18 orders reached 505 million yuan in the same period last year, while the total amount of 67 EPC projects in the first half of this year was only 625 million yuan, which is far less than that of last year, reflecting that the volume of new orders this year is too small and the profit contribution may not be high. With the epidemic under control, all bidding work has returned to the pre-epidemic level, and the company's performance in the second half of the year is expected to be restored through incremental orders.
The business structure continues to transform, and the operation business continues to make efforts.
During the reporting period, the company persisted in adjusting its business strategy, optimizing its business model, and speeding up the arrangement of PPP projects on hand. During the period, the company successively withdrew from the "PPP Project for the Construction of sewage treatment plants and Pipe Networks in key cities and towns of Anren County", "the PPP Project for the Water supply Plant and supporting Water supply Network Project of Estuary Cross-Border Economic Cooperation Zone" and "the centralized Water supply Project of Wulongchong Reservoir in Huayuan County", which improved the company's operating efficiency. At the same time, the company accelerated the promotion of franchise projects into commercial operation, and the company's operating income during the period was 102 million yuan, up 121.89% from the same period last year. Among them, water supply project operation income accounts for 22.80%, sewage project operation income accounts for 23.34%, solid waste operation project income accounts for 49.08%, oil sludge treatment and soil disposal terminal operation project income accounts for 4.61%, the operation business has achieved multi-point flowering. At present, the company has an order of about 9.951 billion yuan. Among them, about 5.62 billion yuan is the investment amount of the PPP project controlled by the company, and this part of the investment will be returned to the project company year by year in the form of operating income during the future franchise period. The remaining 4.331 billion yuan is in the hand order, and the operation order accounts for about 30.93%. Therefore, as the company's project gradually enters the operation stage in the future, the company's operating income is expected to continue to grow rapidly, thus driving the overall performance of the company to pick up.
The fixed increase and landing is of great significance to accelerate the layout of solid waste areas.
On July 20, 2020, the company successfully issued 49871023 additional RMB common shares (A shares) to unspecified targets, raising a total of 579999997.49 yuan. The funds are mainly used for the construction of Beibu Gulf Resources Renewal and Environmental Protection Service Center (Phase I), Hunan Bosch Environmental Protection Industry Park (Phase II) and supplementary liquidity. Beibu Gulf Resources Renewal and Environmental Protection Service Center (Phase I), which is located as a regional and comprehensive industrial waste treatment and disposal project, mainly serves the Beibu Gulf Surface treatment Center project and the hazardous waste produced by Beihai City industrial enterprises. and radiation Guangxi Beibu Gulf area and surrounding hazardous waste production and waste units, the scale of hazardous waste treatment and disposal after completion of 64,000 tons / year. This time, institutional investors have effectively applied for a total of 6 households under Dingzeng.com, and many of them may cooperate with the company in the future, including Guangzhou Environmental Protection Investment Group Co., Ltd., Guangxi Environmental Protection Group and Chongqing Environmental Protection Industry Equity Investment Fund Management Co., Ltd. With the introduction of strategic investors, the company is expected to diversify its business by cooperating with solid waste and other businesses in Guangxi, Guangzhou and Chongqing with the help of war investment's rich business resources and sufficient financial support. Therefore, this fixed increase is not only to improve the company's cash flow level, but also to provide sufficient power for the company's follow-up development, expand the company's business areas and enhance market competitiveness.
Investment suggestion
In the first half of 2020, the company actively responded to the adverse effects of the epidemic, persisted in the optimization of business structure, and accelerated the operation of franchise projects. At the same time, it has completed the fixed increase, broadened the company's business scope and improved the financial situation. However, the epidemic still affected the acquisition of the company's orders. in the case of insufficient performance increments, we reduced the company's revenue and profits from 4.096 billion yuan, 5.016 billion yuan and 6.305 billion yuan to 3.381 billion yuan, 4.191 billion yuan and 5.347 billion yuan respectively in 2020-2022. In the same period, the net profit of returning to the mother was reduced from 358 million yuan, 441 million yuan and 531 million yuan to 252 million yuan, 311 million yuan and 394 million yuan respectively, and the corresponding EPS was 0.62,0.77 yuan and 0.97 yuan respectively. Downgrade from "buy" to "overweight" rating.
Risk hint
1) the progress of the project construction is not as expected.
2) the quantity and amount of new orders are less than expected.
3) the recovery of the company's accounts is not as expected, and the bad debts increase obviously.
