Overview of events:
The company released its three-quarter report in 2020, with revenue of 650 million yuan in the first three quarters, an increase of 51.23% over the same period last year, and a net profit of 96 million yuan (deducting 93 million yuan), an increase of 58.73% over the same period last year (58.41%). Among them, in the single quarter of Q3, the revenue was 310 million yuan, up 45.56% from the same period last year, and the net profit was 44 million yuan, up 46.30% from the same period last year.
Profitability continues to improve, and project operation supports long-term improvement in performance. Thanks to the release of the company's engineering orders and the operation of water operations and waste incineration projects, the company's results in the third quarter continued the high growth of the semi-annual report. During the reporting period, the company's ROE (weighted) 9.81%, an increase of more than 2% over the same period last year; in terms of operating cash flow, after deducting 141 million yuan paid for investment in franchise projects, the company's net operating cash flow in the first three quarters was about 49 million yuan, maintaining a good level.
According to the company announcement, the company's engineering orders exceed 700 million yuan and investment orders exceed 2 billion yuan.
In the future, with the release of orders and the commissioning of operating projects, the company's performance will continue to improve for a long time.
The sewage treatment capacity has increased steadily and is expected to reach 900,000 tons per day by the end of the year. At present, the sewage treatment scale of the company is about 700,000 tons / day. In the second half of the year, the Quzhou project in Zhejiang (50,000 tons / day), the project in the west of Shushan, Hefei (50,000 tons / day), and Yangxin River Town project (30,000 tons / day). Tongcheng rural domestic sewage project (28,000 tons / day) and other projects will be put into operation one after another, and the total treatment capacity will reach about 900,000 tons / day by the end of the year, an increase of about 30%. In 2021, the bid raising and transformation of Taian No. 1 and No. 2 plants (with a total processing capacity of 170,000 tons / day), Dalian PPP project (50,000 tons / day) and Daiyue project (97,000 tons / day) are expected to contribute to the company's operational performance increment.
The 3100 t / d waste incineration project has entered the operation period. The company has a total handling capacity of 3100 tons / day for the waste incineration project in hand. The first project, Dejiang Project, was put into production at the beginning of this year. Huimin project (600 tons / day) is expected to be put into production in the second half of this year, while Chengde project (400 tons / day) and Xixiang project (600 tons / day) are expected to be put into production next year and the year after next. The gradual operation of waste incineration projects will become an important driving force for the company's future performance growth. The cooperation between the company and Shanghai Kangheng will help the company to improve its project management, technology accumulation, market development and other aspects in the field of waste incineration.
The proposed private placement will raise no more than 550 million yuan, and the funds will be in place to help the company grow steadily. The company plans to raise no more than 550 million yuan in private shares to be used for Huimin garbage incineration project, Taian Daiyue emerging industrial park water supply and drainage integration PPP project, and supplementary liquidity. At present, the plan has been approved by the CSRC in early June, and the funds raised will help to improve the company's asset structure, accelerate the promotion of fund-raising projects, and help the company's performance release.
Investment rating: the company is expected to make a net profit of 1.37 billion yuan in 2020-22, corresponding to 285 million yuan, corresponding to PE22/15/11 times. The company has high growth and strong sustainability, maintaining a "buy" rating.
Risk Tip: the risk that the company's project is not as good as expected, and the risk that new orders are not as expected.
