The growth rate of 20Q3 income became positive month-on-month, and the return net profit increased steadily, maintaining the "increase" rating 20Q1-Q3 realized revenue / return net profit / deducted non-return net profit 25.4x270,000,000 yuan, compared with the same period last year. It is mainly due to the epidemic situation affecting the progress of the project in the first half of the year. 20Q3 achieved revenue / return net profit of 93000,000 yuan, compared with the same period last year, with a year-on-year increase of + 4% and 16%. The quarterly income growth rate became positive month on month, and the net profit increased steadily. If the transaction is successfully completed, it will become the controlling shareholder of the company, and the synergy in the acquisition of orders and financing channels can be expected. We maintain the 20-22 year homing net profit forecast of 37,000,000 yuan, and give the company a 21-year 17x Pdeband E, corresponding to the target price of 10.30 yuan, maintaining the "overweight" rating.
20Q3 revenue growth rate became positive month-on-month, operating cash flow continued to significantly improve 20Q3 company realized revenue 930 million yuan / yoy+4%, revenue growth rate month-on-month; gross profit margin year-on-year + 0.4pct to 30.6%; taxes and additional year-on-year + 55%, mainly due to the increase in operating projects, land tax and property tax increased significantly The expense rate is from + 0.4pct to 17.2% compared with the same period last year, which is affected by the increase in the expense of interest expenses and the growth of financing scale brought about by the project operation, the financial expense rate is from + 1.4pct to 9.4%, the investment income is from + 362% to 19.75 million yuan, and other income is from + 132% to 15.85 million yuan year-on-year, jointly driving the homing net profit from + 16% to 110 million yuan. In addition, the company accelerated the payback and optimized the payment. The 20Q1-Q3 operating net cash flow was 570 million yuan (19Q3:-18.0 billion yuan), of which 20Q3 operating cash inflow was 420 million yuan (19Q3:-10.9 billion yuan), and the cash flow continued to improve significantly.
Medium energy saving premium is dominant, resource integration and financing improvement can be expected.
In 2019x7, energy conservation will definitely increase its holding of 8.69% of the company's shares; 2020x3 will sign an equity transfer agreement, followed by a supplementary agreement at 2020Lex8, in which 15% of the company's shares will be transferred to the agreement of 12.7 yuan per share (16% premium over the date of the announcement), with a 20-22-year return net profit of not less than 3.26kg, subject to the approval of the State Council State-owned assets Supervision and Administration Commission. In addition, Guozhen Group also entrusted the voting rights of its 40 million shares (6.26%) to China Energy Saving. If the transaction is successfully completed, China Energy Saving will hold 23.69% of the shares and 29.95% of the voting shares, making it the largest shareholder of the company. SASAC will become the actual controller of the company. As the only central enterprise in China that focuses on energy conservation and environmental protection, the background of state-owned assets is expected to bring support to the company in order acquisition and financing channels, and the synergy effect is expected in the future.
Share buyback shows the company's confidence and maintains the "overweight" rating.
The company passed a buyback bill in June, and based on its confidence and value recognition for future development, the company plans to buy back shares at a price of 150-300 million yuan (the repurchase share price is capped at 13.50 yuan per share). It will be used for the equity incentive or employee stock ownership plan after the transfer of shares in China Energy Saving Company, with a total repurchase amount of 15 million yuan by the end of September. We maintain the profit forecast and estimate that the net return profit for 20-22 years will be 3.7 yuan 4.2 / 480 million yuan, corresponding to 0.61 yuan for EPS 0.53 Wind. With reference to the 21-year Wind consensus expectation of comparable companies, the average value of Pmax E is 13 times higher than that of comparable companies. Considering that the operating attribute of the company is stronger than that of comparable companies, the valuation should enjoy a premium over environmental engineering companies. Corresponding to the target price of 10.30 yuan (the previous value is 10.96-12.06 yuan), maintain the "overweight" rating.
Risk tips: the progress of the project is not as expected, the financing environment is deteriorating, and the income is lower than expected.