Welcome Jiangxi state-owned assets to the master. 1. Main business: the company is mainly engaged in solid waste (sludge, garbage) coordinated disposal and industrial park cogeneration, which has a layout in Zhejiang, Jiangsu, Jiangxi and Shandong. In 2020, the acquisition entered the field of comprehensive utilization of hazardous waste, and the revenue in the first three quarters of 2020 was + 22% to 3.3 billion yuan compared with the same period last year. 3% to 220 million yuan. 2. State-owned assets: in November 2020, the original controlling shareholder transferred 19.94% of the shares to Shuitian Group at a price of 8.8 yuan per share, with a total price of 1.56 billion yuan. The actual controller was changed to the SASAC of Nanchang City, Jiangxi Province. In December 2020, the board of directors became younger in an all-round way. Among the seven non-independent directors in the management, 3 were born in the 1970s and 4 in the post-85. the new chairman, Wanjiao, is only 32 years old, the new management is young and energetic, and the general manager has been engaged in cogeneration in the park for many years. Experienced. The company is expected to make use of the resources and industrial advantages of state-owned capital to promote the development of regional business in Jiangxi and further expand the business of energy saving and environmental protection.

2020 changes in layout: changing cages for birds, multiple layouts. The main results are as follows: 1) the demolition and relocation has withdrawn, and the thermoelectric capacity has decreased. Fuyang was originally the hometown of papermaking. in order to promote local high-quality development, the paper industry basically withdrew from Fuyang. In 2019-2020, the government demolished the company's Fuyang base one after another. According to the company bond rating report, the total installed capacity was reduced by 172500 kilowatts, the heating capacity was reduced by 1250 tons per hour, the profit was reduced by about 130 million yuan, and the corresponding compensation was 2.216 billion yuan. 2) contribution to investment income in that year. 2020H1 Platinum Energy contributed 86 million yuan in investment income, Samsung Thermal Power has retired in 2019, we expect the income may come from demolition compensation; 3) the original base continues to grow. In addition to Fuyang base, the company still has a number of cogeneration bases with an installed capacity of 140000 kilowatts and a heating capacity of 1395 tons per hour. 2020 with the transformation of pipe networks and the expansion of users, we expect or contribute to a profit increment of 30 million yuan (15%). 4) acquisition and expansion of diversified layout. In recent years, the company has acquired Zhongmao Shengyuan (thermal power), Platinum Energy (thermal power) and Suichang Huijin (hazardous waste disposal). According to the progress of projects under construction, we believe that these projects may gradually contribute to profit increment in 21-23 years. (see attached table) 2021: production capacity is put into production, more blossoms. 1) the original thermal power base: we expect the capacity utilization rate to climb and the new capacity to be put into production to increase the company's heating capacity in 21 years by 360t / h, contributing profit increment of 0.8-90 million yuan; 2) waste incineration plant (daily treatment of 1500 tons): expected to be put into production in 2021, we expect 21-22 profit increment of 10 million yuan 3) hazardous waste: by the end of 2020, the treatment capacity will be increased from 50, 000 tons / year to 67, 000 tons / year. Considering the capacity climbing, we expect to contribute 50 million yuan in profit increment. 4) Zhongmao Shengyuan is expected to reverse losses: the park will mainly undertake and transfer superior enterprises in Xiongan New area. As the project is put into production, capacity utilization is expected to increase gradually, and we expect to reduce losses by 0.2 to 30 million yuan in 21 years. 5) several cogeneration projects of Platui Energy are expected to be put into production in 21-22, gradually contributing to the profit increment. We expect the overall profit and loss balance in 21 years and the contribution profit increment of 0.5-80 million yuan in 22 years.

Investment advice. We estimate that the 20-22 company EPS will be divided into 0.340.52 Universe 0.70RMB. Compared with the company 2021PE16 times, PB2.9 times. We believe that although the relocation and withdrawal has led to a decline in heating capacity, the 21-22 company will meet the trend of putting into production and reaching production capacity, and its performance will increase considerably. Coupled with the ownership of state-owned assets, it can take advantage of major shareholder resources and advantages to expand new business in the future. As the performance growth rate may be higher than the industry average, the company will be given 16-20 times PE in 21 years, with a reasonable value range of 8.32-10.40 yuan and 2021 BPS5.23 yuan. Give the company 1.8-2.0x PB, and the reasonable value range is 9.4110.46yuan. Considering comprehensively, the reasonable value range is 9.41-10.40 yuan, which is covered for the first time and given a rating of "better than the big city".

Risk hint: expansion is not up to expectations, and there is uncertainty in setting performance over-achievement awards at a rate of 45%.