Leading domestic landfill gas power generation enterprise. Founded in 2009, the company is one of the main service providers providing landfill gas treatment (methane recycling) by third parties in China. The company adopts misplaced competition strategy to expand the landfill market in small and medium-sized cities and counties. By the end of 2020, the company has put into operation 82 landfill gas power generation projects and installed 171.25MW in the grid, ranking first in the industry.
The landfill gas power generation market is expected to continue to expand. Adhering to the principles of adjusting measures to local conditions, gradual circulation and comprehensive utilization, the two treatment methods of municipal solid waste incineration and landfill will coexist in a certain period of time.
What is noteworthy is that the amount of small and medium-sized landfills in the central and western regions and rural areas is expected to increase; at the same time, the increase in the amount of domestic waste removal, the improvement of residents' consumption level and the increasing penetration of the landfill gas power generation market will promote the continuous expansion of the industry.
The company has obvious competitive advantage, realizing the rapid growth of scale and net profit. The company ploughs the field of landfill gas power generation, expands the national market, and leads the industry in market share. The company has accumulated rich experience in landfill gas power generation development and operation, which can achieve reasonable scheduling of resources, improve gas production efficiency and power generation efficiency, and have significant economies of scale. The compound growth rate of operating income of the company in 16-20 years is 31.08%, and the compound growth rate of net profit belonging to shareholders of listed companies is 24.18%.
The expansion of business boundaries and the continuous promotion of domestic and foreign carbon reduction transactions are expected to contribute additional benefits. The company expands the field of landfill gas power generation to biogas power generation, breeding manure and kitchen waste biogas utilization, and signs cooperation agreements with relevant service providers. The company has set up a carbon reduction department, 19 landfill gas power generation projects have been registered as CDM projects, 14 projects have obtained CCER registration documents, and nearly 30 landfill gas treatment projects are in the VCS/CCER declaration stage.
The financial position is sound. The amount of interest-bearing liabilities of the company is not high, the asset-liability ratio remains low, the cash flow of operating activities is abundant, the gross profit margin of sales is high, and it has strong solvency and profitability.
The fund-raising project is expected to enhance the overall strength of the company. This fund-raising project is mainly used for landfill gas power generation business scale expansion, information system construction and supplement of working capital. After the implementation of the fund-raising project, it is expected to significantly increase the company's installed capacity, improve the efficiency of resource allocation and enhance the ability to resist risks.
The reasonable valuation range is 21.79-22.54 yuan. In the case of not using the over-allotment option, the reasonable share price range is 21.79-22.54 yuan, and the corresponding market capitalization range is 3.496 billion-3.616 billion yuan. According to the net profit before deduction in 2020, the net profit after deduction and the forecast net profit in 2021, the corresponding PE ranges are 28.00-28.96,26.36-27.27,21.42-22.16 times. The reasonable valuation range of the company is higher than the average static price-to-earnings ratio of the ecological protection and environmental governance industry released by China Securities Index Co., Ltd.
Investors are invited to fully consider various risk factors. This report is for inquiry only. Investors need to make their own investment decisions and bear their own investment risks.
Risk hints: the risk caused by the non-establishment of profit forecast assumptions; the risk of changes in subsidy policies and preferential tax policies; the risk of fierce market competition; the reduction of opportunities for landfill gas treatment projects and the risk of insufficient landfill gas; the risk of asset impairment loss caused by the failure of landfill site closure as planned, and the risk that landfill gas power generation projects can not be connected to the grid in time.
