Main points of investment
Pioneering Environment released 2017 interim Yingxi: expected net profit attributable to shareholders to grow by no less than 120% year-on-year (the performance of the New Zealand subsidiary has been retroactively merged).
New domestic projects are growing rapidly, and construction revenue is expected to increase significantly. The first environment in 2016 BOT construction revenue of 196 million yuan, accounting for only 7.2%, lower than the level of most similar environmental protection companies, and has great potential for growth. Since the second half of 2016, new domestic projects have grown rapidly, with 16 waste incineration projects and a total design capacity of 16450 tons per day. It is expected that 15 BOT projects will be started at the same time this year (including waste incineration, anaerobic, collection, storage and transportation, etc.), construction revenue is expected to increase significantly, and the profitability of domestic business will be a qualitative leap.
The strategy of solid and waste integration has been implemented smoothly, and the market competitiveness has been verified. Pioneering Environment has been committed to promoting the management strategy of solid and waste integration, by introducing the advanced operational experience of New Zealand subsidiaries, accurately aiming at the huge gap in the domestic domestic waste disposal market in small and medium-sized towns. In the past two years, the company has obtained a total of 9 integration projects, covering Henan, Jiangxi, Hubei and other provinces, and its market competitiveness has been successfully verified.
The first Group gives strong support and relies on the shareholder strategy to achieve rapid growth. The company's major shareholder pioneering group is one of the largest state-owned enterprises in Beijing, positioning the city's comprehensive development and operators in the future.
The pioneering environment is the only main body of the group's environmental protection solid waste infrastructure construction and operation business. relying on the promotion of the group's grand strategy, the company will receive strong support from platform resources and continue to obtain more solid waste projects all over the country.
Profit forecast and investment advice: domestic solid waste projects have entered a period of outbreak, and the business of New Zealand subsidiaries has maintained steady growth. we expect the company to return to its mother net profit of 1.41 / 321 million yuan respectively in 2017 / 2018, corresponding to the previous share price PE26.2/11.5 times. It was given a target price of HK $0.390 at 15 times PE in 2018, maintaining an "overweight" rating relative to the current share price of 30.0 per cent.
Risk hint: the construction progress of the project is not as expected and the New Zealand dollar depreciates against the RMB.
