Event: the company announced that it intends to acquire 100% stake in Combo solid waste, with a transaction consideration of 1.075 billion. In addition, the consortium composed of the company, Yongqing Water Affairs and Yeda Construction won the bid for the black and smelly water body regulation and supporting facilities construction PPP project in Jiahe County, with a total project amount of 1.869 billion yuan. The project construction is divided into two projects: black and smelly water treatment project (1.27 billion) and urban and rural sewage treatment project (599 million), of which 570 million heavy metal land restoration project is included.
Mergers and acquisitions cut into the field of hazardous waste to make up the whole industrial chain of environmental protection. Kangbo solid waste has an annual incineration of 38000 tons, 17 categories of hazardous waste management license, mature technology, stable operation, annual capacity utilization rate of more than 90%. As the only hazardous waste incineration enterprise in Changshu City, Kangbo solid waste has natural location advantages, the main customer resources are concentrated in Suzhou, and the unit price of hazardous waste disposal increases year by year due to a large amount of demand. Kangbo solid waste promised net profit of 1.06,1.06,1.13 and 120 million respectively from 2017 to 2020. The layout of the hazardous waste industrial chain in Jiangsu will help the company to expand the breadth and breadth of business and improve the level of comprehensive environmental governance.
The soil remediation technology industry is leading, and the core business is developing steadily. Soil remediation is the core business of the company, which has formed a complete industrial chain of technical research, project design and restoration engineering in the industry.
In the first half of 2017, the national business layout has achieved remarkable results in soil and cultivated land restoration projects in Gansu, Mianzhu, Sichuan and Taixing, Jiangsu. In January 2018, it won the bid 570 million comprehensive treatment project of heavy metal pollution in the Taojia River Basin, thickened the company's soil remediation business, and strengthened the market position of the first echelon of site restoration and cultivated land restoration benchmarking enterprises.
We will deepen the multi-level layout and keep abreast of atmospheric governance and EIA consultation. Atmospheric governance and EIA consultation are the main business sectors. In the first half of 2017, the revenue of EIA consulting increased by more than 100% compared with the same period last year, and the industry developed step by step. The EIA qualification system of three A, four B and two tables marks the overall qualification capability in the forefront of the market. With rich experience in atmosphere control, Guodian Yuanbaoshan 1*600MW unit ultra-low emission project and Xining Special Steel pellet 10 "shaft furnace desulphurization project have been won in the first half of 2017, and a series of high-quality projects have developed steadily. The company's multi-level business layout continues to deepen, all business sectors go hand in hand, and performance growth is expected.
Investment rating and valuation: the company's net profit from 2017 to 2019 is expected to be 176 million, 321 million and 425 million yuan, EPS is 0.27,0.49,0.66 yuan, price-to-earnings ratio is 41 times, 23 times, 17 times, given a "buy" rating.
Risk hint: soil remediation business is lower than expected and hazardous waste business expansion is not as expected.
