This report is read as follows:
The company is mainly engaged in big ecology + big environmental protection + circular economy, state-owned assets invest in shares to enhance credit and financing capacity, and plan to issue preferred shares to raise no more than 3 billion yuan, which will optimize the financial structure and support sustainable development.
Main points of investment:
Maintain and increase holdings. The company's revenue in 2019 is 8.13 billion yuan (- 38.9%) and net profit is 52 million yuan (- 96.8%). Under the macro environment such as tight financing environment / local debt and PPP clean-up, the company strictly controls the project undertaking and pays more attention to sustainability and cash flow; maintains the forecast that EPS will be 0.38 yuan 0.47 yuan in 2020-21 and the growth rate of EPS will be 0.57 yuan in 2022 by 21%. The target price is maintained at 6.43 yuan, corresponding to 16.9 PE in 2020, which is 13.7 times higher than that in 21 years.
Gross / net interest rates fell and operating cash flow was under pressure. 1) composition of main revenue in 2019: 30% of municipal gardens / 46% of water environment / 16% of global tourism 2) net profit growth rate of one quarter-2852% 1951% Maxima 51% 6.8pct 3) gross profit margin 29.5% (- 4.6pct), municipal gardens 28.7% (- 3.3pct) / water environment 28.9% (- 3.3pct) / global tourism 40.3% (+ 5pct); net profit rate 0.54% (- 11.4pct) 4) period expense rate 23.3% (+ 4.3pct), financial expense rate 9.9% (+ 4.7pct); 5) operating net cash flow-1.33 billion yuan (51 million yuan last year) due to tight financing / slowing down of PPP loans / increase in cash expenditure, etc., cash-to-cash ratio of 57.8% (- 11.4pct) / cash-to-cash ratio of 76.5% (- 3.9pct); 6) accounts receivable account for 22% of total assets (+ 0.7pct) and debt ratio of 71% (+ 1.7pct).
Focus on the main business of ecological and environmental protection, and plan to issue preferred shares. 1) the company is mainly engaged in large ecology + big environmental protection + circular economy, and the ecological plate focuses on doing high-quality projects / paying attention to the quality of output value / controlling the investment rhythm; reducing PPP and increasing EPC; put forward the "trinity" of water resources management / water pollution treatment and restoration / water landscape construction.
The concept of comprehensive ecological management; 2) the environmental protection plate is an important growth pole, and the company will increase the investment in environmental protection operating assets, and at present, it has reserved the disposal capacity of 28 provinces, with obvious location advantages; 3) one of the three major business sectors of the circular economy plate in the future. at present, a business department has been set up. 4) State-owned shares will enhance credit and financing capacity, provide certain support for business, and help to further improve the market position in the field of ecological and environmental protection; 5) it is proposed to issue preferred shares to raise no more than 3 billion yuan. The loan will be repaid / the maturing debt will be repaid / the financial structure will be optimized; 6) the loan structure will be gradually adjusted and the pressure of short-term debt repayment will be gradually alleviated.
Catalyst: policy efforts to stimulate the economy, PPP policy repair, order performance acceleration and other risks: inflation restricts policy space, local government financial resources restrict cash flow, etc.