I. Analysis and judgment
On November 16, the company announced an additional plan to issue additional shares to the controlling shareholder New Hope Investment Group and its co-actors, Southern Hope hopes to issue no more than 470 million shares (about 30% of the total share capital before the issue) and raise 1.43 billion of the capital structure to optimize the capital structure and expand the scale of business. After the completion of the offering, New Hope's shareholding will be increased from 23.6% to 41.1%, and its control will be further consolidated. At the same time, the company's debt ratio is expected to drop from 76% of Q3 to 67%, and more resources within the group are expected to support business development in the future. so as to accelerate the development model of "industrial coordination between internal and New Hope Group, external cooperation with large central enterprises and state-owned enterprises".
To create a "smart urban and rural ecological environmental protection vanguard", the group's modern farming with smooth microcirculation, smooth business model, high standard and high input has become a trend. The large-scale expansion of pig production capacity of New Hope Liuhe provides a good opportunity for the company to cut into the field of breeding ecology. according to the announcement, the related income of the company in the first three quarters has reached nearly 500 million yuan, the whole year may reach 1.6 billion yuan, and the connotation of breeding ecology is expected to continue to be rich in the future. Since the end of 2019, the company has undertaken large-scale projects such as ecological restoration in Yichun with an investment of 1.1 billion, participated in the construction of the anti-epidemic "two mountains" hospital, continued to improve the popularity of the industry, ushered in the inflection point of new orders, and basically completed the carding of the PPP project in hand. After the change of major shareholders, the company still retains the efficient management decision-making mechanism of private enterprises and the previously perfect layout of environmental protection industry chain. In the future, New Hope Group's agriculture, animal husbandry, real estate and other sectors are expected to fully benefit from the external effects brought by the company's ecological and environmental protection business. The company is also expected to obtain orders and improve cash flow through the support of the group, so as to open up the microcirculation at the group level.
The core team has been formed, and the equity incentive shows confidence.
After the equity change of the company was completed in April 1919, the new hope environmental protection team went to the post. In October this year, the company's new general manager took office, and two new vice presidents were appointed at the same time. In addition, it continued to recruit outstanding talents in science, technology, finance and other fields.
At present, the company's senior management team has been basically stable, and its members have worked in well-known enterprises such as New Hope, Huaxia Happiness, Beijing Water Control, Ba'an Water and other well-known enterprises, with rich experience in project operation and management. In November, the company announced the draft equity incentive, which proposes to grant 70 core executives and business backbones restricted shares that account for 1% of the total equity. The net profit assessment targets for 2021-2023 are 2.5,4.5 and 650 million yuan respectively, and the performance flexibility is considerable.
II. Investment suggestions
The company's PPP project in hand has been basically sorted out, and the landing of additional items in the future will provide further support for the company's financing and business development. We are optimistic about the unique positioning of the company's "smart urban and rural eco-environmental protection vanguard" and its two-pillar and three-factor development model. Assuming that the fixed increase is landed in 2021, it is estimated that the company's EPS in 2020-2022 will be 0.1,0.13 and 0.23 yuan per share respectively, corresponding to the previous share price PE 34, 27 and 15x, slightly higher than the ecological garden industry's average PE of 21x in 2021, but with greater growth potential and maintaining a "cautious recommendation" rating.
Third, risk tips
1, the new business development is not as expected; 2, the carding progress of the project in hand is not as expected.
