Business structure strategy focus adjustment, the formation of "3-3" coordinated development pattern of the company listed in 2010, is the leading domestic high-temperature filter media enterprises, after listing through mergers and acquisitions to extend the upstream and downstream business of flue gas management. However, due to the decline of industry demand and financial deleveraging in 2017 and 2018, the performance of M & A projects fluctuated greatly.
In 2017, after Shanghai Zhongchuang Lingxing Energy Technology Co., Ltd. became the actual controller of the company, the company began to strategically adjust its business structure, gradually divesting Xiamen Porting, trade and other businesses, forming a "33rd" with filter material production and sales, flue gas treatment engineering, hazardous waste solid waste disposal as the business core, urban and rural sanitation integrated services, air purification and sewage treatment as business innovation.
A new pattern of coordinated development.
Risks are fully released and financial indicators are improving as a whole.
Since 2018, the company's asset-liability ratio has continued to decline, 2021Q1's asset-liability ratio has dropped to a low level of 29.15%, the debt risk is low, and there is more room for capital expansion.
In terms of profitability, the company's net interest rate has changed from negative to positive since 2019, and the expense rate has dropped from 30% in 2018 to 8% in 2020. The expense rate of 2021Q1 company during the period is 12%, the gross profit margin is 19%, and the net profit rate is 7%, which has been greatly improved. In 2020, the ROE (weighted) changed from negative to positive to 2%. The improvement is obvious in 2021Q1, which is 1% in a single quarter. In terms of cash flow, the company's income-to-cash ratio has been maintained at a good level of more than 100% since 2018, but the company's net income is affected by multiple factors such as asset divestiture and fluctuates greatly. Affected by trade bill discount, inventory and other factors in 2020, the company's net economic turnover was-166 million, a decrease of 184.89% compared with the same period last year.
The net economic value of 2021Q1 is-53 million yuan, an increase of 70.16% over the same period last year, which has achieved a great improvement.
Hazardous solid waste leads to a reversal of performance, steady development of filter media and flue gas treatment, and great potential for sanitation growth.
Hazardous solid waste business: policies related to hazardous solid waste have been introduced intensively, and the new solid waste law in September 2020 is known as "the strictest in history". The construction of "waste-free city" will also lead to a substantial increase in the demand for hazardous waste disposal. It is expected that the marketization of hazardous waste will usher in a period of rapid development during the 14th five-year Plan period, with a market space of more than 200 billion. Hazardous solid waste disposal is the company's strategic development direction, with a firm attitude and rapid action. at present, the total annual handling capacity of talking, trusteeship operation projects and M & A projects is about 800000 tons, of which the annual profit of Xiangsheng can reach 100 million yuan. in addition, the Zhonghuang Ruiping (Henan) 100000-ton cement kiln coordinated disposal project and the Jiangxi Nihua 3000-ton precious metal recovery project are expected to be put into production this year. The gradual operation of hazardous waste projects will become an important growth point of the company's performance and promote the company's performance reversal.
Filter media and smoke treatment business: the emission standards of pollutants in non-electric industries are constantly improving, and the ultra-net emission limits of smoke and dust in non-electric industries such as iron and steel, cement, flat glass, ceramics and other non-electric industries are all below 20 mg/m3, and the market demand for flue gas treatment is determined, which brings deterministic demand for bag dust removal, high temperature filter media and their construction transformation.
The company is a leading enterprise in the domestic high temperature filter media industry, with annual sales of about 4 million square meters in recent years, with high stability. The annual income of Xiamen Bairuifu flue gas project is more than 100 million yuan, which has increased steadily in recent years, and has a high market influence in many fields such as waste incineration and coal chemical industry. Smoke treatment, company filter material business and hazardous waste business can produce good business coordination, and at the same time have the ability of R & D and sales of flue gas engineering related products such as dust removal system, which can directly drive the company's filter material sales at the same time, it can also promote the technical level of the company's filter media business and grasp the direction of market demand. It is expected that the company's filter media-smoke treatment business will rise steadily.
Sanitation service business: according to the incomplete statistics of "Environment Department Nan", the total amount of newly signed sanitation service contracts across the country in 2020 was 221 billion yuan, a slight decrease of 0.59% over the same period last year, and the contract amount in the first year was 68.6 billion yuan, an increase of 24.73% over the same period last year. It is estimated that the overall marketization rate is about 50%, still in the growth stage. Driven by the promotion of garbage classification and the improvement of the level of urbanization, the total scale of sanitation services is expected to exceed 350 billion in 2025, and the market space is expected to reach 230 billion.
The company's sanitation service operation is currently in its infancy, with 3 projects on hand, with a total bid amount of 105 million yuan and an annual amount of 3498 million yuan / year. Tracking more than 10 sanitation service projects.
The company participates in the equity of Shaanxi Automobile Sanitation vehicle production Company, which has the advantage of integrated sanitation equipment and sanitation services, and can also open up the sanitation service market in Shaanxi with the help of the influence of Shaanxi Automobile.
Sanitation operation service business is the key direction of the company's strategic layout, with the advantages of light assets and good cash flow, and its rapid growth will become an important driving force for the company's performance growth.
Investment rating:
It is estimated that the net profit of the company in 2021 and 2023 is 106 million yuan, 240 million yuan and 293 million yuan respectively, and the earnings per share are 0.27,0.53,0.76 yuan respectively, and the corresponding PE is 26 times, 13 times and 9 times respectively. The company's performance is in a period of rapid growth, and the increase in the proportion of operating assets with high prosperity and good cash flow, such as hazardous waste and sanitation, is also strong with the improvement of the company's valuation level. Compared with comparable companies, the company's 2022 valuation advantage began to show, optimistic about the company's high growth, giving a "buy" investment rating.
Risk Tips:
1. The risk that the progress of the company's hazardous waste project is not as expected.
2. The risk that the market demand of filter media and flue gas engineering falls short of expectation.
3. The risk that the market development of sanitation services is not as good as expected.