Zhongyuan Environmental Protection (000544) 2018 Annual Report Comments: Performance Meets Expected Expected Asset Injection
Event: The company’s recent announcement: 1) The company’s revenue in 2018 was 10.
27 ppm, a five-year increase of 5.
19%; realize net profit attributable to shareholders of listed companies.
14 ppm, an increase of 28 in ten years.
53%; 2) Zhengzhou Public Group, the major shareholder, intends to allocate 100% of the purification company it holds to supplement the listed companies for compensation; 3) The company’s revenue in the first quarter of 20193.
13 ppm, an increase of 21 per year.
26%, achieving net profit attributable to shareholders of listed companies of 6,深圳spa会所175.
890,000 yuan, an increase of 17 in ten years.
In this regard, we comment as follows: Key points of investment: The performance growth in 2018 has increased, mainly due to the Wangxinzhuang Sewage Plant repurchase of the company’s revenue in 201810.
27 ppm, a five-year increase of 5.
19%, achieving net profit attributable to shareholders of listed companies.
14 ppm, an increase of 28 in ten years.
53%, an increase from the increase in performance in 2017, mainly due to the government’s repurchase of Wang Xinzhuang Sewage Treatment Plant, confirmed3.
23 ppm non-current asset disposal gains and losses.
Net profit after deduction 3.
13 ppm, a ten-year increase of 8.
96%, in line with expectations.
In terms of different industries, the wastewater treatment business achieved revenue8.
7.1 billion (+5.
90%), the top of the groundwater sewage treatment volume is 47923, with 1622 titles added each year, and 3203 titles for reclaimed water utilization.
The gross profit margin is 47.
13%, an increase of 4 per year.
71 points; heating sales business achieved revenue 1.
1.6 billion (-7.
95%), with a gross profit margin of -4.
01%, a decrease of 0 per year.
In terms of period expenses: 143 new sales expenses.
880,000 yuan, management costs 8445.
500,000 yuan, an increase of 27 every year.
18%, finance costs 5020.
210,000 yuan, an increase of 111 every year.
09%, mainly due to the increase in corporate loans.
R & D expenses are 3667.
770,000 yuan, a year-on-year increase of 1789.
24%, mainly due to the company’s expansion of wastewater upgrading.
R & D investment in sludge disposal, etc.Net cash flow from operating activities was 2.
81 ppm, a decrease of 20 per year.
The industrial chain is constantly improving + sufficient orders + abundant funds. The company’s future development will be enough. The company continues to develop the industrial chain based on urban sewage treatment and centralized heating. At present, it has extended to the reuse of water, biogas, construction waste, villages and towns.Sewage, river basin treatment, sludge treatment, environmental protection equipment manufacturing, new energy manufacturing, landscaping and other fields. The business scope covers the “big public, big environmental protection, big ecology” and other sectors. The company continues to improve the industrial chain to create comprehensive environmental service providers, andDemonstrated first-class ability to take orders.
Since 2017, the company has successively won bids for Xinmi, Gully, Xinyang Luohe, Civil Rights, Fangcheng, Neihuang, Shangcai, Gongyi, and other environmental management, Dengfeng rural sewage, Zhongyuan district domestic waste sorting, Guizhou Duyun construction wasteQingyun and other projects, the total investment of the project is more than 11.9 billion yuan, full orders.
As of the first quarter of 2019, the company has monetary funds in hand10.
9.3 billion, while the asset-liability ratio is only 30.
10%, there is still a lot of room for financing, full orders + abundant funds, the company’s future development is full of strength.
Selected as a State-owned Enterprise Reform Double Hundred Enterprise, joined hands with Henan Assets to accelerate the asset injection. In August 2018, the company was transformed into a State-owned Enterprise Reform Double Hundred Enterprise by the State-owned Assets Supervision and Administration Commission of the State Council. In October, the company and the controlling shareholder joint venture group and Henan Assets Strategic Cooperation Framework AgreementThe three parties intend to support the implementation of the reform of the “Double Hundred Enterprises”, promote the expansion of cooperation in the field of inter-bank competition, business resource integration, and comprehensive financial services.
Henan Assets is a local asset management company controlled by Henan Investment Group. It shoulders the three missions of resolving regional financial risks, serving the reform of state-owned and state-owned enterprises, and supporting industrial transformation and upgrading. At the same time, Henan Assets has bought company shares from the secondary market, with equity ratios from 2018. Annual report of 4.
30% increase to 4 in the first quarter of 2019.
77%, the company teamed up with Henan Assets, it is expected that the reform process and transformation and upgrading of state-owned enterprises will accelerate.
In April 2019, it announced that the major shareholder public utility group will replace its 100% equity of the purification company with its listed company for compensation, and previously promised that the asset injection will be completed before the end of 2019.
The purification company has Zhengzhou New District Sewage Treatment Plant (100 per day / day) and Shuangqiao Sewage Treatment Plant (60 per day / day). If assets are injected, it will bring performance flexibility to the company.
In addition, the major shareholders themselves have assets such as waste power generation and water supply business, which does not rule out the possibility of injection into listed companies in the future.
As the only state-owned environmental protection platform in Henan Province, the reform of state-owned enterprises is worth looking forward to.
The price-to-book ratio is only 1.
04. The long-term investment value has always been due to market reasons, coupled with the double-hits of the estimated performance of the environmental protection sector, leading to reduced settlement. The company’s current P / B ratio is only 1.
04, far lower than the standard of state-owned enterprises in the same industry (Xingrong Environment 1.
34. Hongcheng Water Industry 1.
39. Chongqing Water Affairs 1.
88), we believe that the value of the company is undervalued.
As of the first quarter of 2019, the company’s asset-liability ratio was only 30.
10%, also lower than peers (Xingrong Environment 47.
36%, Hongcheng Water 62.
36%, Chongqing Water 27.
25%), the net cash flow from operating activities is 2.
2.6 billion, good financial status, long-term investment value of the company.
Earnings forecast and investment rating: Maintain the company’s “overweight” rating.
Without considering the impact of asset injection on the company’s performance for the time being, it is expected that the company’s 2019-2021 EPS will be 0.
42 yuan, corresponding to 18, 16, 15 times the current expected PE, maintaining the company’s “overweight” rating.
Risk reminders: the risk of falling sewage treatment fees, the risk of less-than-expected development of PPP projects, the risk of increased accounts receivable, the expected risks of PPP project construction,武汉夜网论坛 the uncertainty of the company’s future acquisitions and asset injections, and the risk of project advancements falling short of expectations, Macroeconomic downside risks.