Wangneng Environment (002034) Annual Report Comments: Focus on Incineration Increasing Growth of Steady Growth and High Quality
Important investment risk warning: Event: On April 18, the company announced the 2018 annual report.
During the reporting period, operating income was 8.
3.6 billion, down 40 every year.
47%; net profit attributable to mother 3.
0.6 million yuan, an increase of 30 in ten years.
44%; deduct non-net profit 2.
99 million yuan, an increase of 567 in ten years.
The company’s dividend plan is to pay 1 yuan (including tax) for every 10 shares, and the dividend rate is 13.
Focus on waste incineration operations and achieve steady growth.
1) The company’s revenue in 2018 fell 40% year-on-year.
47%, basically the data of the printing and dyeing sector from January to October in the previous year’s income (already put out in October 2017), while the company’s current main waste incineration operation business increased by 8.
85% (97% of revenue.
2) The company’s gross profit margin is 52.
13%, an annual increase of 18.
58pct, mainly due to the impact of the printing and dyeing sector in October 2017; the gross profit margin of the waste incineration operation was 52.
14%, an annual increase of 5.
25pct, increase profitability.
3) In cash, the company’s cash ratio is 111.
57%, an annual increase of 5.
86pct, operating cash flow / net profit was 198.
63%, an annual increase of 36.
22pct, the quality of earnings continued to improve.
Company: The release of production capacity promotes high revenue growth and the profit margin remains high.
By the end of 2018, Wangneng Environment had commissioned 19 waste incineration projects with a total capacity of 1.
If the waste incineration projects can be put into production as expected, the company’s waste incineration capacity will reach 2 by 2020.
56 a day / day, capacity increased by about 1.
The waste incineration industry is a typical heavy capital industry. The realization of its growth logic requires financial guarantee. Based on the profit forecast model, it is estimated that the company’s asset-liability ratio in 2020 is still less than 55%, which is comparable to the current asset-liability ratio of its peers.Funding pressure for expansion is acceptable.
The rapid expansion of production capacity will inevitably lead to a rapid increase in financial costs, but the increase in the proportion of grate-to-furnace project capacity, the increase in ton waste treatment fees and the ton power generation drive the upward trend of gross profit margins, and at the same time increase the project to fully enjoy the subsidy preferential policies, the company comprehensiveRate goes down.
Taken together, the company expects to maintain a high profit margin in the face of high revenue growth driven by capacity expansion.
Industry: High-speed growth driven by short-term policies and guaranteed long-term growth.
From nearly 2?
Looking at the size of three years, the 13th Five-Year Plan will further promote the waste incineration rate.
Even if the pessimistic assumption fails to meet the planning requirements (the gap between the implementation status and the planned value is the same as the 12th Five-Year Plan), by the end of 2020, incineration treatment of urban domestic waste can reach 50% of the harmless treatment capacity, which will increase by 12pct by the end of 2017; From 2018 to 2020, the composite capacity of the industry’s production capacity will reach 15%.
With 佛山桑拿网 the rapid expansion of production capacity, the industry’s maximum production capacity in 2018-2020 can still be maintained at a high level of nearly 95%.
In the long run, the increase of urbanization rate will ensure the continuous growth of waste scale, and the promotion of waste classification will promote the long-term growth of tons of waste power generation.
Investment suggestion: Give a “prudent increase” rating.
The company focuses on waste incineration operations, with existing operating capacity1.
1 day / day, production capacity under construction1.
5 the lowest exchange rate / day, optimistic about doubling the production capacity in the next 3 years, meanwhile, in the past 3 years, the cash-to-cash ratio is over 100%.
We estimate that the company’s net profit attributable to its parent for 2019-2021 will be 4.
1.3 billion, the previous growth rate of 34.
7%, corresponding to an estimate of 19 on April 18.
Three times, given a “prudent overweight” rating.
Risk reminders: project construction progress risk, financing interest rate upside risk, and waste incineration electricity price fluctuation risk.