Dongjiang Environmental Protection (002672): Revenue growth performance fell slightly, long-term logic remains unchanged

Dongjiang Environmental Protection (002672): Revenue growth performance fell slightly, long-term logic remains unchanged

Investment Highlights Event: The company released the 2018 Annual Results Express Report, which stated that the company achieved operating income of 32.

9.7 billion, an annual increase of 6.

36%; net profit attributable to mothers4.

09 million yuan, a decrease of 13.

69%; the return is 0.

47 yuan, a decrease of 14 per year.

55%.

The performance growth rate was close to the lower limit of the forecast, and the single-quarter growth rate in the fourth quarter improved.

According to the company announcement, the company initially achieved operating profit in 20185.

54 ppm, a reduction of 8 per year.

51%; total profit 5.

5.7 billion, a decrease of 10 per year.

52%; net profit attributable to mother 4.

09 million yuan, a decrease of 13.

69%, compared with the previous company’s forecast (expected growth rate of net profit attributable to mother 杭州桑拿 is -15%?
5%), the company ‘s actual growth rate is close to the lower limit of the notice, and the growth rate of the first three quarters of 18 is 14%.

21%, down 27.

9 units.

18 years net income income10.

39%, a decrease of 3 from 17 years.

14 units.

In response to the rapid development of the environmental protection industry and the fierce competition in the industry, the company has actively expanded the market by expanding market development and technology research and development, and strengthening product promotion and management innovation to form a good foundation for the company’s sustainable development.

The main reason for the increase in costs and expenses was the provision for impairment and the depreciation of new projects and the expansion of depreciation and corresponding financial expenses. Until 18Q3, Dongjiang Environmental Protection’s net goodwill formed by the acquisition of subsidiaries.

3.6 billion.

Under the forecast that the overall economic outlook is down and the profitability of some acquisition projects is not up to expectations, the company, based on the principle of prudence, makes provision for impairment of goodwill and other assets.

In addition, the reported company has completed and put into operation some projects, and depreciation and related financial expenses have also increased accordingly, while some completed projects are still in the cumulative climbing stage, resulting in a slow decline in profit contributions.

The scale of assets, shareholders’ equity steadily improved, and the financial situation is good.

As of the end of 2018, the company’s total assets were approximately 97.

75 ppm, a five-year increase of 5.

78%, the owner’s equity is about 40.

3.7 billion, an annual increase of 8.

26%, the net assets attributable to the mother is 4.

55 yuan, an annual increase of 8.

33%, financially sound.

Pay attention to the improvement of the management of leading enterprises.

In terms of industry: the hazardous waste industry enters the integration period, and the leader leads to Zhiyuan: 1) Hazardous waste projects have higher requirements for operation and management capabilities, and factors such as avoidance effects have caused uncertainty in the progress of hazardous waste projects, resulting in obvious industry barriers and serious effective production capacity.Insufficient, the actual conversion rate is less than 40%.

2) Strict regulatory progress drove the industry into the integration period. With the support of Guangsheng, the company took the lead in transforming it into a leader.

In terms of the company: endogenous + extension, the number of processing qualifications reached 350 digits per year in 2020: 1) In terms of endogenous, many projects such as Hubei Tianyin, Zhuhai Yongxingsheng, Dongguan Hengjian, and Hengshui Ruitao have been completedThe trial operation phase provided extra flexibility for the company’s performance growth.
2) In terms of extension, the company recently successively acquired a number of projects such as Wenders (Tangshan Caofeidian), Fulong Environmental Protection, and Jianglian Environmental Protection, such as Dongdaheng, Nantong Hui natural, Hengshui Ruitao, etc., to achieve in-process qualification by 2020A total of 350 budgets / year is worth looking forward to.
Profit forecast and investment grade: Considering that the project progress may be affected by various factors, we expect the company’s net profit attributable to the parent to be 18 to 20 years respectively.

09, 5.

71, 7.

3.1 billion, EPS is 0.

46, 0.

64, 0.

82 yuan, the corresponding PE is 26.

2, 18.

8, 14.

6x, maintain “Buy” rating.

Risk reminder: Hazardous waste treatment price goes down; Hazardous waste project progress exceeds expectations