High-Energy Environment (603588): Focus on Three High-Prosperity Industry Performance Growth Exceeds Expectations

High-Energy Environment (603588): Focus on Three High-Prosperity Industry Performance Growth Exceeds Expectations
Event: The company released the semi-annual report for 2019, and achieved operating income of 20 in the first half of 2019.US $ 8.1 billion, an annual increase of 51.04%; net profit attributable to mother 2.50,000 yuan, an increase of 35 in ten years.07%; net profit of non-attributed mothers 2.00 ppm, an increase of 31 per year.95%; basic profit return is 0.31 yuan / share, an increase of 35 in ten years.37%.The company’s headquarters announced an interim performance forecast. It is expected that the net profit attributable to the mother will increase by 22% in the half year?32%, the company’s interim report performance was slightly higher than expected. The cash flow improved significantly, and the R & D efforts were steadily strengthened: the company’s net cash from operating activities was 1.3.2 billion, an annual increase of 115.98%, mainly due to the increase in the collection of receivables, and the return was good; the net cash of financing activities was 7.85 ppm, an increase of 51 in ten years.53%, mainly due to the issuance of green corporate bonds (the first instalment) of 6 billion during the reporting period, and obtaining long-term project loans5.2.9 billion.Company period expenses12.47%, a decrease of 3 per year.36%, the company has continuously strengthened research and development efforts, and reported an increase in research and development expenses of 62.83 million yuan, an annual increase of 46.66%. Environmental remediation orders have grown steadily, and industry leaders have benefited from policy dividends: H1 companies’ revenue in the field of environmental remediation in 20196.78 ppm, an increase of 41 in ten years.19%, add order 6.1.5 billion US dollars, the performance increase 北京夜网 is mainly due to the company’s increase in the implementation of orders in hand, Suzhou Solvent Plant Phase II, Fushan County, Xiangyin County, Jiangsu Enhua Pharmaceutical, Xuzhou Tianjia, Huachen and other projects have improved investment.The “Soil Pollution Control Law” was formally implemented on January 1, 2019, and was included in the 19-year central government budget soil pollution budget fund plan of $ 5 billion, increasing by 42.9%, in the context of the acceleration of the relocation of chemical companies and the fermentation in the early Xiangshui event, the release of transfer of national and local policies and the increase in national capital investment will promote the rapid release of the soil remediation market.Technology, project experience, brand and other advantages get more orders and continue to benefit. Revenue from domestic waste treatment has grown rapidly, and the intensive operation of waste incineration projects has helped to promote a steady increase in operating income: In 2019, H1’s domestic waste treatment and disposal segment achieved revenue7.760,000 yuan, an increase of 144 in ten years.66%, 7 new orders.61 ppm, the increase in performance was mainly due to the gradual increase in the company’s investment projects entering the construction period in the report and the company’s rapid waste incineration, including the construction progress of investment projects in progress, and recognized revenue increase.The company’s advantage is to participate in Yuhetian and Futai Technology, expand the fields of domestic garbage cleaning and transportation and environmental sanitation informationization, and form the overall industrial chain layout of domestic garbage treatment.As of the end of 2018, the company had 11 waste incineration power generation projects in hand, with a processing scale of 8,800 tons / day, and a long-term scale of 2,000 tons / day in the on-hand projects.Hotan, Hezhou, Liyang, Yueyang and other projects are expected to be put into production in 19 years. The intensive production period will bring stable operating income to the company. The performance of the hazardous waste segment declined slightly, and the project in hand + technological transformation helped the company’s stable development: In H1 of 2019, the company’s hazardous waste treatment and disposal segment achieved revenue3.8.9 billion, down 14 a year.47%, initially 1) the company transferred Xinde Environmental Protection equity in December 18; 2) the subsidiary of CNMC Dongfang implemented technical reforms, the plant suspension of production affected the performance; 3) the subsidiary Guizhou Hongda hazardous waste business license expired,In addition, the company reorganized the personnel management system of the subsidiaries and the upstream and downstream channels of production and operation, which affected the amount of hazardous waste disposal.Up to now, the technical reformation of NFC has been completed, and the equipment in the trial production stage is running well. Guizhou Hongda has replaced the new certificate in 3 months, and the company has approved a business scale of 59.In the 51’s / year, the scale of projects under construction reached 36.96 digits / year.With the successive commissioning of projects in progress and technological transformation to promote the maximization of production capacity, it will bring new growth space for the hazardous waste sector and ensure the company’s stable development. Investment advice: Buy-A investment rating, 6-month target price of 12 yuan.We expect the company’s EPS for 2019-2021 to be 0.69 yuan, 0.93 yuan, 1.21 yuan, corresponding to PE13.8x, 10.3x, 7.9x. Risk reminder: The project advances less than expected, and the uncertainty of the implementation of industry policies.