Yingfeng Environment (000967) Review: Separation of Environmental Engineering Focuses on Sanitary Waste
Event: On August 10, the company announced that it intends to transfer 100% of its wholly-owned subsidiary “Upwind Wind Energy” (including 100% equity of Yuxing Technology) to “Shaoxing Yingchuang” to separate the environmental governance engineering business. The sale of “Upwind Wind Energy (including Yuxing Technology)”, the company focused on the sanitation and large solid waste business: a key step in the company’s strategy: focus on the sanitation and large solid waste sector, including sanitation robots, new energy sanitation equipment, sanitation services, domestic wasteAnd disposal, to give full play to the leading advantages of Zoomlion; plan to gradually replace or split non-core businesses such as wind turbines, electromagnetic wires, and environmental management projects. This transaction is a key step for the company to focus on the main business of sanitation and large solid waste. The transaction will bring total investment income to the company.55 ppm: Upwind wind energy evaluation value -1831.150,000 yuan, the transaction price is 10 million yuan, the company will get 0 investment income.28 ppm; the negative value of the upwind wind energy is mainly due to the fact that the company has allocated 100% of its wholly-owned subsidiary, Yuxing Technology, for 15 this year.US $ 8.1 billion sold to wholly-owned subsidiary Shangfeng Wind Energy (the company received investment income1.2.6 billion), and Shangfeng Wind Energy has not yet paid the consideration, which is 15.81 million U.S. dollars is listed as the current debt of wind power. Successfully acquired the leading environmental sanitation equipment, China United Environment, to build a “smart environmental sanitation” system.In November 2018, the company completed the acquisition and transfer of 100% equity of Zhonglian Environment with a purchase price of 152.5 trillion, the funding source is expected to issue additional, the additional issue price 7.64 yuan / share.China United Environment’s betting performance for 2018-2020 is 9.97/12.30/14.950,000 yuan, the acquisition is estimated 15/12/10 times; in 2018, China United Environment Environment deducted non-net profit11.0.5 billion, an excess of 1.0.8 billion to 南京桑拿网 complete the commitment.Zhonglian Environment is positioned as an urban and rural sanitation integrated solution provider, while maintaining the leading position of sanitation equipment (the sanitation machinery market share has ranked first for 15 consecutive years), actively developing new energy, smart sanitation equipment and smart sanitation cloud platforms;At the same time, we will create a “smart sanitation” system, while incubating high-quality sanitation customers, we will increase and strengthen the scale of self-managed sanitation operations, and we will vigorously lay out an integrated sanitation business with two approaches. The inflection point and trend have now emerged, and sanitation operations have entered a period of rapid growth.We estimate that in 2020, the annual market space for sanitation operations will be 165.3 billion yuan, and the annualized space for equipment will be 61.4 billion yuan; until 2017, the sanitation market penetration rate is 39.6%, there is still room for resistance improvement.At this point in time, the industry’s inflection point and trends already exist: 1) The inflection point. In 2018, the industry entered a period of rapid heavy volume. According to data from the Department of the Environment, new orders in 2018 were 49.1 billion, an increase of about 60%.2) Trend. According to the data of the Department of Environment, more than 3,000 sanitation contracts expired in 2018 and the tenders were resumed, mainly for 1-3 years; the new total order for the sanitation operation industry in 2016 was 974.45 billion, TOP5 concentration of 49.43%, sanitation operation orders are centralized and long-term.We believe that the marketization of environmental sanitation has moved from pilot to mature promotion, which is good for leading companies. Investment suggestion: Maintain the rating of “Prudent Overweight”.The company focused on the sanitation large solid waste sector, successfully acquired the leading sanitation equipment leader Zoomlion, seized the opportunity of rapid growth of the sanitation operation industry, and increased both sanitation operation and equipment revenue.We adjusted the company’s net profit forecast for mothers to 2019-2021.13/17.60/21.74 trillion, a growth rate of 52% / 25% / 23%, corresponding to 14/11/9 times the valuation on August 12, maintaining the level of “prudent increase”. Risk reminder: the risk of sanitation marketization progress, the risk of intensified competition in the equipment market, and the significant rise in costs.