Shanghai Environment (601200): Achievements in line with expectations Ample solid waste projects in hand, optimistic about long-term development

Shanghai Environment (601200): Achievements in line with expectations Ample solid waste projects in hand, optimistic about long-term development

2018 results are in line with expectations The 2018 results announced by Shanghai Environment: operating income 25.

83 ppm, an increase of 0 per year.

66%; net profit attributable to parent company5.

78 ppm, an increase of 14 in ten years.

21%, corresponding profit 0.

82 yuan / share.

The company’s performance basically met expectations.

Deduct non-attributed net profit 4.

38 ppm, a 10-year increase2.

03%.

1.

Non-recurring gains and losses of USD 3.9 billion were mainly due to the disposal of Chengdu Luodai Waste Incineration Project.

The company’s Luoyang project put into operation has driven the solid waste business to continue to grow, and reported consolidated solid waste business revenue to grow for ten years.

37% to 16.

100 million US dollars, of which the amount of waste entering the site increased by 11 per year.

83%, the amount of waste incineration on the Internet increased by 9 per year.

74%; due to the reconstruction of the Zhuyuan Sewage Treatment Project, the sewage treatment report also led to a decline in performance.

52% to 3.

5.4 billion.

The improvement in the efficiency of businesses such as sewage treatment led the company’s gross profit margin to increase by 3 ppt to 35 in 2018.

4%.

The company’s overhead cost ratio rose by 0.

3ppt, R & D expenses rose by 0.

1ppt.

As corporate borrowings increase, financial costs increase by 24 per year.

89%, asset-liability ratio increased by 2ppt to 51%.

Development trend Solid waste disposal has ample projects in hand and growth is expected.

The company accelerates the development of waste incineration projects. In 2018, it added 6,450 tons of waste incineration per day. In 2019, the company has 杭州夜网论坛 completed intent contract projects with a production capacity of 2,400 tons per day.

The company currently has a total of 1.

39 lowest exchange rate / day, approximately 1 item has been put into operation.

1x, sufficient reserves for projects in hand.

If the project is successfully implemented, we forecast that the company’s revenue will increase to about 13 trillion, accounting for 80% of the solid waste business revenue in 18 years.

The impact of shareholder reductions on the company is limited.

Hony’s equity investment is planned to be traded in a centralized bid within the next 6 months, and the bulk of the transaction will be reduced by no more than 5% of the company’s total shares.

Among them, the shares held by centralized bidding transactions shall not exceed 1% for any consecutive 90 days.

It is estimated 武汉夜生活网 that the average daily trading shares account for about 2% of the company’s average daily trading volume in 2019, which has limited impact on the company.

Earnings forecast We maintain our 2019e earnings forecast7.

02 trillion unchanged.Dating 2020e profit forecast is 7.

20,000 yuan.

Estimates and recommendations The company currently can sustainably cope with June 19/20.

9/16.

9 times P / E.

Maintaining the recommendation level, we are optimistic about the long-term development of the solid waste sector. We raise our target price by 33% to 22 yuan, corresponding to 22/22 times P / E in 18/19, which has 30% room compared to the current one.

Risk in-progress projects are not progressing as expected, policy risks, and shareholder reductions.