Weiming Environmental Protection (603568): The Rise of Private Waste Incineration Leaders
The low-price competition in the waste incineration industry has ended, and the capacity of the incineration industry will be concentrated in the next three years.
According to the “Thirteenth Five-Year Plan” for the National Harmless Treatment Facility Construction of Urban Domestic Waste, by 2020, the domestic waste-to-energy treatment scale target is 60 per day, and by May 2018, incineration power generation has been put into operation 38 in total.
In May, there is a lot of space to be put into operation. It is expected that 2019 to 2020 will be the period of concentrated production capacity of the industry.
Public environmental awareness and rational government bidding have pushed the industry to overcome the short-term low-price winning trap of 2016, incinerated the superiority and inferiority of leading companies, the market share of leading companies has increased, and the industry has entered an orderly competition stage.
There are many projects in hand, and the performance is flexible.
The company currently operates a waste incineration daily treatment capacity of approximately 1.
5 announcements / day, project 1 under preparation.
At the beginning of 7 days, 70% of the company’s incineration projects in operation were located in Zhejiang, which has obvious geographical advantages.
In addition, the company has 1,215 tons / day of hand-made kitchenware projects, 150 tons / day of sludge, 555 tons / day of leakage, and 4650 tons / day of waste collection and transportation projects. We believe that the company is expected to put more high-quality waste incineration and other solid productsDiscontinued projects with high performance flexibility.
The company’s projects are of high quality and strong management.
We conducted economic calculations for a typical waste incineration project of 1,000 tons per day. The sensitivity analysis of the incineration project was in order from strong to weak waste power generation> waste treatment fees> debt financing costs. Project location became the key to profitable waste incineration.
Weiming’s gross profit margin is more than 60%, which is higher than that of the same industry. Preliminary: ① Refined management makes tons of garbage on-grid electricity at a high level in the industry.
② Located in Jiangsu and Zhejiang, the waste disposal fee is high.
③ Low financial expenses and low asset-liability ratio.
In addition to the company’s excellent external operations, it differs from its peers in the accounting treatment of depreciation period and cost recognition, and also contributes a certain high gross profit.
The company’s incineration equipment has outstanding competitiveness and high project returns.
The company has strong equipment capabilities in the field of waste incineration. It has the independent production capacity of core equipment for waste incineration such as garbage cranes and grabs, incinerators, waste heat boilers, flue gas treatment systems, and automatic control systems (most of the peer companies are outsourced equipment), The purchased equipment is mainly steam turbines, circulating cooling towers and other general-purpose power equipment, equipment competitiveness is outstanding.
Excellent companies have excellent core equipment capabilities, small project investment, high project return rate, ROE over 20%, leading the industry.
Investment suggestion: As a private waste incineration leader, the company has excellent management, possesses incineration core equipment production and marketing capabilities, and has a high project return rate.
At the same time, the company has abundant waste incineration projects in hand, and its performance will be flexible in the next few years.
We estimate that the company’s net profit attributable to its parent for 2019-2021 will be 9 respectively.
3 trillion, EPS is 0.
52 yuan, the corresponding PE is 22.
0X / 17.
5X / 14.
1X, covering for the first time and giving the company a “Buy” rating.
Risk reminder: the risk of waste incineration policy, the increase of operating costs, and the project progress is less than 杭州桑拿网 expected.