High Energy Environment (603588): Cash flow continues to improve, large solid waste layout welcomes rapid development

High Energy Environment (603588): Cash flow continues to improve, large solid waste layout welcomes rapid development
Event: According to the company’s performance report, in the first three quarters of 2019, the company achieved operating income of 31.7.1 billion, an annual increase of 41.87%; net profit attributable to mother 3.140,000 yuan, an increase of 30 in ten years.06%; deduct non-attributed net profit 3.30,000 yuan, an increase of 26 in ten years.40%; basic profit income is 0.47 yuan / share, an increase of 29 in ten years.86%. The performance has grown rapidly, and cash flow has improved significantly. The order additionally guarantees future performance: in the first three quarters of 2019, the company achieved operating income31.71 ppm, an increase of 41 in ten years.87%, a 51% increase compared to 19H1.04%, still maintaining rapid growth.The company’s net operating cash was 3.5.3 billion, an annual increase of 142.46%, mainly due to the increase in the collection of receivables, and the return was good. As of the end of September 2019, the company’s supplementary order amount was 24.2.6 billion, of which 18 were engineering contract orders.34 billion, 重庆耍耍网 accounting for 75.60%, an annual increase of 31.94%, investment operation orders 5.92 billion, accounting for 24.40%, the company has sufficient supplementary orders, which effectively guarantees future performance growth. Leaders in the repair industry are expected to benefit from the policy bonus: the report merges, the company actively obtains new orders, and supplementary orders in the field of environmental repair7.41 trillion, accounting for 30 of the total new orders.54%, the business model of environmental restoration is mainly EPC project contracting, the project cycle is short, and supplementary orders can effectively guarantee the performance of the next year.The “Soil Pollution Control Law” was formally implemented on January 1, 2019. In total, the soil pollution budget fund plan in the 19th central budget was $ 5 billion, an increase of 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. Solid waste incineration, cumulative amount of hazardous waste disposal, continuous operation to ensure the company’s future operating income: In the field of solid waste treatment and disposal, the company reported how to add new orders for domestic waste treatment and disposal business.610,000 yuan, supplementary orders for hazardous waste treatment and disposal business3.620,000 yuan, new orders for general industrial solid waste business3.3.4 billion.In the field of domestic waste treatment, the company has taken a stake in Yuhetian and Futai Technology to expand the field of domestic waste cleaning and transportation and environmental sanitation informatization to form the overall industrial chain layout of domestic waste treatment.So far, the company’s waste incineration power generation project has reached a processing capacity of 8,800 tons / day, and the long-term scale of the project has reached 3,300 tons / day.The Sihong, Hezhou, and Shunyi projects have been put into operation. The intensive production period will bring stable operating income to the company.In the field of hazardous waste disposal, due to factors such as CNMC Oriental Technical Reform and Guizhou Hongda’s renewal of certificates, which affected the company’s performance in the first half of the hazardous waste disposal section, but the transformation of technical reforms and renewal of certificates was completed, the performance of this section gradually returned to a stable development track.So far, the company has approved a business scale of 59.The lowest exchange rate per year is 51. The types of treatment and disposal cover 33 of the 46 categories in the National Hazardous Waste List, ranking first in the industry.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 0.65 yuan, 0.87 yuan, 1.19 yuan, corresponding to PE15.6x, 11.6x, 8.5 times. Risk reminder: The project advances less than expected, and the uncertainty of the implementation of industry policies.