Shanghai Environment (601200) 2019 Interim Report Comment: Projects under construction steadily advance productivity decline and performance growth is highly certain

Shanghai Environment (601200) 2019 Interim Report Comment: Projects under construction steadily advance productivity decline and performance growth is highly certain

Event: The company released its semi-annual report for 2019 and achieved operating income in the first half of the year13.

22 ppm, a ten-year increase of 8.

88%; realized net profit attributable to mother 2.

9.6 billion, a five-year growth of 5.

80%; net profit attributable to non-attributed mothers2.

89 ppm, a ten-year increase of 7.

55%.

The two major businesses have steadily increased, and the environmental restoration sector has turned a profit.

In 2018, the company had no new waste incineration project put into operation, and the amount of consolidated waste entering the plant reported a slight increase3.

15% to 322.

20 is the lowest, and the increase in calorific value / decreased proportion of plant electricity leads to an increase in the amount of on-line electricity (sometimes +2.

30% to 299 degrees / ton), which together drives the company’s online power increase by +5.

53% to 9.

6.4 billion degrees; in the long term, the commissioning of the Xinchang Landfill Project will drive the company’s landfill volume to +24 per year.

47% to 134.

38 At least, increase the amount of Laogang biogas power generation on-grid electricity.

From 06% to 51.84 million degrees, the company’s solid glucose business income is +15 per year.

38% to 7.

6.5 billion.

Because Zhuyuan No. 1 Plant is undergoing upgrading and upgrading, the company’s sewage treatment capacity has been reduced by -43.

55% to 3.

1.8 billion tons, but the average increase in water prices (+76.

13% to 0.

99 yuan / ton), to ensure that the company’s sewage treatment segment operating income fluctuates only slightly each year.

58% to 1.

7.7 billion.

The company continues to make efforts in the environmental restoration sector, and the report will win 8 soil and pipeline restoration projects; it will turn into an environmental services sector with an increase in operating income of +43.

10% to 0.

79 trillion, and realized a loss-making profit (net profit from -6.72 million yuan in 2018H1 to 620,000 yuan in 2019H1).

Market expansion has not diminished, and the smooth landing of convertible bonds has ensured the progress of the project.

The company maintained the continuous expansion rate of each sector, and the report added two new waste incineration projects (total capacity of 1,000 tons / day) to Xinchang and Weihai, a wet waste project in Jiading District (with a capacity of 530 tons / day), and a construction waste project in Jiading (Production capacity of 1500 tons / day), and a number of environmental restoration services.

The company has successfully issued 21.

7 trillion convertible bonds, cash in hand 20 at the end of the reporting period.

5.8 billion, which can effectively guarantee the smooth progress of various projects under construction.

Maintain “Overweight” rating: We maintain our original profit forecast and 天津夜网 expect the company to return to its parent net profit in 19-215.

83/6.

70/8.

28 trillion, corresponding to the EPS of 19-21 is 0.64/0.

73/0.

91 yuan, which currently corresponds to 18 times the corresponding 19-year PE.

Considering that the company is backed by Shanghai’s leading state-owned enterprise, Shanghai Urban Investment, the asset injection is expected to increase the company’s performance. At the same time, the two wet waste projects of the company’s Songjiang and Jiading promote accelerated landing and bring performance gains, maintaining the company’s “overweight” rating.

Risk warning: The project under construction is put into operation less than expected, and the parent company’s asset injection is less than expected.