Hongcheng Water Industry (600461) Research Brief: Regional Public Platform for Steady Development
Nanchang City’s comprehensive public platform, all three major businesses are attractive. The company is a comprehensive public platform in Nanchang City, Jiangxi Province. It is mainly engaged in water supply, sewage, gas and other businesses. The lowest price / day 杭州桑拿网 is in an absolute leading position in Nanchang urban area. The supply business is subject to price increases. In November 2018, the price of first-class residents in Nanchang was 1.
58 yuan / ton increased to 2.
03 yuan / ton, up by 0 per ton.
45 yuan, directly driving the company’s water supply business in the first half of 2019, the revenue growth of 32%; 2) 236 sewage treatment capacity.
4 Daily / day, occupying more than 80% of the market in Jiangxi County. Sewage treatment is subject to standardization and expansion: nearly one hundred wastewater treatment plants of the company need to complete first-level standardization and upgrading by 2020, and 1/3 of 2020 will be completedAround the time, the upgrading and upgrading led to the steady growth of the company’s sewage treatment business, and at the same time the company actively developed large-scale sewage treatment plants in the city; 3) The market share of gas in Nanchang has exceeded 90%.The conversion rate is about 70%, and there is still much room for development.
Dingzeng completed the completion of the protection project, and the Three Gorges shareholding expects synergy. On November 15, 2019, the company issued shares 1 non-publicly.
5.3 billion shares, net proceeds raised.
US $ 6.6 billion for the second phase of the Chengbei Water Plant and nine sewage treatment expansion and upgrade projects, as well as repayment of bank loans
The completion of the fixed increase can guarantee the accelerated implementation of the project and increase the company’s performance.
In addition, Three Gorges Capital purchased company stock from the secondary market to 4.
The 1065% stake is the seventh largest shareholder of the company.
Three Gorges Capital is a holding subsidiary of the Yangtze River Three Gorges Group. The Yangtze River Three Gorges Group was expanded into the Yangtze River Economic Belt by the Party Central Committee and the State Council and played a key role in capturing the protection of the Yangtze River.
The recent dividend of Three Gorges Capital’s shareholding shows the recognition of the company’s future development prospects. Restructuring as a strategic shareholder of the company can help the company in project resources and funds, help the company grow, and look forward to the synergy effect in the Yangtze River protection.
Advanced stock-binding shareholders are conducive to the company’s long-term development. On December 13, 2019, the company completed the share incentive.
The incentive objects of the stock issue include the chairman, general manager, secretary of the board of directors, chief financial officer, deputy general manager in charge of each department and the company’s backbone, a total of 15 people.
50,000 shares, accounting for 0 of the company’s total share capital.
62%, grant price 3.
05 yuan / share.
The performance evaluation target is: the average annual ROE from 2020 to 2022 is not less than 9%, and the compound revenue growth rate is not less than 10%.For the quantile value, we have calculated that the 13 corresponding companies with the 75th quantile in 2017-2018 had revenue growth rates of 20 respectively.
33% / 15.
38%, corresponding to a ROE of 9.
61% / 8.
85%, showing that leaders are confident in the company’s future development.
In addition, it is required that the annual dividend ratio from 2020 to 2022 is not less than 40%.
As a state-owned enterprise, the company’s launch of this listed stock incentive can fully mobilize the enthusiasm of the company’s leaders, bind the company’s interests with personal interests, and help the company’s long-term development.
Earnings forecast and investment rating: Maintaining the company’s obvious geographical advantage in Nanchang, Jiangxi, the three major businesses are all attractive, we are optimistic about the company’s development prospects.
Considering the impact of management expenses caused by the company’s equity incentives, we slightly adjusted the company’s profit forecast. It is expected that the company’s 2019-2021 EPS will be 0.
63 yuan, corresponding to the current expected PE of 12, 11, 9 times, maintaining the company’s “Buy” rating.
Risk reminder: expected risks for the progress of supplementary projects and projects in progress, upward interest rate risks, macroeconomic downward risks, and expected risks of synergy with the Three Gorges.