High Energy Environment (603588) Company’s First Coverage： Soil Rehabilitation Welcomes Underestimation Leading Spring

High Energy Environment (603588) Company’s First Coverage: Soil Rehabilitation Welcomes Underestimation Leading Spring
Key points of investment: Leader in soil remediation, high performance growth.The company is a leading enterprise in soil remediation.The main business includes three major sectors: soil remediation, solid waste treatment, and hazardous waste disposal. Customers include government and industrial enterprises.The company successfully acquired companies such as Ningbo Dadi, CNMC Oriental and Yangzi Chemical, which effectively strengthened the hazardous waste sector. The soil remediation market was further released. The company’s orders increased rapidly, and the amount of transfer projects was gradually increased. The company’s high performance can be expected, and the profitability pursuit of着 promote.2018 revenue 37.62 ppm, an increase of 63 in ten years.2%, net profit attributable to mother 3.250,000 yuan, an increase of 69 in ten years.1%, 2019Q1 revenue of 6.840,000 yuan, an increase of 36 in ten years.83%, net profit attributable to mother 0.55 ppm, an increase of 76 in ten years.7%, revised ROE 13 in 2018.45%, an increase of 4 per year.18 units. The soil law has been implemented, and more than half of the pollution has been investigated, and orders are expected to be released faster.The “Soil Pollution Control Law” was officially implemented on January 1, 2019. The detailed investigation of soil pollution opened in July 2017 is now over half, and the soil pollution situation in various places has become more and more clear. We believe that the use and improvement of relevant standards, local,The government is becoming more and more perfect, and soil restoration is expected to enter a high-speed growth period.As of the end of 2018, the company’s soil remediation supplement order20.7.9 billion, a year-on-year growth of 99%.The national soil remediation market capacity is approximately 13.5 billion in 2018, and it will grow at an annualized growth rate of 40-45% in the next five years. The market size is expected to reach 72.6-8865 billion yuan in 2023. The company’s market share in 2018 is approximately 15%.It is believed that the company, as a leader in restoration, has complete qualifications and technology, has rich project experience, and has a gradual brand influence, and its market share can help to increase. Solid waste enters the operation period, and it is expected that hazardous waste will be maximized.The company has 2 solid waste operation projects, 4 projects under construction, 4 pre-disposal projects, 1 custody operation project, a total of 1,700 tons / day has been put into operation, a total scale of 8,800 tons / day, we expect the company to start production in 2019 4A total of 3,200 waste incineration projects per day. The solid waste sector has entered the operating period, which is expected to contribute to the company’s stable cash flow and increase the company’s gross profit margin.Hazardous waste sector, the company through mergers and acquisitions, currently has 8 hazardous waste operating projects, a total of 50 license processing capacity.47.By the end of 2018, the hazardous waste sector has replenished orders14.07 million US dollars, the future production capacity increase is expected to exceed 60%. We believe that the hazardous waste sub-industry has a high degree of prosperity, the cumulative increase in production capacity in the future and the completion of the transformation of existing projects, with the increasingly strict management of hazardous waste, the trend of increasing industry concentrationThe company’s maximum production capacity still has room for improvement, and accelerated growth of the hazardous waste sector is expected. Estimates and recommendations.We expect the company’s EPS to be 0 in 19-21.71/0.93/1.At 23北京夜网 yuan, the company, as a leader in soil remediation, benefited from the accelerated release of the market, increased market share, high performance growth and guarantee. In the future, solid waste and hazardous waste operating assets will contribute to stable cash flow.With reference to the 19-year average PE of 19 comparable companies, the average PEG is 0.89. We believe that the company has technological advantages and brand influence, has rich project experience, and increased market share. It has maintained a rapid performance growth rate in 18-20 years (average annual compound growth rate of 47).5%), so we give the company PEG0 in 2019.45-0.50, corresponding to PE evaluation 21.4-23.8 times, corresponding to a reasonable value range of 15.19-16.90 yuan, the first coverage, given to the “affiliated city”. Risk reminder: The market demand for soil remediation is not up to expectations; the project is not up to expectations.