20th afternoon research report selection: 10 shares are expected to break out

Securities Times Network April 20th

Industrial Securities

Top Group (601689.SH): rare high-quality growth targets, short, medium and long-term

Event: Recently, the company announced its annual report. In 2016, it achieved revenue of 3.94 billion yuan, up 30.9% year-on-year; net profit of returning to mother was 620 million yuan, up 50.7% year-on-year. The consolidated gross profit margin was 31.2%, up 2.4pct from 2015; the net profit margin was 15.6%, up 2.0pct from 2015.

The growth rate of various businesses was considerable, and the volume and price increased to help the interior business grow faster than expected. In 2016, revenue increased by 930 million, including 360 million shock absorbers and 450 million interior parts, which is the core product of the company's performance growth. The interior benefited from the rapid growth of sales of core customers such as Geely and the increase in the value of bicycles. The growth rate caused by the increase in volume and price exceeded expectations.

Benefiting from the rise of independent brands, downstream customers are still in a high-growth channel in 2017. The company is the beneficiary of the rise of independent brands. Geely, Chuanqi, Roewe and other independent brands have risen rapidly, and the business from Geely contributed the main increase in the company's revenue in 2016. Considering that the company's important independent brand customers Geely, Chuanqi, Roewe and other sales prospects in 2017 are still good, in addition to the overseas general E2XX, GEM projects gradually increase, the company's performance in 2017 will continue to maintain high growth.

The electronic vacuum pump has limited capacity in 2016 and expects rapid expansion of production capacity. The output of electronic vacuum pumps in 2016 was only 380,000 pieces, and the production capacity at the end of 2018 is expected to reach 2.8 million pieces. Electronic vacuum pump customers include Geely, Roewe, etc. The downstream demand is very strong, and the electronic vacuum pump is the company's continuous growth pole.

IBS downstream demand is strong, and it is expected to contribute to the company since 2018. The company's IBS products are in the road test of various models. It is expected to be mass-produced in 2018. The production capacity of the project “with an annual output of 1.5 million sets of IBS” will be gradually put into production in 2018. IBS will become an important growth pole for the company's profit growth.

There are few outstanding growth targets, and there are many short-term and long-term perspectives, maintaining the “overweight” rating. The launch of self-owned brands, new production capacity and new products has brought short-, medium- and long-term growth points to the company, which is the target of certain high growth in the weak market in 2017. Through the IBS layout of the smart car core executive end, and the subsequent extension expectations, the company should enjoy the valuation premium. Regardless of the non-public offering, the company's EPS for 2017-2018 is expected to be 1.32/1.74 yuan respectively, maintaining the “overweight” rating.

Southwest Securities

Xinye Textile (002087.SZ): volume and price rise, new capacity boost

Event: The company released its annual report. In 2016, it achieved revenue of 4.09 billion yuan, a year-on-year increase of 34.1%. The net profit of the mother was 210 million yuan, a year-on-year increase of 77%. Among them, 16Q4 achieved revenue of 1.16 billion yuan, a year-on-year increase of 24.2%, and realized a net profit of 67.067 million yuan, an increase of 317.8% year-on-year. The growth rate was in line with expectations. It is proposed to distribute a cash dividend of 0.2 yuan for every 10 shares of all shareholders.

The volume and price have risen, boosting the performance. In 2016, the company's yarn products achieved revenue of 2.41 billion yuan, a year-on-year increase of 62.5%. Gross profit margin increased by 1.9 percentage points to 18%, and grey fabric products achieved revenue of 1.28 billion yuan, down 8.9% year-on-year. The annual growth rate was 1.9 percentage points to 17.6%. The overall gross profit margin of the company was 17.6%, an increase of 1.5 percentage points over the previous year. The reasons for the substantial improvement in the company's performance are: 1) In 2016, Yuhua Textile Technology Co., Ltd. successfully put into operation 100,000 spindles of high-grade spinning project and Jinyu Textile Co., Ltd. Phase II cotton spinning 100,000 spindles and 5,000 air spinning units were put into production. Drive the company's revenue growth; 2) The company purchased 60,000 tons of cotton at a low price at the beginning of the year, basically locking in the cost of cotton in 2016, while the annual Chinese cotton price index 328 rose by 22%, and the increase in raw material prices pushed the price of yarn up. Since July last year, the company has gradually increased the price of yarn products. According to Wind statistics, the index of 32 cotton carded yarns rose by 20.3%, and the index of 40 cotton combed yarns rose by 13.1%, which drove a significant increase in gross profit margin.

Capacity expansion, government subsidies continue to increase. The company is propping up the 120,000-spindle intelligent spinning production line project as planned. At the same time, it has successfully passed the approval in July 16 and raised 760 million yuan for 20,000 tons of high-grade knitted fabric projects and 100,000 spindles and 5,000 rotor spinning projects. It is expected to be put into production by the end of 2017, and the addition of new high-end products and capacity will further enhance the company's performance. The company actively responded to the National One Belt and One Road strategy to invest in Xinjiang, and in 2016 brought more than 100 million yuan of government subsidies to the company. Government subsidies are related to the scale of production capacity. As the company's production capacity in Xinjiang is gradually released, future government subsidies are expected to increase further.

The increase in executives’ holdings demonstrates confidence in the company’s future development. On July 29, 2016, a total of 8 directors, supervisors and senior executives of the company increased their shareholdings with their own funds, and increased their holdings by 1.004 million shares. After the re-enforcement, the average holding price was 6 yuan/share, reflecting the executives. Confidence in the company's future development prospects and recognition of the company's value.

Earnings forecasts and investment advice. Considering that the yarn is still in the price increase period, the orders are sufficient, and the new capacity will be released in the next two years, and the profit forecast will be raised. It is estimated that the EPS in 2017-2019 will be 0.36 yuan, 0.45 yuan and 0.55 yuan respectively, giving the company 2017 25 Double PE, corresponding to the target price of 9 yuan, maintain a "buy" rating.

Industrial Securities

Nanda Optoelectronics (300346.SZ): performance has declined, special gas and photoresist layout open up future growth space

Event: Nanda Optoelectronics released its 2016 annual report, achieving annual operating income of 101 million yuan, down 15.82% year-on-year; operating profit of -269.13 million yuan, compared with 24.437 million yuan in the same period of last year; net profit attributable to shareholders of listed companies 754.87 Ten thousand yuan, down 83.03% year-on-year; realized earnings per share of 0.0469 yuan, and operating cash flow per share was 0.2055 yuan.

At the same time, the company released the first quarterly report of 2017. In the first quarter, it achieved operating income of 24,018,600 yuan, up 4.45% year-on-year; net profit attributable to shareholders of listed companies was 2,504,100 yuan, up 283.68% year-on-year; realized EPS0.0156 yuan, operating cash per share The flow is -0.0144 yuan.

Maintain “overweight” rating. The annual performance of Nanda Optoelectronics declined year-on-year, mainly due to the fierce competition in the LED industry and the MO source segment industry during the year, the company's provision for inventory depreciation and the loss of operating profit of Quanjiao Nanda Optoelectronics. At present, the company's high-purity special gas products have reached production, and it is expected to contribute new profit growth points in the future. In addition, during the year, Kehua's shareholding was completed and the company's electronic material layout was further improved.

Nanda Optoelectronics has deep technical accumulation in the field of LED upstream MO sources, and the main MO source products are expected to resume growth with the bottoming out of prices and the future development of new segments. In recent years, the company has actively deployed high-purity electronic gas and photoresist fields. High-purity arsine, phosphane products and MO sources have strong synergistic effects. In the future, they will benefit from the development prospects of domestic LED and semiconductor fields; Entering the field of photoresist is expected to share the growth space brought about by the accelerated development of domestic semiconductor photoresist faucets. We are optimistic about the company's future potential for import substitution in the field of multiple chemicals in electronic chemicals, giving the company a forecast of EPS of 0.08, 0.16 and 0.22 in 2017~2019, respectively, giving an “overweight” rating.

Soochow Securities

Desai Battery (000049.SZ): High growth in the first quarter, high-end mobile phone brand further promotes battery faucet

Event: The company released the first quarterly report of 2017, realizing operating income of 2.289 billion yuan, the same as: an increase of 50.40%; achieving net profit attributable to shareholders of listed companies of 69 million yuan, an increase of 77.54%.

Q1 high growth, Q2, Q3, Q4 still have strong growth momentum: In the first quarter of 2017, 2017Q1 realized operating income of 2.289 billion yuan, a year-on-year increase of 50.40%; realized net profit attributable to listed company shareholders of 69 million yuan, an increase of 77.54% The shareholders who belonged to the listed company deducted a net profit of 609 million yuan, a year-on-year increase of 92.85%. From the perspective of profit margin, the company's overall gross profit margin was 9.83%, up 0.1pct year-on-year, net profit margin was 3.91%, 0.66pct year-on-year, and overall profitability improved, reflecting that the company's production management mechanism improvement has produced good results.

For the reason, since the company cut into the domestic mobile phone supply chain last year, its main domestic mobile phone supply share has increased from a few percentage points at the beginning of last year to about 30% now. The year-on-year benefits are very obvious, which also drove the rapid growth of the first quarter of this year. .

Looking forward to the next few quarters, the company's supply share of domestic mobile phones in the second quarter still has a large year-on-year increase effect. In the third quarter, Apple's supply will continue to bring performance, and we can see that the company's quarterly throughout the year There are obvious sources of growth. The expansion of revenue scale will continue to drive the increase in profit margin, and will continue to show rapid growth throughout the year.

The high-end mobile phone brand further promotes the battery leader: Since 2016, the smart phone industry has entered the stock game and the user change stage, and the willingness of users to upgrade has become more intense. In addition, the price of components that have been rising since last year has caused the cost of mobile phone BOM to rise sharply. Only branding and high-endization can pass on huge rising costs. Judging that this year's mobile phone industry chain will be greatly divided, high-end mobile phones will be a big change, low-end mobile phones and supply chains will be in crisis.

For mid- to high-end mobile phones, mobile phone terminal manufacturers will pay more attention to the quality of component supply. Desai battery has accumulated a good reputation in the battery industry, benefiting from the trend of high-end mobile phone brands.

Notebooks, power batteries, power tools, multi-product force: notebooks are still in their infancy, and the prospects are broad. The market for laptop batteries is huge and is currently mainly supplied by Taiwan battery manufacturers. Desai's notebook battery products have made breakthroughs. In 2016, two customers achieved mass production, but the overall revenue is still small, accounting for a lower proportion of the company's total revenue; in 2017, the company will continue to import more Customers, there will be more projects to achieve mass production.

Power batteries are actively approaching new customers, and 2017 is worth looking forward to. In 2016, the revenue of power battery was nearly 30 million yuan, and the overall loss was about 60 million yuan. Looking forward to 2017, the company is actively engaged with Volkswagen, BAIC, GAC and other manufacturers, sales are expected to open a new situation.

The power tool battery supply is the world's leading manufacturer and is well received by the big market. At present, the company's customers include the world's major power tool manufacturers such as Black & Decker, Bosch and Makita. In the future, it is expected to continue to maintain the competitive advantage of battery supply and tap into the potential of the power tool market.

Earnings forecast and investment advice: Optimistic about the business layout of Desai battery consumer electronic battery and power battery, the new generation of iPhone8 and HOV will push the company's performance to a new level in 2017. The notebook is also introducing new customers and moving to the big market. The EPS of 2017/2018/2019 is expected to be 1.74/2.36/2.89 yuan, maintaining the BUY rating.

Huachuang Securities

Plum blossoms (600873.SH): lysine, threonine rebound, superimposed corn prices fell, driving a sharp increase in performance

Matters: The company released the 17th quarterly report: operating income of 2.74 billion yuan, an increase of 3.6%, net profit of 3.41 yuan, an increase of 54%.

Main points: Su, lysine boom rebounded and corn prices fell to drive performance growth: According to the national average price, lysine rose about 11% in the first quarter, lysine spread (by 2.5 tons of corn and 0.18 tons) Soybean meal calculation) increased by 6%; threonine decreased by 1% compared with last year, threonine price difference (measured by 3.3 tons of corn consumption) increased slightly by 0.6%; although the price of MSG is still low, due to the fall in corn prices, it is expected The spread was more than 15% higher than the same period last year.

The widening of the spread and the internal digging potential have greatly increased the gross profit margin. It is expected to increase the raw material stocking in the first quarter: the gross profit margin in the first quarter increased by 4.7 PCT to 28.85% compared with the same period of last year, which is considered to be two reasons: (1) As mentioned above, the price of corn has decreased and the product has expanded. Spreads, increase gross profit; (2) internal tapping of the company, including the improvement of production efficiency, procurement and sales process optimization. In terms of expenses, the sales rate increased by 1.6 PCT to 8.72% year-on-year, and the management fee rate fell by 1.4 PCT to 4%. In addition, government subsidies and wealth management income increased by 47 million yuan compared with last year, which increased net profit. The increase in the cost of materials paid in the current period led to a decrease of operating cash flow of RMB 30 million to RMB 300 million, which is expected to increase the stock of raw materials.

Investment suggestion: In 17 years, the company will expand production of 100,000 tons of sulphate and lysine each, maintaining the leading position of the share guarantee. At the same time, the production capacity of new varieties such as tryptophan, proline and xanthan gum will increase. In January, the company’s 200 million employees were held, and the cost was 6.895 yuan/share. The stock price has been upside down and has a margin of safety. The net profit for 17-18 years is 13.3 and 1.8 billion yuan, corresponding to EPS of 0.43 and 0.58. The current share price corresponds to PE15 and 11 times, and it is strongly recommended.

Dongxing Securities

Sylt (002538.SZ): the two-way expansion of the upstream and downstream of phosphate compound fertilizer, the big health double main industry is expected to break through

Event: Sirte released the 2016 annual report: realized operating income of 2.818 billion yuan, YoY-5.24%, net profit of 244 million yuan, YoY-1.11%, EPS 0.34 yuan, net profit of 177 million yuan after deducting , YoY-18.55%, mainly due to land acquisition and storage, operating income of 49.96 million yuan. Among them, in the fourth quarter, the operating income in the single quarter was 686 million yuan, YoY+29.58%, net profit attributable to the mother was 38 million yuan, YoY-30.63%, net profit after deduction was 0.23 billion yuan, YoY-41.79%, mainly due to The price of monoammonium phosphate and compound fertilizer declined year on year. The company plans to pay 1 yuan for every 10 shares.

The company expects the net profit margin of the first quarter of 2017 to be 2863~42.95 million yuan, YoY-40%~-10%.

Opinion: In 2016, the global agrochemical market was in a downturn, and the price of phosphate compound fertilizer products fell. In 2016, the company's phosphate compound fertilizer product sales were 1,636,300 tons, YoY+18.57%, and the output was 1,181,200 tons, YoY+7.40%. Monoammonium phosphate product revenue was 1.092 billion yuan, YoY-16.69%, gross profit margin fell 4.79ppt to 13.30%; compound fertilizer product revenue was 1.556 billion yuan, YoY-0.82%, gross profit margin fell 0.56ppt to 19.65%. Affected by the sluggish demand in the global agrochemical market, the average market price of monoammonium phosphate and common compound fertilizer in 2016 decreased by 16% and 9% to 1,800 yuan/ton and 2063 yuan/ton respectively.

Conclusion: We will not consider the follow-up acquisition of Guizhou Lufa. We expect net profit for 2017-2019 to be 285 million yuan, 357 million yuan and 433 million yuan respectively, and EPS is 0.40 yuan, 0.50 yuan and 0.60 yuan respectively. At present, the stock price corresponds to P/E of 23 times, 19 times and 15 times respectively. Maintain a "strongly recommended" rating.

Dongguan Securities

Desai Battery (000049.SZ): Excellent performance and optimistic growth throughout the year

Event: Desai Battery (000049) disclosed the first quarter report of 2017 on the evening of the 19th. In the first quarter, the company's actual business income was 2.289 billion yuan, an increase of 50.4%, and the net profit of returning home was 69,010,800 yuan, an increase of 77.54%, in line with the company's previous Performance forecast, EPS is 0.34 yuan.

Comments: The rapid growth of performance stems from the expansion of existing business, which is endogenous growth. From the data of a quarterly report, the company's performance growth was benefited from the expansion of its main business, especially the downstream customers of consumer electronics battery packaging grew faster, while the investment income, non-operating income and other volume and changes were small, and the first quarter results. Does not constitute a significant impact, so the company's first quarter performance is endogenous growth.

It is expected that the company's domestic customer sales will grow faster. According to the company's business strategy and the 2016 annual report data, it is judged that the company's current largest customer sales ratio is still relatively high, but the proportion tends to decline, and it is reasonable to expect that the company's other customers, especially domestic customers, will see faster revenue growth. At present, the company's domestic smartphone customers, including Huawei, OPPO and Xiaomi, are becoming more and more important to the company's operations.

Mobile phone shipments have declined slightly, but annual growth is still optimistic. Compared with the sharp increase in mobile phone shipments in February, domestic mobile phone shipments declined slightly in March. According to the “Analysis Report on the Operation of Domestic Mobile Phone Markets in March 2017” issued by China Information and Communication Research Institute, the shipment volume of smartphones in March 2017 was 41.871 million units, down 6.3% year-on-year. In summary, in the first quarter of 2017, smartphone shipments were 118 million units, up 1.7% year-on-year. The industry outlook for the second quarter is more cautious, mainly considering that the market is watching the iPhone8 in the second half of the year, and that the market will be re-strengthed by the new iPhone products in the second half of the year, so it is relatively optimistic about the annual shipment growth, so the company's annual growth is expected. Also more optimistic.

Blue micro new source is expected to become a new growth point. At present, the listed company mainly controls three companies, including Huizhou Desai Battery, which is mainly engaged in small and medium-sized lithium battery PACK business, Huizhou Lanwei, which is mainly engaged in small and medium-sized mobile power BMS business, and main large-scale power battery, energy storage battery BMS and PACK business. Blue micro new source. Among them, Lanweixinyuan was established in 2015, with a loss of 45.865 million yuan in 2016. Last year, new energy vehicles ushered in an explosion. In 2016, China's new energy vehicles produced 517,000 vehicles and sold 507,000 vehicles, up 51.7% and 53% respectively. It is still expected to grow rapidly in the future. Considering the technology accumulation of Blue Micro-New Source and the long-term growth potential of the new energy vehicle market, it is believed that the future blue and micro source will be a new growth point for the company.

Earnings forecasts and investment advice. It is estimated that the company's net profit attributable to shareholders of the parent company will be 3.2/352 million yuan in 2017-2018, corresponding to EPS of 1.56/1.72 yuan, corresponding to PE33/30 times, giving Desai battery a "cautious recommendation" rating.

Northeast Securities

Palm Shares (002431.SZ): Turning losses into profits, 17 years is expected to return to normal

Summary of the report: The company released the 2016 annual report and the 2017 first quarter report, and the results turned into a profit. In 2016, the company achieved operating income of 3.906 billion yuan, a year-on-year decrease of 11.2%; net profit attributable to mothers was 121 million yuan, an increase of 157.1% over the same period of last year, EPS was 0.09 yuan, and a profit distribution plan was announced for every 10 shares to be distributed at 0.2 yuan. At the same time, the company released the first quarter of 2017, achieving operating income of 527 million yuan (+24.0%), net profit of the mother to 53.6 million (+31.3%). The performance has stabilized and rebounded, and it has gradually improved. In terms of quarterly, in the Q1 quarter of 2016, the company achieved revenues of 425 million (-22.4%), 1.027 billion (-35.0%), 1.207 billion (+37.0%), and 1.247 billion (-10.5%), respectively. 527 million (+24.0%), net profit at home - 0.78 billion (-111.5%), 130 million (-20.9%), 33 million (+136.1%), 36 million (+114.4%), -0.54 billion (+ 31.3%), the performance stabilized and rebounded, and gradually improved, as shown in Figure 1, Figure 2.

PPP business has advanced by leaps and bounds, and built a platform for the integration of “Palm + Bell Gaolin + New Zhongyuan”. The company borrowed the PPP policy to increase the strength of the municipal garden business, and the PPP business advanced by leaps and bounds. Since 2015, the company has announced an order amount of 15.04 billion yuan, of which PPP orders reached 8.52 billion yuan; in addition, the company signed a large-scale cooperation agreement with local governments, the planned investment amount exceeded 45 billion yuan. At the same time, the company acquired 45% equity of Xinzhongyuan at the end of 2016, and built a PPP construction platform of “Palm+Bell Gaolin+Xinzhongyuan” to form an integrated PPP service advantage. In March 2017, the company will work with Xinzhongyuan. Jointly participated in the bidding for the characteristic town project of Yanyang Town in Meizhou City, and the synergy effect of the strong alliance between the two sides gradually appeared.

The decline in the previous performance was basically eliminated, and the performance in 2017 is expected to return to normal. In 2015 and 2016, the company's engineering and design business decreased, and the continued distribution of eco-urban business revenues has not yet been reflected, resulting in a decline in company performance. Revenue fell from 5.9 billion in 2014 to 3.9 billion. Net profit from home since 2014 430 million fell to 120 million, gross profit margin (17%) and net profit margin (3%) also fell sharply, far from the industry average (25% gross margin, 10% net profit margin). Benefiting from the outbreak of the economic recovery in 2016, the company's real estate garden business will be improved significantly, and the benefits of ecological towns will gradually be reflected. The decline in the previous performance will be basically eliminated. Coupled with the gradual implementation of PPP projects, it is expected that the company's gross profit margin will be expected. A sharp rebound, 2017 results will return to normal.

Financial forecast and valuation: The EPS of the company is expected to be 0.31, 0.48 and 0.64 yuan respectively from 2017 to 2019. The current share price is 43 times that of 2017, maintaining a “Buy” rating.

Industrial Securities

Haley Bio (603718.SH): stable operation, expecting the amount of foot and mouth disease

Event: In 2016, Haley Bio realized operating income of 340 million yuan (+8.4%); net profit of returning home was 86 million yuan (-10.3%), and deduction was not 0.83 billion (-14.4%). In the fourth quarter, the revenue was 93 million yuan (+16%) and the profit was 14 million yuan (-34%). The profit distribution plan is to distribute a cash dividend of 0.4 yuan for every 10 shares.

Mainly stable. The increase of political revenue by 10% year-on-year is the main reason for revenue growth, but the industry is fiercely competitive. The overall market gross profit margin is 1.25 percentage points. Among them, the piglets are mainly from the growth of rings, piglets and pseudo-madness. The seedlings benefit from the increase in vaccine demand caused by the price recovery of the poultry industry. The sales volume of the new inactivated vaccines of the new tributaries of chickens has doubled to nearly 16 million milliliters.

The 17-year foot-and-mouth disease will be sold, driving the company into a new stage of growth. Yangling Jinhai has obtained the GMP certificate. The company has completed the declared O-type, OAI three-price inactivated vaccine has been approved, and the product is expected to be listed in 2017. Foot-and-mouth disease is the largest market for animal vaccines in China. The technical source of Haili's foot-and-mouth disease determines its full competitiveness, such as the smooth listing, or affects the existing market structure of bio-shares, Zhongnong Witt and other companies to divide the foot-and-mouth disease.

The employee stock ownership plan strengthens the incentives and participates in the multi-round operation of the pre-existing medical care. In 2016, the company was listed in the following year. The company implemented a shareholding plan for 8 Dong Jiangao and the remaining 80 employees to rationalize the interest mechanism. In addition, the shareholding of Kangkang Medical allowed the company to achieve the first step of the veterinary drug + human drug dual track. Supported by the rich industry background of shareholders, the company is expected to continue to integrate industry resources.

Investment suggestion: The company has a natural advantage as a potential newcomer to the foot-and-mouth disease industry. The large shareholders have abundant resources: it is worthy of attention, giving a forecast of 140 million, 220 million and 300 million in 17-19 years, corresponding to the current PE65.7, 42 and 30.9 times. , maintain the "overweight" rating.

Industrial Securities

High-energy environment (603588.SH): winning the heavy metal repair large order, verifying the core recommendation logic

Event: The company announced that it has won the bid for the construction of the chrome-containing soil pollution control project (No. 001). The total project price is 122 million yuan and the construction period is 910 days. In this regard, the comments are as follows:

Win the heavy metal repair large order and verify the core recommendation logic. The silver-containing historical chromium-containing soil pollution control project has repaired a total of 27,5925.4 cubic meters of soil, built an anti-pollution and diffusion project, built a new treatment workshop, a pharmacy room, built a soil temporary storage station, and built roads, electricity, water, and equipment. , auxiliary projects such as pharmaceuticals, with a total investment of about 148 million. The company won the bid for the 001th section, with a total project price of 122 million yuan. The source of construction funds is the national special fund. The project duration is 910 days. In recent reports, it has been repeatedly emphasized that 2017 will be a “big year” for the strong catalysis of soil remediation policies, and soil remediation orders will be accelerated. According to industry research data, the industry orders in 2016 exceeded 6 billion. Compared with 2015, the industry's order growth has begun. The company won the bid for heavy metal repair orders and verified the recommendation logic from the micro level.

The order size is the first in the industry, and the ability to take orders is strong in the national market. In 2016, the company added orders of approximately 1.3 billion in the field of soil remediation, ranking first in the industry. As early as 2014, the company implemented a number of soil remediation projects such as the Zhuzhou Qingshuitang Industrial Zone Heavy Metal Waste Slag Comprehensive Treatment Project, the Suzhou Anli Chemical Plant's original site contaminated soil treatment and restoration, and the Linxiang City's original Taolin lead-zinc mine farmland soil heavy metal treatment project. The demonstration effect is obvious. The company has established a stable technical system and research and development team in the field of soil remediation, with rich project experience. The company has strong ability to take orders, and the current repair orders are spread across 13 provinces and cities nationwide, and the first to achieve the national layout.

The waste incineration project entered the peak construction period, and the project revenue broke out soon. According to statistics, the company is in the process of 8 waste incineration power generation projects. Among them, the Sihong County Domestic Waste Incineration Power Generation Franchise Project has entered the stage of comprehensive construction, and the Hetian Municipal Domestic Waste Incineration Power Generation PPP Project has entered the substantive review stage. Judging that the company's waste incineration power generation project will enter the concentrated construction period from 2017 to 2018, and the construction contract revenue of the project will erupt.

Quickly cut into the hazardous waste market and wait for the release of capacity. In 2016, the company quickly entered the hazardous waste market and acquired and participated in five hazardous waste enterprises through cash acquisition and capital increase. Among them, Jingyuan Hongda and Xinde Environmental Protection Co., Ltd. contributed a net profit of 7.77 million yuan to the company in 2016. In 2017, the company intends to increase the capital of Yang Xinpeng Fu and Xiangyang Yuanda. After the completion of the investment, the company will hold 51% equity of Yang Xinpeng Fu and Xiangyang Yuanda respectively. The company's existing and under construction hazardous waste capacity has reached 404,400 tons / year. With the increase in the current capacity utilization rate and the commissioning of new projects, the company's operating income will continue to increase, and the cash flow situation will gradually improve.

Adequate orders in hand ensure high growth in performance. As of the first quarter of 2017, the company's on-hand orders totaled 8.768 billion yuan, of which 1.305 billion yuan had been fulfilled, and 7.463 billion yuan was still available. The amount of the order that can be fulfilled is five times the operating income of 2016, which is enough to guarantee the high growth of the performance in the next three years!

Investment suggestion: Maintain the overweight rating. The company's net profit for 2017 to 2019 is estimated to be 401 million, 564 million, and 646 million, corresponding to valuations of 28 times, 20 times, and 17 times. In 2017, the soil remediation industry ushered in a strong catalytic policy, and the environmental remediation business entered a period of high prosperity; the orders in hand were sufficient to ensure high growth in performance; In summary, maintain the overweight rating!

(Securities Times News Center)