Hanlan Environment (600323): Counter-cyclical acquisition of assets to reproduce the crown and development ideas

Hanlan Environment (600323): Counter-cyclical acquisition of assets to reproduce the crown and development ideas

Key points of the report Event description On June 6, the company announced that it had a mid-term cooperation agreement with Shengyun Environmental 北京夜生活网 Protection. The company purchased Shengyun Environmental Protection including, but not extending, Jining Waste Incineration Phase II, Xuancheng Waste Incineration Phase II, Haiyang Waste Incineration Power Generation Project, WulanchaWaste incineration power generation project, Mengyin waste incineration power generation project, and other projects that the two parties have agreed to need to cooperate in investment, construction and operation.

The event commented that the five waste incineration projects acquired had a production capacity of 3,850t / d.

The company clearly acquired Jining Phase II (800t / d, total investment 400 million) and Xuancheng Phase II (1,000t / d, total investment 3).

600 million), Haiyang project (500t / d, total investment 2.

500 million), Wulanchabu project (1,050t / d, total investment 5).

The total production capacity of 500 million) and Mengyin project (500t / d) is 3,850t / d. The first four are under construction and the Mengyin project is in preparation.

According to the 2018 Corporate Bonds Tracking Rating Report, as of May 2018, the construction progress of Xuancheng Phase II & Haiyang Project was 40%, and the construction progress of Jining Project was 30%.

The other five projects are worthy of attention, with a production capacity of 4,700t / d.

Judging from the company’s latest business registration information, the company newly established and merged a total of 9 subsidiaries in March (including 5 explicitly announced and 4 unidentified), and 1 newly established in May (not announced), soThere are five subsidiaries that are not specified in the announcement but the business registration information has been disclosed.

According to information from the Chinese Government Procurement Network, the five companies have a total capacity of approximately 4,700t / d, including the Xilinguole Project (500t / d), the Huaian Project (800t / d), the Baotou Project (2,000t / d), and Fengcheng Shengyun500t / d) and Tumen Zhongke Solid Waste (900t / d). These projects that have not yet been formally announced may be the company’s pending projects.

The company acquired assets through counter-cyclical low-price acquisitions, and reproduced the development idea of M & A to create the crown.

Hanlan is a company with a stable business operation. Both bidding and mergers and acquisitions give top priority to the rate of return. In 2014, under the transfer of President Jin Duo, the acquisition of Chuangguan was achieved, the production capacity was expanded, and the waste incineration business was realized.National layout.

From the operating results, the company’s ton of waste on-grid electricity from 334 kWh before the merger and acquisition to 266 kWh of the year of acquisition, after three years of intensive cultivation, the ton of waste on-grid electricity to 309 kWh, the effect is significant.

The acquisition of Shengyun Assets is similar to that of the previous year’s crown. It achieved 厦门夜网 leapfrog development through counter-cyclical extension of price mergers and acquisitions, which transformed into intensive cultivation and significantly improved asset profitability.

It is estimated that the company’s net profit after deducting non-return to motherhood will be 8 in 2019-2021.

500 million, 1.1 billion, 12.

200 million, the corresponding PE is 14x, 11x, 9x respectively, given a “buy” rating (without considering the impact of this merger).

Risk Warning: Risk of M & A failure; project construction progress is less than expected risk.