03/09/2020

Longjing Environmental Protection (600388): Performance meets expectations. On-hand orders support company performance.
2018 results that are in line with expectations The company announced its 2018 results: operating income of $ 9.4 billion, an increase of 15 years.9%; net profit attributable to parent company 8.10,000 yuan, an increase of 10 in ten years.6%, corresponding to a relative profit of 0.75 yuan.Basically in line with our expectations. The company’s dust collector, ancillary equipment and installation business grows by 25 per year.11% to 57.4 trillion, mainly due to the rapid growth of the company’s non-electricity business orders.The desulfurization and denitrification project is temporarily suspended6.55% to 29.$ 800 million, mainly due to the demand of the power industry, orders were less than expected. The total number of reports is subject to rapid growth in short-term borrowings to 15.With an impact of RMB 450,000, the company’s financial expenses increased rapidly by 161% to 7,156.70,000 yuan; the company’s sales expense ratio (2.3%) stable, management expense ratio (5.3%), R & D expense ratio (4.6%) slightly anesthetized. The development trend has sufficient orders in hand, and the non-electricity business develops faster, supporting the company’s performance.In total, the company reported 13 billion new orders, an increase of 38% each year, of which 8.3 billion were new orders in the non-electricity industry.The “ultra-clean emissions” policy has driven demand growth in non-electrical industries such as steel, offsetting the disadvantage of reduced orders in the power industry.As of the end of 2018, the company had $ 17.2 billion in orders on hand, an annual growth of 15%, and a large accumulation of orders on hand. The company lays out new businesses such as water treatment, with high customer overlap, which is conducive to the company’s market development.The reported corporate water governance business achieved revenue 2.500 million US dollars, the company’s water treatment project is mainly for the tail water treatment of industrial enterprises, we believe that this and the company’s traditional flue gas treatment customers have a high 四川逍遥网 degree of overlap, which is beneficial to the company to obtain orders. Earnings forecast We raised our 2019e earnings forecast by 5% to 8.8.8 billion, dating 2020e profit forecast 1 billion. Estimates and recommendations The company currently can sustainably cope with June 19/20.0/14.2x P / E.Maintain the recommendation level, and raise the target price by 27% to 16 as the estimated hub moves upwards.5 yuan, corresponding to 19/20 years 19.9/17.6x P / E, compared with current expectations of 24%. Risk orders were less than expected, repayment risks, policy risks.