\u3000\u3000 China Tianying Inc(000035) China Tianying Inc(000035) )
The solid waste treatment business has been deeply cultivated for more than ten years, and the layout advantage of the whole industrial chain is obvious. The company, formerly known as Qidong Tianying environmental protection Co., Ltd., was founded in 2006. It is mainly engaged in the operation of waste incineration power generation and the R & D, production and sales of relevant equipment. Through a number of mergers and acquisitions of overseas technologies, the company has completed the acquisition of urbaser, and completed the layout of the whole industrial chain covering intelligent classification, sanitation, sorting, resource utilization and end disposal of urban environmental services. At present, the company is mainly engaged in five major businesses: comprehensive urban environmental services, waste disposal and incineration power generation, environmental protection engineering, industrial waste treatment and water treatment. It is one of the few companies in China with the production capacity of waste incineration and medical waste core disposal equipment. In 2021, the company’s revenue was 20.593 billion yuan, a year-on-year decrease of – 5.83%, and the net profit attributable to the parent company was 729 million yuan, an increase of 11.54% year-on-year in 2020.
Sell urbaser and move forward with light clothes, and “Teng cage for bird” promotes strategic transformation. On October 21, 2021, the company sold its 100% equity of urbaser, s.a.u. at a transaction price of about 1.5 billion euros. This sale of urbaser has a premium of about 350 million euros, with a premium rate of 30.43%. The company has received a net cash inflow of more than 6 billion yuan. In addition to repaying bank loans, sufficient cash will support the company to accelerate project investment and strategic transformation. At the end of 2020, the asset liability ratio and goodwill were 75.2% and 5.6 billion yuan respectively. After the completion of the transaction, the annual report of 2021 showed that they decreased to 54.5% and 66 million yuan respectively. With light equipment, the gross profit margin is expected to increase significantly.
The projects of waste disposal and utilization have been put into operation steadily, and the reserve capacity will promote the high growth of business in the future. According to the annual report of 2021, the company’s waste treatment business achieved an operating revenue of 5.714 billion yuan, a decrease of 14.16% over the same period of last year. A total of 12 waste incineration power generation projects located in Jiangsu Rudong, Jiangsu Qidong, Jiangsu Hai’an, Fujian lianjiang, Shandong Binzhou, Jilin Liaoyuan, Jilin Yanji, Shandong Junan, Anhui Taihe and Jiangsu Yangzhou operate efficiently and stably. By the end of 2021, the total treatment scale of waste incineration power generation projects operated by the company in China had reached 11600 tons / day. The total investment in 2021 is 1.351 billion yuan, with a cumulative investment of 5.493 billion yuan. The capacity under construction is 20000 tons. The reserve capacity will be put into operation in the next three years, promoting the high growth of waste incineration.
We have successfully built a comprehensive service platform for smart city environment and promoted steady growth in performance. According to the annual report of 2021, the company’s comprehensive urban environmental service business achieved an operating revenue of 9.084 billion yuan, a decrease of 13.28% over the previous year. In 2021, the company won the bid for many urban and municipal environmental service projects in China, such as the outsourcing project of road and river cleaning, garbage removal and transportation and rural environmental remediation services in Changjiang Town, Rugao City, the market-oriented operation project of environmental sanitation in Hebin new area, Wuhai City, and the government procurement project of environmental sanitation services in grassland Tianlu, Zhangbei County. During the reporting period, the company provided urban environmental services to 35 cities in 18 provinces, municipalities and autonomous regions.
The R & D capacity of core disposal equipment leads the country, improves the system of scientific and technological progress, and promotes the transformation of achievements. The company provides high-quality waste incineration power generation overall solutions and industry-leading new core equipment, involving the design, manufacture, installation, commissioning, operation and handover of domestic waste incineration power generation, comprehensive treatment of construction waste, food waste treatment, sludge treatment, hazardous waste treatment, intelligent waste classification and other equipment. After years of research investment, the company has independently developed a number of innovative core technologies to fill the national technical gap, such as the world’s first set of fly ash plasma melting system, the 850 ton / day large tonnage modular domestic waste incineration mechanical grate furnace of the first set of major equipment products in Jiangsu Province, and the first smart cloud platform in the industry.
Cutting into the field of comprehensive new energy operation, gravity energy storage is expected to become a new growth point of the company. In 2021, the company plans to establish “Jiangsu nengying New Energy Technology Development Co., Ltd.” with its own funds or self raised funds, with a registered capital of 2 billion yuan. Recently, the company signed the new energy industry investment agreement with Rudong County policy to jointly build a zero carbon energy demonstration center in the Yangtze River Delta, participate in Rudong beach photovoltaic power generation project and equity participation in the development of offshore wind power project, and lead the R & D, manufacturing and implementation of Rudong gravity energy storage power generation and equipment manufacturing, Invest in the construction of zero carbon heating infrastructure platform company, zero carbon transportation infrastructure platform company and regional energy Internet center platform, and officially realize the implementation of new energy strategy.
For the first time, the company is rated as “overweight”: the company has continuously improved itself over the years. At present, it has completed the layout of the industrial chain and has a perfect management system. After the stripping of urbaser, there will be sufficient cash on hand, the main business will return to China, the gross profit level will be greatly improved, and there is a lot of room for development. The company continues to operate advantageous businesses such as environmental sanitation services and waste incineration. At the same time, it is also actively developing new energy industry. As the second growth point of the company, the company is expected to continue to enjoy the development opportunities of Jiangsu Rudong gravity energy storage, sea breeze and photovoltaic in the future. We predict that the company’s revenue from 2022 to 2024 will be 6.047 billion yuan, 7.367 billion yuan and 8.708 billion yuan respectively, with a year-on-year increase of – 70.64%, 21.84% and 18.19% respectively. The net profit attributable to the parent company was 819 million yuan, 1069 million yuan and 1351 million yuan respectively, with a year-on-year increase of 12.28%, 30.59% and 26.43% respectively. EPS is 0.32, 0.42 and 0.54 yuan respectively, and the corresponding PE is 14.7, 11.3 and 8.9 times respectively. For the first time, give the company a “overweight” rating.
Risk warning: the sale of urbaser may pose a risk of large-scale decline in China Tianying Inc(000035) ‘s future revenue; The project construction progress is lower than the expected risk; The public data used in the research report may have the risk of information lag or untimely update; Policy risk.
