\u3000\u3000 China Tianying Inc(000035) China Tianying Inc(000035) )
Key investment points
Successfully divested urbaser, optimized the capital structure and continued repurchase to demonstrate the confidence of the management. In 2021, the company sold urbaser for 1.47 billion euros. The transaction consideration paid when acquiring urbaser was 1.15 billion euros, realizing an investment income of 320 million euros. After stripping urbaser, the company’s asset liability ratio will decline significantly, and the goodwill is expected to decline from 5.6 billion yuan to 66 million yuan. The cash inflow of about 6 billion yuan was obtained from this transaction. In addition to repaying bank loans, the company will speed up the operation of proposed and under construction projects, invest in scientific and technological innovation activities, and promote the more efficient and rapid development of the company. In addition, in November 2021, the company passed the proposal on share repurchase plan of the company, which plans to repurchase the company’s shares with its own funds. The repurchase amount is not less than 800 million yuan (inclusive) and not more than 1.5 billion yuan (inclusive), and the repurchase price is not more than 6.50 yuan / share (inclusive). It will be used to implement the company’s equity incentive or employee stock ownership plan, so as to further improve the corporate governance structure and highlight the confidence of the management.
The company has sufficient waste incineration projects and achieved remarkable results in expanding the Southeast Asian market. The company has sufficient projects in hand. By the end of 2021, the daily treatment scale of waste incineration power generation projects built and planned by the company at home and abroad was about 20000 tons. At the same time, the company actively expanded the waste incineration market in Southeast Asia. The consortium formed with Pt aka sinergi group successfully won the bid for the waste treatment cooperation project in the southern service area of Jakarta, Indonesia, with a daily treatment scale of 1500 tons. The company’s capacity release elasticity (reserve capacity / operation capacity) is 173%. In the future, with the acquisition of new projects and the commissioning of projects under construction, the company’s solid waste disposal scale will be further improved to support the stable growth of the company’s performance.
The layout of the new energy industry with light equipment has great prospects in the future. The company signed the new energy industry investment agreement with the people’s Government of Rudong County in November 2021, allocating 20% of the newly added beach photovoltaic power generation resources in the 14th five year plan of Rudong County to the company. At the same time, the company can cooperate with state-owned enterprises in Rudong County to build a regional energy center in Rudong County, including: energy storage center (gravity accelerated energy storage project), hydrogen energy center (renewable green hydrogen to synthetic ammonia technology), zero carbon energy Internet center and intelligent network connection center (future urban virtual power plant).
In cooperation with American EV company, energy storage progress exceeded expectations. In January 2022, the company signed technology license agreement and pipe capital increase agreement with energy vault and Atlas renewable, and built 100mwh energy storage project, with a total transaction amount of US $100 million. EV will advance US $25 million to build a 100mwh gravity energy storage demonstration project in Rudong, Jiangsu Province, which will be completed and put into commercial operation within 2022.
Investment suggestion and Valuation: the company’s capacity release elasticity (reserve capacity / put into operation capacity) is 173%, which supports the stable growth of the company’s performance. At the same time, it is light loaded, actively layout new energy and create a new growth curve of the company. We expect that the company’s revenue from 2022 to 2024 will be 6.261 billion yuan, 8.178 billion yuan and 9.973 billion yuan respectively, with growth rates of – 69.6%, 30.6% and 21.9% respectively, and the net profit attributable to the parent company will be 860 million yuan, 1.1 billion yuan and 1.32 billion yuan respectively, with growth rates of 18%, 27.4% and 20.6% respectively. Give the company 15-20 times PE valuation in 2022, with a reasonable share price of 5.11-6.82 yuan. It is covered for the first time, and give a buy investment rating.
Risk tip: the project promotion is not as expected, the risk of national policy change, the risk of intensified industry competition, and the risk of overseas project investment.
