Key investment points
Key recommendations focus on the following: ‘ Miracle Automation Engineering Co.Ltd(002009) for the , Grandblue Environment Co.Ltd(600323) , China water, Jiangxi Hongcheng Environment Co.Ltd(600461) , Yutong Heavy Industries Co.Ltd(600817) , Henan Bccy Environmental Energy Co.Ltd(300614) , fulongma, China Resourcesand Environment Co.Ltd(600217) .
Suggestions for attention: Wangneng Environment Co.Ltd(002034) , Chongqing Sanfeng Environment Group Corp.Ltd(601827) , conch entrepreneurship, Jiangxi Jovo Energy Co.Ltd(605090) , Beijing Capital Eco-Environment Protection Group Co.Ltd(600008)
Latest view: focus on sustainable growth renewable resources & marginal improvement of undervalued value: cash flow, high dividend, new track. 1) Sustainable growth renewable resources, key recommendations: reuse of power batteries [ Miracle Automation Engineering Co.Ltd(002009) ] pe18 times in 2022, continuous doubling of scale from 2020 to 2021, and three times of scale expansion from 2022 to 2024; Hazardous waste recycling [ Beijing Geoenviron Engineering & Technology Inc(603588) ] in 2022, it is considered to increase pe19 times, increase by 30% from 2016 to 2021 + continue in the future, and the operating profit accounts for 60% +. 2) Undervalued value + marginal improvement, ① undervalued value + cash flow improvement: it is recommended that the leading countries in the [Everbright environment] industry make up about 8.1 billion yuan of arrears, the stock subsidy can be solved within a certain period, superimpose their own development cycle, and the cash flow welcomes the return of improved value; [ Dynagreen Environmental Protection Group Co.Ltd(601330) ] the arrears paid by the state account for 16% of the net assets at the end of 2021, and the asset structure has great flexibility to improve. ② Undervalued + High Dividend: it is recommended that [Everbright environment] pay a dividend of HK $0.34 in 2021, with a dividend rate of 7.04%; [ Jiangxi Hongcheng Environment Co.Ltd(600461) ] the dividend yield is 6.67%, and it is promised that the dividend proportion from 2021 to 2023 will be ≥ 50% to provide a margin of safety. ③ Underestimated value + new track: focus on recommending [ Fujian Longking Co.Ltd(600388) ] the improvement of the main business structure of the leader in atmospheric governance, and strategic cooperation Zijin Mining Group Company Limited(601899) cutting into new energy.
The Ministry of environment issued guidelines for the warehousing of ecological and environmental protection financial support projects, vigorously promoted the EOD model and strengthened financing support. The guide clearly lists EOD and PPP mode projects as support objects. EOD mode refers to promoting the integrated implementation of ecological and environmental protection projects with strong public welfare and poor profitability and related industries with good returns through joint operation, changing from declaration to normalization after warehousing. The warehousing scope includes air pollution prevention and control, water ecological environment protection, comprehensive treatment of key sea areas, soil pollution prevention and control, agricultural and rural pollution treatment, solid waste treatment and disposal and comprehensive utilization of resources, ecological protection and restoration, other environmental treatment and other fields. The warehousing project is expected to obtain more financing support to promote project development.
Carbon neutral builds the investment framework of environmental protection industry from the front end, middle end and back end, and is bullish on the long-term rise of EU carbon price and CCER in the short term. 1) Front end energy substitution: adjust the energy structure and pay attention to the demand for environmental sanitation new energy equipment and renewable energy substitution. 2) Middle end energy conservation and emission reduction: promote industrial transformation and pay attention to energy conservation management & Application of emission reduction equipment. 3) Back end recycling: promote the recycling of renewable resources such as waste classification, waste household appliances / cars and hazardous waste recycling. 4) Carbon trading: encourage the development of CCER projects such as renewable energy, methane utilization and forestry carbon sequestration. The development of China’s carbon market is similar to that of the European Union. It already has the prototype of total amount control & market regulation mechanism. At present, there is much room to improve the transaction scale and covering industries, and the carbon price is far lower than overseas. The tightening of total amount drives the carbon price to rise for a long time. The approval of CCER demand release is expected to restart. We expect the scarcity price of CCER to rise in the near future.
Steady growth + new tools + new fields, comprehensively recommend low-carbon environmental protection assets: 1) environmental asset value + Growth Logic 2.0: a) steady growth + new tools + new fields, from single dimension to combination. Policy +: double carbon macro policy, strengthening infrastructure investment; Mode +: REIT s improves the return on assets and opens the growth ceiling; Space +: the second growth curve. B) The value of cash flow driven by marketization is further highlighted: policy tools such as CCER green power, waste incineration bidding and marketization of water price enhance the certainty of return and improve cash flow. 2) Under the new logic, the valuation anchor has been significantly improved: undervalued + low position + growth, improved model and cash flow, and improved valuation. 3) Suggestions: a) steady growth / high dividend / REITs: waste incineration [ Dynagreen Environmental Protection Group Co.Ltd(601330) ], water + pipe network [ Beijing Capital Eco-Environment Protection Group Co.Ltd(600008) ] [ Jiangxi Hongcheng Environment Co.Ltd(600461) ], water supply price increase + direct drinking water [China water]. B) New track: renewable resources: the most economical carbon premium + price increase of resource products: hazardous waste recycling [ Beijing Geoenviron Engineering & Technology Inc(603588) ], wine tank recycling [ Road Environment Technology Co.Ltd(688156) ], power battery recycling [ Miracle Automation Engineering Co.Ltd(002009) ], recycled plastics [ Shandong Intco Recycling Resources Co.Ltd(688087) ] [ Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) ]; Hydrogen energy: [ Jiangxi Jovo Energy Co.Ltd(605090) ]; High matte: [ Zhejiang Weiming Environment Protection Co.Ltd(603568) ].
Latest research: Shandong Intco Recycling Resources Co.Ltd(688087) 2021 annual report comments: deduct non high increase by 79%, increase both volume and price, and enhance profitability; Comments on fulongma’s 2021 annual report: the profit of environmental service continues to increase, and the equipment cost is under pressure Shandong Intco Recycling Resources Co.Ltd(688087) : it is planned to expand the 100000 ton multi category recycled plastic project, opening up growth space.
Risk tip: the policy promotion is less than expected, the interest rate rises more than expected, and the fiscal expenditure is lower than expected
