Hongcheng Water (600461): The completion of the fixed increase, the incentive to land, the change of shareholders looks forward to the development of a new climate

Hongcheng Water (600461): The completion of the fixed increase, the incentive to land, the change of shareholders looks forward to the development of a new climate

From 2019 to 2021, we analyze the company’s performance growth points as follows: first, the price adjustment of the water supply business and the continuous increase in production capacity; second, the sewage treatment operation volume and price brought about by the expansion and transformation of sewage treatment projects, and bothDrainage engineering business growth; Third, the rapid growth of natural gas sales brought about by the continuous advancement of gasification Nanchang, and the continuous increase in the number of gas engineering installations.

At the same time, the completion of the fixed increase to provide capital guarantees, fair incentives to land and enhance the enthusiasm of the management team, the acquisition of the 杭州桑拿网 Three Gorges Group has brought more new space for the company’s business development.

Currently the company meets the corresponding PE estimate of 202010.

5 times, and corresponding to a high dividend payout ratio, already has investment value.

Hongcheng Water’s three major business growth points are sorted out: (1) Water supply: The adjustment of water prices has been implemented, and water supply income and profitability have significantly improved in 2019. In the future, the natural increase in water volume and the expansion of new water plants will increase revenue.

(2) Sewage treatment and water supply and drainage projects: 2020 will need to complete the first-level bidding for wastewater treatment plants, and the expansion and expansion will bring engineering business growth, and the sewage treatment volume and 深圳桑拿网 price will rise; (3) Gas business: GasNanchang is about to end. In 2019, the goal of 90% urban gasification rate needs to be achieved, and natural gas sales are expected to reach 5 in 2020.

At 5.4 billion cubic meters, both gas sales and installation revenue will continue to grow rapidly.

The fixed increase is completed, and the funds raised are mainly used for sewage upgrading and expansion projects. When the funds are in place, the company will accelerate the implementation of related projects, promote the company’s sewage treatment business volume and price to rise, and increase the income of water supply and drainage engineering business, and the transmission capacity will gradually increase.

Major shareholders participated in the fixed increase and locked for three years, demonstrating confidence in development.

The initial incentive implementation will bring more positive development: after the new chairman took office in 2015, the company’s performance growth began to change significantly; in December 2019, the equity incentive plan was implemented, recognizing the unification of interests and demands, and it is expected that the future development will be more active and income will continueGrowth, high dividends continued.

Three Gorges Group entered the stock market and became the seventh largest shareholder from the secondary market. Nanchang is one of the 12 key cooperation cities of the Three Gorges Group in the Yangtze River Protection. Hongcheng Water Industry has an absolute advantage in Nanchang’s water supply and drainage business.Expand the Yangtze River protection business.

Earnings forecast and estimation: We expect that the company’s EPS for 2019-2021 will be 0.

49 yuan, 0.

56 yuan, 0.

62 yuan, currently expected to correspond to PE estimates for 2019-2021 are 12 times, 10.

5 times, 9.

The dividend is estimated at 5 times. At the same time, considering that the company will have a cash dividend of more than 40% each year, according to the current progress forecast, the dividend return rate is expected to exceed 3%. The company’s current cumulative investment value is given at 13 times PE in 2020.Target price 7.

28 yuan, maintain “strongly recommended -A” rating.

Risk reminders: risks of changes in public utility operating prices; risks of policy changes; project progress exceeding expectations.

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