Longjing Environmental (600388) Annual Report Comment: Non-electricity orders doubled, non-gas environmental protection achieved breakthrough

Longjing Environmental (600388) Annual Report Comment: Non-electricity orders doubled, non-gas environmental protection achieved breakthrough
Non-electricity orders surged, and profits increased by 11% in 2018. The company disclosed its 2018 annual report and realized revenue of 94 in 2018.20,000 yuan, an increase of 16% in ten years; net profit attributable to mother 8.10,000 yuan, an increase of 11% in ten years.The company’s revenue growth was mainly due to the release of orders in the non-electricity market (up 98%) and small changes in power orders (total 10%). Non-electricity orders doubled, cash flow improvement annual report revealed that the company’s new orders increased by US $ 13 billion in 2018, an increase of 38%; of which electricity orders were US $ 4.7 billion, an increase of 10% per inch; non-electricity orders were US $ 8.3 billion, an increase of over 98%.There are 17.2 billion orders in hand at the end of 2018, an increase of 15% every year.In 2018, the steel price was at a relatively high level, and the company’s overall gross profit margin decreased by 0.6 up to 24.08%.In terms of separate business, the company’s dust collector business revenue increased by 25% to 5.7 billion US dollars, and the desulfurization and denitration project revenue decreased by 6% to 3 billion US dollars.Cash flow from operating activities in 20184.14 ‰, a year-on-year increase of 21%, mainly due to the increase in contracts, the increase in advance receipts, and the company’s enhanced repayment. Breakthrough in the field of non-gas environmental protection In 2018, the company acquired New Continental Environmental Protection 92.5% equity, the target 2017-2019 profit commitment is 0.20/0.25/0.3 billion.In addition, the company actively expanded its non-gas 天津夜网 environmental protection business and newly signed VOC governance.3.7 billion, tube transport 3.400 million, soil remediation 0.1.7 billion industrial sewage ponds8.1 billion.The company’s USD 1.8 billion transferable debt to be issued for environmental protection transportation equipment, wastewater treatment, VOC treatment, etc. has completed the first round of feedback; the company’s USD 1.5 billion green asset-backed notes have been registered.The company’s good operating cash flow and external financing support the company’s future development in the non-gas environmental protection field. The non-electricity and atmospheric governance leader, and the continued development of non-gas business is expected to have an EPS of 0 in 2019-21.88/1.05/1.17 yuan / share, currently corresponding to 15 times PE in 2019.The company is a leading company in atmospheric governance, benefiting from the release of atmospheric governance needs in the non-electricity sector, and non-electricity orders will grow rapidly. At the end of 2018, the company has orders in hand of USD 17.2 billion, while expanding non-gas environmental protection business to ensure stable growth in future performance.Taking into account the company’s high non-electricity sector’s higher city share and performance stability (equal company’s 19-year performance equal range), we believe that the company’s ownership will have a premium, given 19 times PE in 19 years, a reasonable value of 15.8 yuan / share, give “Buy” rating. Risk reminders: expansion of plant air treatment orders; demand release in non-electricity areas exceeds expectations; engineering construction exceeds expectations.