Hanlan Environment (600323): High growth performance of solid waste surpasses expectations and is optimistic about long-term development

Event: Han Lan Environment released the semi-annual report for 2019 on the evening of the 15th; in the first half of 2019, the company achieved operating income of 26.

7 ppm, an increase of 16 in ten years.

63%; Net profit attributable to shareholders of listed companies.

61 ppm, a decline of 7 per year.

78%; non-net profit attributable to the parent company is 4.

470,000 yuan, an increase of 25 in ten years.

75%; deducted average expected return on net assets is 7.

38%, an increase of 0 every year.

76 units.

Comments: 1.

Revenue maintained a higher growth, and the performance exceeded market expectations. In the first half of 2019, the company achieved operating income26.

7 ppm, an increase of 16 in ten years.

63%; Net profit attributable to shareholders of listed companies.

61 ppm, a decline of 7 per year.

78%; the net profit attributable to the parent company was 4.

470,000 yuan, an increase of 25 in ten years.

75%; The growth rate of the company ‘s net profit after deductions for the first half of the year greatly exceeded the growth rate of net profit attributable to the mother.Such bring higher non-recurring gains and losses.

Overall, the company’s performance in the first half of 19 exceeded market expectations.


Four main businesses: solid waste business with high growth, active external expansion, the core driving force for performance growth; gas business actively expanding downstream customers, with significant results, actively adopting flexible measures to alleviate rising costs; transportation operations, drainage business water prices have increased significantly, Revenue has increased significantly.

Solid waste business: high growth in revenue performance, positive external expansion, the core driving force for performance growth; the company’s solid waste business achieved main business income10.

980,000 yuan, an increase of 37 in ten years.

01%, revenue accounted for 41.

1%, the company’s highest revenue business segment; the company’s waste incineration power generation in the first half was 8.

5.9 billion degrees, an increase of 9 in ten years.

6%; settlement power 7.

3.1 billion degrees, an increase of 7 in ten years.


The solid waste business segment is the core driver of the company’s high annual growth in the first half of the year.

Since the beginning of this year, the company’s projects in progress have been progressing smoothly and vigorously. Among them, the Langfang waste incineration project and the Shunde waste project have been put into operation at the initial stage. Among the projects under construction, the Harbin restaurant and kitchen project has been commissioned and the southern Zhangzhou waste incineration power generation project has been commissioned.The completion will enter the commissioning phase. The Nanhai No. 3 Waste Incineration Power Plant project is expected to be completed by the end of September. The Foshan Green Industrial Service Center Project (Nanhai) hazardous waste project is expected to be completed by the end of the year, and other projects under construction are also progressing smoothly.

The company’s Jiangxi Ganzhou hazardous waste project has been operating this year, and the project’s hazardous waste disposal scale is 7.

2Every year / year, covering the three major treatment processes of incineration, physical and chemical comprehensive utilization, and landfill. Its formal commissioning effectively contributes to the company’s performance. At the same time, as the company’s first hazardous waste project in operation, its smooth operation is the company’s future hazardous waste business.The continuous expansion and operation have laid a good foundation.

The two major subsidiaries in the company’s solid waste sector, Green Power Company and Hanlan (Xiamen) Solid Waste, respectively achieved revenue3.

500 million and 3.

8.7 billion, achieving net profit1.

3.1 billion and 0.

8.9 billion yuan, with a net profit increase of 44.18 million yuan and 1182 million respectively over the same period of the previous year; other profits from the company ‘s solid waste sector contributed to the Jiangxi hazardous waste project, the Shunde waste project was put into operation and good operation, and the project revenue recognition of projects under construction was recognized.
During the reporting period, the company actively expanded new projects and achieved better results.The company recently signed a cooperation framework agreement with Shengyun Environmental Protection. The company has initially decided to undertake the Jining municipal solid waste incineration power generation phase II project (800 tons / day), and announced the municipal solid waste incineration power generation phase II project (1000 tons / day). Haiyang CityDomestic waste incineration power generation project (500 tons / day), Ulan Qab domestic waste incineration power generation project (1200 tons / day), Mengyin County domestic waste incineration power generation project (500 tons / day) and Huaian City domestic waste incineration power generation projectThe period project (800 tons / day) has a total of 6 domestic waste incineration power generation projects, with a total scale of 4,800 tons / day; the company’s on-hand waste incineration project scale is about 2.

76 days / day, of which 1 has been put into operation.

48 lowest price / day (including the Shunde project with equity participation), under construction and preparation1.

At the beginning / 28, the cooperation between the company and Shengyun Environmental Protection could be increased to 3 due to the company’s total waste incineration project.

24 highest standards / day will effectively enhance the company’s future performance growth potential and sustainability.

Gas business: The downstream customers have achieved significant expansion results, and actively adopted flexible measures to mitigate rising costs. The gas business segment achieved revenue in the first half of the year.

27 ppm, an increase of 17 in ten years.

2%, revenue accounted for 34.


In the first half of the year, the company actively seized the possibility of upgrading the village-level industrial park and the clean energy transformation of ceramic enterprises, actively explored new users, and promoted the added value of gas sales and revenue; however, the cost of the company’s gas supply rose in the first half, leading to the company’s gross profit marginSignificantly decreased by 5.

2 points to 18.

16%, resulting in a slight decline in the gas business performance contribution of the company ‘s gas business in the first half of the year; in the face of gas source growth, the company took the initiative to flexibly lock purchase prices and procurement cycles, partially alleviating the pressure on reported gas source procurement costs to rise, the secondQuarterly earnings growth slowed.

The core of the company’s report is to actively promote the construction of hydrogen refueling stations in Nanhai District, of which Songgang Station and Taoyuan Station will be completed and put into operation within the year.

Water supply and drainage: The water supply business remained stable, the drainage business benefited from the upgrading of the water price, and the revenue increased rapidly. The water supply business realized the main business income in the first half of the year.

2.2 billion, down slightly from 0 previously.

78%, revenue accounted for 15.

8%, gross margin decreased by 6.

6pct to 24.

1%; in the first half of the year, the company continued to advance the construction of the fourth phase of the South China Sea Second Water Plant project to strengthen the security of water supply in the South China Sea.

Drainage business realized main business income1.

420,000 yuan, an increase of 37 in ten years.

37%, income 合肥夜网 accounted for 5.

3%, gross margin 40.

5%, stable.

The high revenue growth of the drainage business is mainly from August 2018 to the first half of 2019. Six sewage treatment plants have implemented new unit prices in accordance with relevant agreements for upgrading and upgrading.The average annual price increased by 11.

34%, the average price of sewage treatment business from April to June increased by 25 compared with the average price in 2019.


In the future, other sewage treatment plants of the company will gradually promote the upgrading and implementation of new water prices, and the revenue from drainage business is expected to maintain a high growth.

During the reporting period, due to policy adjustments, the company withdrew from the Lishui River Basin Governance Project. At present, it is promoting the transfer of assets such as asset verification, asset evaluation, allocation, and exit compensation.


The comprehensive gross profit margin decreased slightly; the expense rate level was stable; the company’s comprehensive gross profit margin was 29 in the first half of 19 with good cash flow.

79%, 33 compared to the same period last year.

An improvement of 97% was mainly due to the decrease in gross profit margin of the gas and power supply business.

Among the company’s four major businesses, the solid waste business has a gross profit margin of 40.

1%, rising by 0 every year.

9 points; gross profit margin of gas business 18.

16%, a decline of 5 per year.

2pct; gross profit margin of water supply business is 24.

1%, down 6 from the same period last year.

6pct; gross profit margin of sewage treatment business 40.5%, a decline of 0 per year.

7 points.

The sum of the company’s three expense ratios and R & D expense ratios is 12.

14%, compared with 12 in the same period last year.

29% was basically the same, reflecting the company’s good cost control ability.

Among them, the company management fee is 1.

530,000 yuan, an increase of 27 in ten years.

87%, the strength of the increase, mainly due to the increase in the management of the virtual fair incentive fee and business expansion increased merger unit, the management expense ratio (excluding research and development expenses) is 5.

74%, compared with 5 in the same period last year.

twenty three%.

Company financial expenses 4.

04%, compared with the same period last year 4.

52% decreased slightly.

In the first half of the year, the company sold 24 commodities and received cash for labor services.

10,000 yuan, the cash ratio is 90.

0%, compared with 93 in the same period last year.

9% fell slightly; net cash flow from operating activities was 4.

1.3 billion, a decrease of 4 over the same period last year.

9%; net cash flow from investment activities of the company is -16.

30,000 yuan, -9 compared with the same period last year.

12 million US dollars increased by 78%, mainly due to additional capital investment in solid waste projects; the company has monetary funds in hand12.

900 million, an increase of 11 in ten years.


On the whole, the company’s cash flow situation remains relatively high, and the currency in hand is plentiful. At the same time, the company’s convertible bond plan and short-term financing bond program have been advanced in an orderly manner, and the three have effectively ensured the company’s project progress and performance.


Profit forecast and investment advice The company strives to advance the “big solid waste strategy” and further builds a solid waste vertical and horizontal business layout.

Initially perfected the entire industrial chain of solid waste treatment covering front-end sanitation, middle-end collection and transfer, and end-of-life treatment; the company has achieved full coverage of pollution sources such as municipal waste, industrial hazardous waste, and agricultural organic waste in cross-cutting areas;”No waste city” ability to provide total solutions.

The company is actively developing and has a large number of projects in hand. The continuous increase of solid waste projects and the successive landing of projects in the future will effectively guarantee the company’s continuous improvement and growth.

In the gas business field, the company actively expands downstream customers. The coal industry in the South China Sea replaces the expansion of the 2020 time window with coal. It is expected that the progress will be accelerated, which will help promote the company’s customers to add and rapidly increase gas consumption.Development, the future revenue of the gas sector will maintain higher growth.

The company’s executive compensation incentive program for senior management this year includes a combination of short-term incentives and long-term incentives. The short-term incentives include basic annual salary and performance annual salary, and the long-term incentives are in the form of virtual distribution units. The incentive program will increase team motivation and enhancePerformance growth drivers.

The expected performance for 2019-2021 is 8.

7, 11.

0, 12.

5 ppm, corresponding to an estimated PE of 15.

3, 12.

2, 10.

7 times, maintenance is highly recommended.


Risk reminder: Project advancement and operation effects are not up to expectations, the proportion of engineering equipment revenues will increase, lower the overall gross profit margin, convertible bond issuance is not approved, the gas business gross profit margin is not improved, and the overall systemic risk.