Xingrong Environment (000598): Increase in performance increased by 13.

0% SOE Reform Boosts Profitability

Xingrong Environment (000598): Increase in performance increased by 13.

0% SOE Reform Boosts Profitability

Key points of the report Description The company released its 2019 first quarter report on April 25, 2019, and achieved operating income9.

59 trillion, an increase of 7.
.

1%; net profit attributable to mother 2.

61 ppm, an increase of 13 in ten years.

0%; deduct non-attributed net profit 2.

5.8 billion, an increase of 12 in ten years.

7%.

Incident review The project is steadily advancing, leading to a steady increase in performance and the project’s reserve capacity for ongoing construction.

The company’s newly launched Wanxing incineration project in 2018 (2400 tons / day), the second phase of the Shuiqi Plant (50 tons / day), and the Zhonghe Wastewater Treatment Plant (5 tons / day), etc., will promote the upward performance of 2019Q1.

The projects put into operation in 2019 are expected to include the Longfeng Incineration Project (1500 tons / day), the second stage of wastewater neutralization (30 tons / day), and the second wastewater treatment plant in Bazhong (7.

5 day / day), three sewage projects in Jianyang, Huanyang were commissioned to operate (3.

5 days / day), waste seepage expansion project (2000 tons / day).

In addition, the Ninth Water Purification Plant will be upgraded and upgraded by 100 daily / days, and the price increase is expected after completion.

Preliminary profit growth is higher than income growth preliminary: 1) 2019Q1 gross profit margin 44.

3%, a year increase of 0.

5pct, which is equivalent to an extra thickening total profit of about 4.59 million yuan, contributing about 3.9 million yuan in net profit.

2) Credit / asset impairment losses of 14.76 million yuan, a monthly decrease of 3.92 million yuan, accrued as credit impairment losses according to the new rules for bad debts.

Financial expenses have grown rapidly.

Three fees (including R & D) total 1.

00 ppm, an increase of 10 in ten years.

0%; accounting for 10% of revenue.

4%, an increase of 0 a year.

2pc, most of which are stable; of which, financial expenses are growing fast (63.

8%), interest-based denial increases due to project advancement; management costs (including research and development) are zero.

5.6 billion, downgraded by 3 every year.

5%, controlled.

Well-funded.

Asset and liability pricing for the first quarter of 201947.

4%, an increase of 3 a year.

3pct, mainly due to the rapid growth of debt payables and advance receipts, and interest resistance to replace 23.

9%, 0 in ten years.

5pct; As of the end of 2019Q1, the company’s monetary funds22.

80 million yuan. In April, another 800 million yuan of green bonds were issued to further supplement the funds. Therefore, the foundation of integrating water environmental protection resources around Chengdu was gradually promoted.

Cash flow is good and repayments are improved.

2019Q1 sales of goods, provision of services received cash10.
1 ‰, which is 105% of the income, surpassing the increase of 4.
7pct; net operating cash flow is 2.

9.4 billion, a previous appreciation of 14.

7%, basically matching the growth rate of profits; at the same time, in the first quarter of 2019, accounts receivable and bills payable totaled 8.

4.5 billion, with a previous appreciation of 4.

9%, lower than the growth rate of revenue, all indicate that the company’s repayments continued to improve.

Profit forecast and estimation: The company’s target business average has achieved continuous development, and the merger of repurchased shares for subsequent employee stock ownership plans or equity incentives will help the company’s profitability to further improve.

It is estimated that the company’s net profit attributable to its parent in 2019-2021 will be 10 respectively.

9/12.

1/13.

300 million, 10-year growth rate was 10.

0% / 11.

3% /杭州夜网 9.

6%; corresponding PE is 13x / 12x / 11x, maintain “Buy” rating.

Risk Warning: 1.

The progress of the project is not up to expectations.