Weiming Environmental Protection (603568): 18 years performance growth and growth optimistic about future growth space

I. Event Overview The company released the 2018 annual report: 2018 operating income15.

47 ppm, an increase of 50 in ten years.

29%; net profit attributable to mother 7.

40,000 yuan, an increase of 46 in ten years.

01%; EPS is 1.

08 yuan / share, an annual increase of 45.


Second, the analysis and judgment of the company ‘s profits have increased significantly, and equipment sales have become the main contribution point.
1) The company’s main business is the operation of waste incineration projects, leakage treatment, kitchen waste treatment, equipment sales and technical services, and waste removal.

Among them, project operation income accounts for 64% of total income.

5%, an increase of 15 in 2018.

26%, contributing about 25.

The total operating income increased by 5%, and the growth of the project operation business mainly increased to the increase in the scale of waste incineration brought by the new commissioning projects in 2017 and 2018: the Cangnan project was commissioned at the end of 2017, the Wuyi project, and the Ruian project phase IIThe Wannian project was successfully concurrently run in September, October, and November 2018, and was trial run.

Therefore, in 2018, the total amount of domestic garbage storage in all projects was 424.

36 for the first time, growing by 14 per year.

59%, completed the grid-connected power generation12.

9.1 billion degrees, an increase of 14 in ten years.

96% contributed to the growth of carbonization revenue.

Equipment sales and technical services accounted for 32 of total operating income.

89%, an increase of 264 in 2018.

56%, contributed 71.

38% of total operating income increased; overall, leakage treatment business accounted for 0 of total revenue.

4%, an increase of 24.

7%; kitchen waste disposal business accounts for total revenue1.

66%, an increase of 28.

83%, the company handles kitchen waste 10 in total.

52, an increase of 53.

6%; In 2018, the company newly added garbage transfer transportation business and completed the removal of 14385 fences for domestic garbage, with business income accounting for 0% 成都桑拿网 of total revenue.

56%, this business mainly gradually the company in the new year of 2018 six garbage transportation contracts.

2) The cost of the company’s main business increased by 54.

18%, slightly higher than the main business revenue growth rate, mainly due to Cangnan Weiming’s formal operations and equipment sales and technical services increased.

From the perspective of cost composition, project operation, leakage treatment, kitchen waste disposal, and equipment sales cost accounted for 76% of the main business cost.

96% / 0.

82% / 3.

43% / 18.


Among them, the cost of project operations increased by 6.

At 18%, the cost of leaked plasma processing business increased by 24.
7%, the cost of food waste treatment business increased by 18.
52%, equipment sales business costs increased by 248.


The growth rate of the cost of each business is lower than the average growth rate of revenue, which indicates that under the circumstances of business operations, continuous improvement and optimization, and profitability.

The performance of Zhejiang Province has increased significantly, but the business outside the province has improved, and it continues to consolidate its leading position in Zhejiang Province.

In terms of business areas, Weiming’s environmental protection business is mainly concentrated in Zhejiang Province.

Provincial business income accounts for 90% of total revenue.

1%, less than 10% outside the province.

At the same time, the substantial increase in performance in 2018 mainly expanded business growth in the province.

81%, while revenues outside the province decreased by 3.

11%, the increase in business within the province contributed to the growth of total revenue and the consolidation of business substitution outside the province.

From a cost perspective, although the province’s business revenue grew rapidly, the cost growth exceeded revenue growth by 10 percentage points, resulting in a decline in gross profit margin2.

18%, on the contrary, the cost of operations outside the province has dropped by 14.

81%, an increase of 5.

46% gross profit margin.

From the perspective of the entire industry market, Weiming Environmental Protection’s share of the domestic waste incineration treatment market fell from 5% to 4 from 2015 to 2017.

38%, and in Zhejiang Province, the market share began on 29th of 2015.

97% increased to 35 in 2017.

85%, the level of the provincial leaders is basically consolidated, but the company’s long-term development still needs to pay attention to the expansion of business outside the province.

In 2019, the company’s profit is expected to continue to grow, and the domestic market has plenty of room.

It is expected that Weiming Environmental Protection’s 2019 performance will continue to grow, mainly due to the commissioning of newly built projects in 2018, Wuyi Project, Ruian Project Phase II, and Wannian Project, which were successfully connected to the grid for power generation in September, October, and November 2018, respectively.Promote trial operation; Jieshou project began to enter garbage and realized grid-connected power generation in February 2019.

The company has achieved fruitful results in expanding projects. In 2018, the company has a total of 11 domestic waste incineration projects and waste transportation projects, and 9 food waste treatment and leakage treatment projects. These projects will bring to the company in the future.Business with big gains.

At the same time, the macro-environment is improving, the nation’s scale-up deployment of the ecological environment, and the construction of “no waste cities” will bring considerable potential for the entire solid waste treatment market.

At the same time, the increase in project contracts will also lead to an increase in future costs, but overall, Weiming Environmental Protection has a better revenue growth momentum in the future and ample market space.

Third, profit forecasting and investment advice As the nation’s leading solid waste treatment company, the company’s expected performance in 2019 will continue to increase. The main profit growth will gradually increase the operating income brought by new and future projects. It should be noted that there are more future construction projects.Significant cost increases and increased costs for existing projects.

Thanks to the favorable domestic policies, environmental protection industries such as solid waste treatment will have breakthrough development space in the future. It is expected that the EPS for 2019-2021 will be 1.



72 yuan, currently expected to correspond to 20/17/15 times PE, give a “buy” rating.

Fourth, risks indicate that the project construction is not as good as expected; the progress of new project signing in the future is unfavorable; low-price competition; the on-grid price of waste incineration power generation has fallen.

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