Zhefu Holdings (002266) Research Review: Proposed Acquisition of Shenlian Environmental Protection to Enter Hazardous Waste Projects and Commence Operation

Zhefu Holdings (002266) Research Review: Proposed Acquisition of Shenlian Environmental Protection to Enter Hazardous Waste Projects and Commence Operation

I. Overview of the event Recently we participated in the company survey and exchanged ideas with the company leaders on the company’s development strategy.

合肥夜网 Second, the analysis and judgment of the layout of emerging industries is positive. Huadu Nuclear Equipment will benefit from the re-launch of nuclear power by the company in 2008. It started as a hydropower equipment business in the early years.

Under the background of the continuous growth of domestic hydropower installed capacity and the deteriorating competitive landscape in the industry, the company has steadily promoted business transformation and upgrade through the acquisition of equity of Huadu Nuclear Equipment, 2345, Cansun Culture and other companies, and practiced “Big Energy + Internet””Investment in other emerging sectors” development strategy.

The subsidiary Huadu focuses on the development of control rod drive mechanisms. The product is one of the core components of the three generation nuclear power units. After the acquisition, the company’s integration in the manufacturing industry will help it realize the industrialization of technology.

Huadu nuclear equipment has been able to maintain a compound growth rate of about 10% in the past three years, with solid profits. It will fully benefit from the restart of domestic nuclear power in the future.

It is planned to acquire and apply for joint venture environmental protection to enter the hazardous waste industry. It is worth looking forward to the concentrated production of the project. In March 2019, the company will disclose a major asset restructuring plan. It plans to acquire 100% equity of Shenlian Environmental and 40% equity of Shenneng Environmental, which are controlled by major shareholders. The target price is 14.5 billion.Yuan, a total commitment of 2020 performance13.

500 million, corresponding to PE 11x.

Shenlian Environmental Protection adopts advanced high-temperature melting technology, which has strong metal enrichment ability, low landfill cost and outstanding profitability.

According to the company’s response to the exchange’s inquiry in September, Shenneng Environmental Protection 40, which was put into operation in February this year, announced that the capacity of hazardous waste (including solid waste) projects has climbed well, 77 Taixing Shenlian, 30 Power Plant Lanxi self-supporting projects are expected toApplying for hazardous waste trial operation licenses in February and April 2020 will continue to provide momentum for the company’s profit growth.

Hydropower equipment reduces losses, investment income is stable, and industry investment returns are good. The competition in the hydropower equipment industry continues to intensify. In 2018, the company successfully reduced hydropower equipment losses by exploring overseas markets and reducing costs.With a construction period of 59 months, the contracted electricity price is high, and the additional purchased electricity is large, which will increase the company’s profit after commissioning.

In terms of industrial investment, the company’s investment in Huadu Nuclear Equipment, 234, 5 and Canstar Culture is in good profit and is expected to continue to contribute to profit.

Third, the investment proposal is optimistic about the sustainable release of the potential of Shenneng Environmental Protection under the dividend of hazardous waste industry. Assuming that the issue can be implemented within the year, is it expected (after regeneration) in 2019?
EPS is 0 in 2021.

19/0.

29/0.

35, corresponding to the current consistent PE22 / 14 / 12x, the company’s current PB 2.

55x, located in the bottom range since listing. At the same time, the fundamentals have changed positively. The performance growth is worth looking forward to. The first coverage is given, and a “recommended” rating is given.

4. Risk warnings: 1. Asset injection matters are less than expected; 2. Nuclear power restart progress is less than expected; 3. Political risks of overseas business.