Shanghai Xiba (603200): a technologically advanced industrial water treatment faucet with a clear growth path

Shanghai Xiba (603200): a technologically advanced industrial water treatment faucet with a clear growth path

Industrial enterprises’ profit recovery + environmental protection actively and rigorously increased the third-party operating share.

We conservatively estimate that by 2020, the operating costs of the industrial processing market will approach 100 billion yuan.

From the perspective of the steel industry, the volume and price of steel products have risen in 2018, and the profitability of steel companies has continued to expand.

In 2018, steel prices continued to run at a high level, and the net profit of the steel 杭州桑拿网 industry exceeded 470 billion, achieving the best level in history.

With the recovery of earnings, capital expenditure in the steel industry has risen significantly.

From the perspective of environmental protection supervision, environmental taxes + pollution permits + high environmental protection supervision pressures increase the cost of non-standard sewage discharge by enterprises, which directly facilitates the upgrading of engineering contractors and third-party operators. The promotion of pollution permit systems is gradually accumulating, forcing environmental protection upgrades.

The company is a technology-leading chemical water treatment service provider. Its business is mainly based on industrial water treatment operations. The core team of operation and technology is stable, and it is aware of technological upgrades.

The industrial company is one of the few domestic companies that has provided various water treatment services for Baosteel Group, Wuhan Iron and Steel Group, Anshan Iron and Steel Group, Shagang Group, Maanshan Iron and Steel Group and many other large steel companies.CNOOC is one of the providers of various water treatment services.

Has multiple pharmaceutical copyrights, mainly industrial customers.

The company’s R & D and R & D expenses account for more than 5% of its annual income, which is at a high level within the industry. It also focuses on reducing costs and expanding chemical water treatment technology in the business field.

The first equity incentive grant was completed at a grant price of 19.

74 yuan / share.

Incentives are company directors, a total of 170 middle and senior managers and core employees.

Shareholder executives increased their holdings, demonstrating the company’s confidence in development.

As of February 26, the increase in the chairman’s holdings has been completed, and the increase in holdings is 1,557.

450,000 yuan, the average price of holdings is 31.

8 yuan / share.

Since October last year, many senior executives of the company have frequently increased their holdings. The increase in holdings by controlling shareholders and shares highlights the long-term value of the company.

Localized industrial water treatment business model, EPC project brings performance flexibility.

It has a large number of time-tested industrial wastewater treatment projects, which are highly replicable.

The company’s five major customers accounted for 60% of the company’s revenue over the years, concentrated in steel, petrochemical, and automotive ultra-large-scale enterprises, and the payment was safe.

From the business model point of view, the company uses on-site technical + regulatory personnel + contracted waste treatment, one-stop operation and service Lectra.

The number of steel relocation and transformation projects increased, and as a leader, it tried to obtain more EPC projects based on the “1 + 1” model.

When there is a demand in the industry and the standard is improved, the market concentration will inevitably be concentrated in high-tech and leading enterprises. The company’s growth path can refer to the clear water source from 2010 to 2015.

The company has a high gross profit margin, maintains an asset-light model, has sufficient funds, and has ample room to increase leverage, helping to increase performance.

The company’s overall gross profit margin has been maintained at more than 40%, and the asset-liability ratio has always been below 20%, which is much lower than its peers.

Abundant capital further guarantees the company’s abundant momentum for future endogenous and epitaxial development.

Earnings forecast and rating: We expect net profit for 2018-2020 to be zero.

82/1.

24/1.

61 ppm, corresponding to 36/24/18 times the 重庆耍耍网 PE, maintain “Buy” rating.

Risk reminder: Existing risk of loss of large customers, supplementary industrial water orders exceed expected risks, and increased competition in the industry