High Energy Environment (603588): The IPO application of the stock company Yuhetian was approved

High Energy Environment (603588): The IPO application of the stock company Yuhetian was approved
Event: On November 22, 2019, High Energy Environment issued an announcement. The company received a notice from Yuhetian Environmental Development Group Co., Ltd., a joint venture. Yuhetian’s application for the IPO of A shares was approved by the China Securities Regulatory Commission on November 21, 2019The 18th Session of the Issuance Review Committee’s 2019 183rd Working Meeting was reviewed and approved.  Opinion: The listing of the stock company Yuhetian was approved.According to the company’s announcement on December 31, 2015, High Energy Environment acquired 100% equity of Shenzhen Xinzhuotai Investment Management Co., Ltd., which involved a transaction amount of RMB 169.56 million. Shenzhen Xinzhuotai held 20 million shares in Yuhetian.In the end, High Energy Environment indirectly holds 20 million shares in Yuhetian through its wholly-owned subsidiary, Shenzhen Xinzhuotai, accounting for 19% of its total share capital before issuance.27%, this part of shares shall not be transferred within 12 months from the date of listing of Yuhetian stock.The announcement of the prospectus disclosed by Yuhetian shows that Yuhetian intends to issue no more than 3,460 new shares on the GEM.0 million shares, 10 funds to be raised.USD 7.7 billion was used for the construction of sanitation service operation centers, smart sanitation construction projects, and supplementary liquidity projects.Yuhetian’s 2018 net profit attributable to the issuer was 18,242.990,000 yuan, calculated based on the company’s total share capital of 13840, the basic income is 1.32 yuan.Wind data show that comparable companies disclosed in the 杭州夜网 prospectus enlighten the environment (000826.SZ), Longma Sanitation (603686.SH), Xin Anjie (831370.OC), its latest price-earnings ratio (TTM) is 51.8, 17.9, 21.6 times.The listing price of Yuhetian is determined through an inquiry. Assuming that Yuhetian’s surplus is copied 20 times after the issue, the stock market variable corresponding to the high-energy environment.28 ppm, several times more profitable than investment costs. An exchange inquiry letter was received for the acquisition of equity in a hazardous waste subsidiary.On October 30, 2019, High Energy Environment issued an announcement that it is planning to acquire 40% of the equity of the company’s holding subsidiary, Yang Xin Peng Fu, by issuing shares and paying cash, Jingyuan Hongda 49.02% equity.On November 18, 2019, the company announced that it had received 深圳spa会所 an inquiry letter from the Shanghai Stock Exchange regarding this issue, requesting that High Energy Environment retain the shares of the target company, equitable pledges, environmental fines, entrusted holdings, performance changes, related party transactions, substitution benefits, internalControl, property right certificate, security risk and other issues will be disclosed within 5 trading days. Cash flow from operating activities continued to improve.In 18 years, the company’s net operating cash flow reached 3.2.2 billion, an increase of 217% over 17 years.In the first half of 19, the company’s net operating cash flow1.320,000 yuan, an increase of 116% over the same period in 18 years.Among them, the operating cash flow in the second quarter of 19 was zero.7.4 billion, an increase of 26 from the first quarter.6%.The reason for the improvement of the company’s operating cash flow was mainly due to the increase in the collection of receivables and the good return of engineering projects. Earnings forecast and rating: Based on the latest equity, we expect the company’s diluted earnings from 2019-2021 to be zero.64 yuan, 0.86 yuan, 1.12 yuan, calculated based on the closing price of 2019-11-21, the corresponding PE is 14 times, 11 times, 8 times respectively, maintaining the “overweight” level.Risk factors: Approval risk of acquisitions; Yuhetian listing price risk; intensified competition in the industry; new orders are obtained, and projects under construction are not up to expectations.