Phillip Securities Group
Please note that the Day Light Saving of Europe and US will be effective on April 1st and March 11th respectively. The trading hours for those relevant contracts will be 1 hour earlier. Any questions, please contact us at 22776677.For details, please visit our foreign futures website or contact us at 22776677.Moreover,the spread of USD/JPY is low as one pip.Please click here for details
 
  Phillip Investor Notes

28-03-2024(Thu) 27-03-2024(Wed) 26-03-2024(Tue) 25-03-2024(Mon) 22-03-2024(Fri)
Page : 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 |
Investor Notes - Phillip Securities (HK) Ltd
Past Investor Notes *Advertisement*
Phillip Home Send to Friends Free Subscription Give Comments ¤¤¤åª©
28 Nov, 2016 (Monday)

            
ZHONGDI DAIRY(1492)
Analysis¡G
China Zhongdi Dairy Holdings (1492) mainly operates two major businesses : dairy farming business and livestock import trading business. Its revenue for the six months ended 30 June 2016 amounted to RMB504 million, representing a year-on-year increase of 119%. The increase was mainly attributed to an increase in the sales of raw milk of newly constructed dairy farms. Profit after biological fair value adjustments increased by 55.1% to RMB65.94 million. The Group plans to construct or reconstruct a total of four farms. Upon completion of those four farms, the designed capacity of its dairy farm network will nearly double from 60315 (head of dairy cows) currently to 112,847. (I do not hold the above stock)
Strategy¡G
Buy-in Price: $0.83, Target Price: $0.95, Cut Loss Price: $0.77

GREENLAND BROAD(1253)
Analysis¡G
Broad-Greenstate primarily devotes itself to construction services of municipal and landscaping projects. Its major clients include national and local governments as well as state-owned enterprises, who contribute to more than 90% of the company`s revenues. In the past five years, the company`s results maintained a high growth, with the compound annual growth rates of the company`s revenues and net profits between 2011 and 2015 reaching 28.6% and 51.3%, respectively. In H1 2016, the company announced 3 PPP projects totaling RMB1.8 billion. One of the three projects started construction during the period, whereas the other two projects will start construction in 2017. It is projected to drive substantial increase in the revenues of the next two years. Additionally, after the acquisition of Shanghai DTG Architectural Engineering Design Co., Ltd., the company`s architectural design capability and ability to undertake PPP projects have been further sharpened. Hence, it is believed that the company will be able to win more orders of PPP projects in the future.
Strategy¡G
Buy-in Price: $1.21, Target Price: $1.53, Cut Loss Price: $1.05


KANGDA ENV (6136. HK) - Accelerating PPP Projects to Improve Performance

Mid-term Performances below Expectations

In 1H 2016, Kangda International Environmental Company Limited realized a revenue of RMB902 million, up by 15% from RMB785 million over the same period last year. Specifically, the revenue from construction was the main driving force of the revenue growth. First, as more BOT projects were implemented, the revenue from which increased by RMB116 million YoY to RMB433 million. Second, financial revenue increased slightly by RMB36 million YoY to RMB205 million, while the revenue from operations dropped by RMB35 billion YoY to RMB263 million, offsetting a part of the growth. The net profit growth was lower than expectations, dropped by 13.76% YoY to RMB122 million. The EPS decreased by 17.9% YoY to RMB0.0546, mainly attributable to the decrease in gross profit margin and the rapid growth in expenses over the period.

In respect of profitability, the gross profit margin fell by 5% to 42% YoY, mainly affected by "replacing the business tax with a value-added tax". In respect of costs, administrative expenses increased significantly by 25.8% YoY to RMB105 million, while financial expenses increased by 10% YoY to RMB130 million. Taken together, the net profit margin reached 13.52%, representing a YoY decrease of 4.5%.

PPP Projects Speed Up to Boost Performance

In 2016, the company's traditional water treatment capacity began to resume growth. As of the end of October, the company's total daily sewage treatment capacity reached 2.969 million tons, up by approximately 16.3% YoY, with an added treatment capacity of 192,500 tons/day; and sewage treatment capacity in operation reached 2.309 million tons, up by about 9.1% YoY. In addition, the company was further involved in the sludge treatment industry, adding a sludge treatment capacity of 400 tons per day within the period, which is expected to work with sewage treatment projects to enhance the company's competitiveness.

The company seized the opportunities brought by the PPP model and gradually transferred its business focus from the traditional water projects to the PPP projects. Up to now, the company has newly added three PPP order items (Guangdong Yunan PPP Project, Shandong Rushan PPP Project and Henan Hebi PPP project), with a total investment of RMB3.15 billion. Moreover, the company also gained more than 10 BOT and TOT projects, with a total investment of RMB1 to 2 billion. Benefiting from favourable policies, the company actively involved itself in transformation and PPP projects. With years of experience in the water markets of second- or third-tier cities, the company is expected to acquire and complete more PPP projects, boosting future performance with great rate of return.

Significant Revenue Growth from Investment after Buying into Zhongyuan Asset Management Co., Ltd.

On September 1, the company acquired 15% equity of Zhongyuan Asset Management Co., Ltd. for RMB450 million in cash. Zhongyuan Asset, the only local asset management platform in Henan Province, signed a strategic cooperation agreement on finance and eco protection with some municipal and county-level governments in Henan Province (for example, Xinxiang City, Hebi City and Jiaozuo City). The agreement is expected to bring more PPP projects to further consolidate the company's first-mover advantage in the number and project promotion.

Overall, although the company's performance growth is lower than expectations in 1H, we are confident about the rapid growth in the performance for the next two years. With the PPP projects gradually yielding results, the company's performance is expected to usher in the turning point. Therefore, we give the company an estimation of 12.5x PE in 2017 and the target price is HK$2.38. Also, the "Buy" rating is maintained. (Closing price at 24 November 2016)

Risk Warnings

New projects fell short of expectations;

Yield rate of PPP projects fell short of expectations;

Continued depreciation of the RMB;

Financials

Click Here for PDF format...




Recommendation on 28-11-2016
RecommendationBuy
Price on Recommendation Date$ 1.940
Suggested purchase priceN/A
Target Price$ 2.380
Writer Info
Wang Yannan
(Research Analyst)
Tel: 86 21 51699400-107
Email:
wangyannan@phillip.com.cn

Local Index
       Index    Change   Change%

World Index
       Index    Change   Change%
  

A-H spread
Stock Code H share
Price
A share
Price
H share
discount


Oversea Research Reports


Investment Service Centre



Enquiry : 2277 6666 OR investornotes@phillip.com.hk
If you cannot read this e-mail in the proper format, please click here to view the web version.

Phillip Research - Hong Kong ½÷¥ß¬ã¨s³¡ ¡V ­»´ä¤Î¤¤°ê
Company Stock Code Last Update Suggestion Target Price Price on Recom
Information Techology Research Department N/A+852 2277 6527research@phillip.com.hk
O-Net Technologies87727/09/2016No Rating4.02
O-Net communications87726/10/2010BUY7.156
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
SAIC Motor60010425/11/2016Accumulate25.8123.65
GAC223818/11/2016BUY12.79.22
Insurance Research Department (86) 21 51699400-110research@phillip.com.cn
Investment Opportunities of Shenzhen-Hong Kong Stock Connect (III)07/11/2016No Rating
Investment Opportunities of Shenzhen-Hong Kong Stock Connect (II)02/11/2016No Rating
Media & Publishing Research Department (+ 86 21 51699400-107)research@phillip.com.cn
Wisdom Sports Group166111/07/2016Buy3.32.18
NetDragon77716/06/2016Buy28.422.9
Pharmaceutical Fan Guohe  (+ 86 21 51699400-110)fanguohe@phillip.com.cn
CR Double-Crane60006223/11/2016Accumulate27.5223.08
3SBio Inc.153016/11/2016Buy 107.68
Health & Personal Care Fan Guohe  (+ 86 21 51699400-110)fanguohe@phillip.com.cn
Guangzhou Baiyunshan Pharma87418/10/2016Buy24.4819.16
Guangzhou Baiyunshan Pharma87417/10/2016Buy24.4819.16
New Energy Research Department (86) 21 51699400-110research@phillip.com.cn
CONCORD NE18224/10/2016Buy0.60.39
SINGYES SOLA75014/10/2016Buy5.14.12
Food, Beverage and Retail Research Department (86) 21 51699400-110research@phillip.com.cn
361 Degrees136126/08/2016Buy3.22.48
Poly Culture363625/08/2016Accumulate23.519.84
Telecommunications Fan Guohe + (86) 21 51699400-110fanguohe@phillip.com.cn
Chinasoft International35426/10/2016Buy4.863.72
Chinasoft International35425/10/2016Buy4.863.72
Mainland Property Research Department (86) 21 51699400-110research@phillip.com.cn
KWG Property181324/11/2016Buy5.94.38
Logan Property338008/11/2016No Rating3.1
Utilities Research Department (86) 21 51699400-110research@phillip.com.cn
KANGDA ENV613628/11/2016Buy2.380.000
CANVEST ENV138122/11/2016Buy4.563.6
Software & Service Research Department (86) 21 51699400-110research@phillip.com.cn
Goldpac Group331518/02/2015N/A4.77
IGG800221/11/2014Accumulate3.953.44
Hotels and Entertainment Zhang Jing (+ 86 51699400-103)zhangjing@phillip.com.cn
Jinjiang Hotels200608/07/2016Accumulate2.982.49
CUTC60035808/03/2016N/A10.41

Information contained herein is based on sources that Phillip Securities (Hong Kong) Limited and/or its affiliates ( the ¡§Group¡¨) believe to be accurate. The Group does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The Group (or its employees) may have interests in relevant investment products. For details of different products¡¦ risks, please view the Risk Disclosures Statement on http://www.phillip.com.hk.

If you DO NOT wish to receive further marketing emails from us, please click HERE to opt-out.

ª©Åv©Ò¦³¡A ½¦L¥²¨s¡C

Copyright(C) 2016 Phillip Securities (HK) Ltd. All Rights Reserved.


Copyright © 2011 Phillip Securities Group. All Rights Reserved [ Risk Disclosures Statement ] [ Terms and Conditions ] [ Personal Data Policy ]