Stable Growth of Results in 2014

In H1 of 2014, revenue of the Company was RMB 849 million, an increase of 19.92% compared with the same period of 2013. Net profits of Company shareholders were 174 million, an increase of 19.57% yoy. As shown in the positive profit forecast of the results in 2014, the revenue of the whole 2014 were 2.048 billion, an increase of 29.35% yoy compared with 2013 and the net profits of company shareholders grew by 20.8% yoy, which indicated the stable growth of company operations.

Development of all Businesses Hand in Hand

In H1 of 2014, revenue of industrial waste disposal business was RMB 647 million, an increase of 17.62% yoy, among which, the revenue of resource sales business was 492 million, an increase of 12.35% yoy. Because copper prices continuously remained low and the Company implemented hedging, we expect that the decline of copper prices would have a limited influence on the resource sales business. The revenue of industrial waste disposal was 155 million with sharp growth of 38.23% yoy. The revenue of municipal waste disposal business was 122 million, an increase of 31.27% yoy.

Rapid Growth in 2015

In H2 of 2014, Northern Guangdong Project, Hade Project and Jiangmen Project were put into operation successively, with the scales of 500 thousand tons, 60 thousand tons and 198.5 tons respectively. The disposal ability of the Company reached 1188.5 thousand tons, which was great growth in scale compared with the scale of 430 thousand tons at the end of 2013. It is expected that in 2015 and the following two or three years, the Company will embrace the high-speed growth period of results.

Waste gains more attention

In this year's National People's congress and the Chinese Political Consultative Conference, the national association of industry and commerce submitted Proposal of Dismantling Subsidy of Waste Household Appliance, suggesting to offer household appliances dismantling enterprises subsidies, rise up the industry doorsill, weed out small enterprises and non-technical companies in this industry and improve industrial concentration ratio, so that as a leader of the waste industry, the Company will benefit. Although it is only a proposal, we believe that in the future the waste industry will be reformed and gain more attention.

Valuation

As a leader of this waste industry, the Company possesses tremendous development potential. Operation in the waste industry requires business certificate, which is issued in limited amount in all places, so the industry doorsill is proved to be high. However, the Company owns 46 of the 49 business certificates for waste. The Company's performance and appraisement show a rising trend according to policy's release of good news and the Company's new projects` commissioning in succession. We give the target price 35.31 HKD of 12 months on the company, equivalent to 25/17 times prospective PE ratio of that in 2015/2016, which is considered as "Buy" rating.

Financials

Click Here for PDF format...