Matthew effect appears in the environmental performance of the environmental protection company

A number of environmental protection policies have brought significant benefits to environmental protection enterprises, and many environmental protection enterprises have performed well in the medium term. In 2016, 58 listed environmental protection companies, which had already released the Chinese newspaper, increased their net profits by 12.2%. At the same time, the performance differentiation between the sub-sectors within the industry is also obvious, water treatment and monitoring performance growth is faster, but energy conservation and water performance is poor.

Of the 58 listed companies that have reported losses, only one lost money. Overall revenue rose 28.1% and net profit rose 12.2% compared with last year, while net profit of A-share listed companies grew only - 3.9% over the same period. PPP project and environmental M & A are two key factors to promote the company's performance. On the whole, the performance of the environmental protection industry is obviously divided, with the Matthew effect of the stronger Yu Qiang and the weaker weaker. The performance of water treatment and monitoring has increased rapidly, but the performance of energy saving and water management is not good.

In recent years, especially since last year, a number of environmental protection policies have been introduced intensively, which have brought significant benefits to environmental protection enterprises. Many environmental protection enterprises have performed well in the medium term.

According to Wind, the 58 listed companies that have reported environmental protection, compared with last year, overall revenue rose by 28.1%, net profit rose by 12.2%, the A-share listed companies'net profit growth rate was only - 3.9%, which shows that the overall environmental protection industry is in a relatively high state of prosperity.

Except for E-Star, none of the remaining 57 companies suffered losses, and 27 had net profits (net profits attributable to the shareholders of the parent company) exceeding 100 million yuan. In particular, the Central Plains environmental protection, net profit soared 1.65 times to 127 million yuan, has exceeded the company's net profit last year.

Overall, the performance of the environmental protection industry is obviously divided. At the corporate level, large companies with a market capitalization of more than 10 billion contributed 70% of the revenue and 80% of the net profit of the environmental protection sector, with the growth rates of 36% and 28% respectively, while small companies with a market capitalization of less than 5 billion yuan both experienced a decline in revenue and net profit.

Specific to the subdivision area, there are also divisions between different plates. The growth of water treatment and monitoring performance is obvious, and the net profit growth rate of the two party is 57.3% and 30.4% respectively. But energy-saving and water performance is poor, energy-saving plate net profit growth rate of only 8.0%, water net profit fell by 18.2%.

Matthew effect appears in industry differentiation

In the downside of the economy, the environmental protection industry has handed out a bright mid term response. Xue Tao, senior partner of E20 environment platform and executive director of E20 Research Institute, called it "counter cyclical" industry.

According to Wind data, the medium-term revenue of 58 environmental listed companies totaled 58.147 billion yuan, up 28.13% from 45.382 billion yuan in the same period last year, and net profit of 8.275 billion yuan, up 12.2% from the same period last year. Among them, 26 have net profits of more than 100 million, and 8 have increased by more than 100% in Central Plains Environmental Protection, Science and Technology Environmental Protection, Shenwu Environmental Protection and Xingyuan Environmental Protection.

The reason is that the PPP project and environmental M & A are two key factors to promote the company's performance.

Excluding water and some transition stocks, according to Guangfa Securities statistics, the trend of PPP orders transferring to listed companies is very significant: the income growth rate of the companies undertaking PPP projects in the first half of 2016 was 49%, significantly higher than 25% of non-PPP companies; the performance growth rate of PPP companies in the first half of the year was 63%, much higher than 23% of non-PPP companies.

In addition, excluding the three environmental protection and God fog environmental protection, Guangfa Securities Statistics found that mergers and acquisitions on the performance of a more significant boost. In the first half of 2016, revenue growth in the M&A and non-M&A categories was 43% and 14%, respectively, and performance growth was 53% and 3%, respectively.

Although the environmental protection sector as a whole developed steadily in the first half of the year, but judging from the performance of a single subsidiary, there is still some differentiation, the stronger the strong, the weaker the Matthew effect.

Statistics show that large companies with a market value of more than 10 billion contributed 70% of the revenue and 80% of the net profit of the environmental protection sector. The growth rates of the two companies reached 36% and 28% respectively, while small companies with a market value of less than 5 billion yuan showed a decline in their revenue and net profit.

15 companies with declining revenues, including energy conservation, water utilities, solid waste and atmospheric plates, are all distributed. There are 18, 12, 7 and 6 companies with revenue growth of 0% - 20%, 20% - 50%, 50% - 100% and above 100%. Among them, 5 of the 13 companies with more than half of their revenue growth are in the water treatment sector.

There are more companies with net profit falling, a total of 18. Among them, the most serious decline was the far-reaching environmental protection of the atmospheric plate, with a net profit of 58.36 million yuan, only a quarter of the same period last year. In addition, 8 companies whose net profit increased by over 100% had 3 in the water treatment sector.

Zheng Xiaobo, an environmental analyst at Everbright Securities, told reporters that the differentiation between large companies and small companies lies in the penetration of the former market, the ability to expand the market downward, strong financing capacity, rich government resources, and strong ability to take bills of PPP projects. Taken together, the performance of large companies is naturally better than that of small companies.

Division of performance between subdivision plates is also more obvious. Although water sector revenue increased 25.98% year-on-year, but due to increased processing costs, reduced investment returns and other reasons, profit fell 18.2% over last year. The growth of revenue and net profit of energy saving plate is less than the overall level of the industry, which is 9.7% and 8% respectively.

Under the pull of environmental protection, revenue and net profit of the air control sector increased by 57.4% and 49.3% respectively. Excluding the impact of the two companies, revenue growth was only 13.8% and net profit fell by 5.6%. This is because the industry's high growth period has passed, and its performance is poor.

The first half of the solid waste sector's revenue growth was 25.6%, and net profit increased by 20.1%. Benefiting from renewable resources or sanitation business, Enlightenment Sander, Longma Sanitation and Greenmay all saw revenue growth of more than 30%.

Zheng Xiaobo said that municipal solid waste incineration has crossed the rapid development period of the industry, and the market began to expand from second-tier cities to third-tier and fourth-tier cities. As a result, revenue growth was less than 10% among the four companies, with the exception of Dendrobium chinensis, and Shengyun and Weiming's environmental revenue declined. Net profit, except Han LAN rim, the growth rate is less than 10%.

Which sectors are the most brilliant?

In many sectors, water treatment and environmental monitoring are the most brilliant.

The total revenue of 15 water treatment enterprises was 9.347 billion yuan, an increase of 39.9% over the same period of last year, and the net profit was 1.342 billion yuan, an increase of 57.3% over the same period of last year. The two growth rate is higher than the overall growth rate of the industry.

CICC analysis said that the plate is mainly driven by PPP orders. By the end of June, the total investment of PPP projects in the Treasury of the Ministry of Finance was 10.6 trillion yuan, a 19% increase over the end of March, and the project landing rate has been rising quarterly, currently at 24%.

Environmental protection industry accounts for 9% of the total investment in PPP, while sewage treatment accounts for 19% of the total investment in environmental PPP. The first half of the PPP project landing is the main driving force for the profit growth of Listed Companies in sewage treatment.

Comparing with Jin Membrane Technology and Bishui Water, the two companies that produce and sell membrane products can find the importance of PPP. The company that provides a comprehensive solution for water reuse with professional membrane technology is the one with the worst net profit decline in the sector, down 65% from a year earlier, to only 5.76 million yuan. The company attributed it to intensified competition and seasonal fluctuations.

Bishui, the leading company with the highest market capitalization, also maintained a high growth rate of 76.2% in net profit, the fastest year-on-year growth since the company went public. At the same time, revenue doubled, reaching 2 billion 350 million yuan.

Zheng Xiaobo analysis said that it is difficult for Tianjin Membrane Science and Technology to maintain performance growth solely by equipment, and Bishui to support the equipment, through the establishment of joint ventures with the local government, push PPP model and other ways to expand the market.

Since the beginning of last year, we have pushed the PPP mode into a fresh water source. In the first half of this year, the new revised order reached 9 billion 280 million yuan. At present, the company has not yet executed the order of 18 billion 500 million yuan.

There are also environmental monitoring panels. In the first half of the year, revenue of the sector reached 3.98 billion yuan, an increase of 29.9%, and net profit of 360 million yuan, an increase of 30.4%. Because of the late start of the sector, the profit margins of the 6 companies were only 100 million.

The sector contributed to the fastest growing revenue company: Polytechnic. The company, which has not yet transformed into an environmental protection industry, is the first listed company in the power equipment online monitoring industry. Last year, the company completed a major asset restructuring, acquired new technologies from the power engineering cost tool software manufacturer Bowei, and Shangyang Environmental Science, which is involved in water quality monitoring, as an opportunity for the company to "strategically enter the environmental protection industry".

The merger of the two companies enabled the division to achieve high-speed growth in revenue and net profit in the first half of the year: revenue of 195 million yuan, an increase of 191.27%; net profit growth of 846.17% to 263.568 million yuan.

The other company, which monitors the company, has not fared so well, with net profit almost halved in the middle of the year, down 49.39% from a year earlier at 45.366 million yuan. The company said there were three reasons: expanding new products and new business led to a 21.82% year-on-year increase in sales costs; adding R&D personnel, merging foreign subsidiaries led to an increase in management costs of 17.899 million yuan; investment income of 46.77 million yuan compared with 19.98 million yuan in the same period last year decreased by 14.41 million yuan, a decrease of 75.51%.

In addition to environmental monitoring, investment hotspots in the first half of this year also have soil remediation. Since last year, the "ten trillions of banquet" in the environmental protection research reports of major brokerages have been observed. On May 31 this year, the "Ten Articles of Earth" was officially promulgated. The Ministry of Environmental Protection interpreted that by 2020, it is estimated that the new output value of the environmental protection industry will be about 450 billion yuan.

These favorable policies have led to an increase in orders for environmental protection companies: Bosch won nearly 200 million yuan of contracts for Nanhua projects in the first half of the year. In the first half of the year, Yongqing won the soil remediation project in Changsha, Dalian, Xuzhou, Jingjiang and other places.

High-energy environmental orders have increased substantially, and have successively won large-scale environmental restoration projects such as Changchun Thermal Power Plant, Xining Zhongxing Chemical Plant, Baima Lake Basin Treatment, Suzhou Solvent Plant and Shanghai Taopu. According to the statistics of Wang Yang, an environmental analyst at Societe Generale Securities, the company's new orders for environmental restoration plate were 1.155 billion yuan, a sharp increase over the same period last year. However, business revenue fell by 8.82%.

In this regard, Wang Yang in the research paper analysis said that this is mainly due to a certain period of time from the signing of orders to the realization of income, the current period of the order can not achieve income immediately. Soil restoration orders are expected to accelerate release and the company's environmental restoration business will enter a boom period after the "Ten Soil Strips" landing.