20151208-光大证券-天洁环境-01527.HK-Profit_Boom_with_Policy_Support_23页_250kb

报告摘要

Tengy (1527 HK) Summary

Core Content

Tengy is a leading manufacturer of electrostatic precipitators in China, specializing in atmospheric pollution control solutions for industries such as power generation, metallurgy, and paper mills. The company is anticipated to benefit significantly from the Chinese government's stringent environmental policies aimed at reducing air pollution, particularly from coal-fired power plants.

Main Points

Market Position: Tengy is the third largest manufacturer of electrostatic precipitators in China in terms of sales value in 2014.
Policy Support: The Chinese government's "Action Plan of Coal Power Energy Saving Upgrade and Reconstruction (2014-20)" and other environmental regulations have driven demand for pollution control systems.
Government Incentives: Subsidies and rebates were introduced to encourage compliance with stricter emission standards, which has increased the need for Tengy's products.
Capacity Expansion: To meet growing demand, Tengy expanded its production capacity by setting up new facilities in Xinjiang and Zhejiang provinces.
Product Portfolio: Tengy's products include ash removal systems, SO₂ emission reduction systems, and NOx emission reduction systems, with electrostatic precipitators as the core offering.
Revenue Growth: The company recorded significant revenue growth, with a CAGR of 29.8% from FY14 to FY17.
Profitability: Tengy's net profit is expected to grow at a CAGR of 45.1% during the same period due to rising gross margins and cost efficiencies.
Valuation: The company is currently undervalued, with a target price of HK$13.12, offering 55.3% upside potential based on a FY16E P/E of 8.5x.

Key Information

Emission Standards: Current standards for PM, SO₂, and NOx are 30 mg/m³, 100 mg/m³, and 100 mg/m³ respectively, while the ultra-low emission standards are 10 mg/m³, 35 mg/m³, and 50 mg/m³.
Business Model: Tengy offers tailor-made solutions through engineering design, equipment procurement, installation, and maintenance, with a strong focus on the power generation industry.
Financial Performance:
- Revenue growth: 7.3% in 2013, 31.6% in 2014, with projected CAGR of 29.8% for 2014-17.
- Net profit growth: 187.2% in 2014, with a CAGR of 45.1% for 2014-17.
- EPS: Expected to reach Rmb1.68 in FY17E.
Valuation Metrics:
- P/E (FY16E): 5.4x, compared to an average of 16.9x for HK-listed peers.
- P/B (FY15E): 1.26x, expected to decline to 0.81x by FY17E.
- Target Price: HK$13.12, offering 55.3% upside potential.
Major Shareholders: Bian Yu's family holds 69.96% of shares, followed by Zhang Wei (7.25%) and Zhao Kai Yuan (4.08%).
Product Diversification: Tengy's business is primarily concentrated on electrostatic precipitators, which account for a significant portion of its revenue.
Steel Prices Impact: Weak steel prices have contributed to lower production costs and improved gross margins, especially in the ash removal segment.
SWOT Analysis:
- Strengths: Government policy support, strong revenue growth, and capacity expansion.
- Weaknesses: Limited product diversification.
- Opportunities: Continued demand for pollution control due to environmental regulations and the growth of the industry.
- Threats: Structural decline in demand from coal-fired power plants due to alternative energy development.

Investment Recommendation

Rating: Buy
Upside Potential: 55.3%
Target Price: HK$13.12
Reasoning: Strong earnings growth, policy-driven demand, and capacity expansion support the Buy rating.

Conclusion

Tengy is well-positioned to benefit from the growing demand for pollution control systems in China, driven by stringent environmental policies and government incentives. The company's focus on electrostatic precipitators and its expansion plans are expected to lead to strong revenue and net profit growth over the next few years. Despite the challenges of limited product diversification, the company's valuation appears attractive, making it a compelling investment opportunity.

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