20180615-交银国际证券-粤丰环保-01381.HK-Project_execution_on_track__maintain_Buy_6页_1mb

Canvest (1381 HK) Summary

Core Content

Canvest, a company involved in waste management and environmental services, is currently in a phase of project execution and expansion. The report provides an update on its operational status, financial performance, and strategic developments as of June 15, 2018. The stock is rated Buy with a target price of HK$5.81, implying a potential upside of +38% from the last close of HK$4.20.

Main Points

• Project Execution:

  • Beiliu phase 1 and Lufeng phase 1 are expected to start operations in 1H18 and 4Q18 respectively.
  • Qingyuan phase 1 is anticipated to begin construction as early as 4Q18 and start operation in 2020.
  • The company has a strong project pipeline with existing operations and upcoming projects in various locations across China.

• New Investments and Acquisitions:

  • Canvest is actively working with Huafa Group to expand its waste collection business through the acquisition of Johnson Cleaning Services (JCS).
  • JCS is expected to contribute approximately HK$16 million in net profit annually at the associate level.

• Financing:

  • Canvest has secured a 60-month HK$1.176 billion syndicated loan led by the International Finance Corporation.
  • This loan is intended to support new greenfield projects and M&A activities.
  • The company aims to add 7ktpd of new contract capacity in 2018, though it has been inactive in the first half of 2018.

• Earnings and Valuation:

  • Earnings forecasts remain unchanged, with a target price of HK$5.81 (18x 2018E P/E).
  • The company maintains a robust earnings CAGR of 23% from 2017 to 2020E.
  • Financial metrics show consistent growth in revenue and net profit, with a projected increase in waste processing capacity to 13.7ktpd in 2018, 16.1ktpd in 2019, and 18.6ktpd in 2020.

Key Information

Financial Highlights (HK$ million)

Project List

Analyst Ratings

• Stock Rating: Buy

• Rating System:

  • Buy: Total return is expected to exceed the industry benchmark.
  • Neutral: Total return is expected to match the industry benchmark.
  • Sell: Total return is expected to be below the industry benchmark.
  • Not-Rated: No conviction about the stock's total return relative to the industry.

• Analyst Industry Views:

  • Outperform: Industry is expected to outperform the market.
  • Market Perform: Industry is expected to perform in line with the market.
  • Underperform: Industry is expected to underperform the market.

Disclaimer

• The report is confidential and for private circulation only.
• The views expressed are those of the analysts and may not reflect those of BOCOM International Securities Ltd.
• The company may have business relationships with BOCOM International and its affiliates.
• No guarantee is made regarding the accuracy or completeness of the information provided.

Contact Information

• Wallace Cheng: wallace.cheng@bocomgroup.com, (852)37661810
• Spencer Luo: spencer.luo@bocomgroup.com, (852)37661853

Additional Notes

• The report is prepared from data and sources believed to be correct and reliable.
• The company has a strong foundation and good earnings visibility.
• The report does not constitute an offer or recommendation to buy or sell securities.