Environmental reshuffle: winter has passed, spring is not fa

[Abstract] Industry analysts believe that the environmental protection market will maintain growth in 2019, and the next two years will be the key year for the three major environmental protection battles, and the intensity of environmental protection will not decrease. In the future, with the improvement of the financing environment, various capitals will gradually enter the environmental protection market.

On January 21, the Ministry of Ecology and Environment announced the Opinions on Supporting the Green Development of Private Enterprises, and proposed to encourage private enterprises to set up environmental protection venture funds and issue green bonds.

For environmental companies, 2018 is mixed. Driven by policy catalysis and market demand, the overall momentum of the environmental protection industry has developed rapidly. At the same time, there has been a divergence within the industry, some corporate debts have defaulted, financing has been trapped, and there is a large financial pressure. This is the status quo of China's environmental protection industry.

According to industry analysis, the environmental protection market will maintain growth in 2019, and the next two years will be the key year for the three major environmental protection battles. The environmental protection will not be reduced. In the future, with the improvement of the financing environment, various capitals will gradually enter the environmental protection market, and the performance of environmental protection enterprises will also be expected to pick up overall.

Intensification of shuffling

Under the combined influence of policy dividend release and strict supervision of the industry, environmental protection companies experienced a round of reshuffle in 2018.

In terms of market capitalization performance, the overall performance of the environmental protection sector in 2018 was not good. According to statistics, in the first three quarters of 2018, 59 major environmentally-listed companies achieved a net profit of 14.37 billion yuan, down 24% year-on-year. The main reason for the sharp negative growth in net profit was the tight funding and the sharp increase in financial costs.

Times Weekly reporters do not fully statistics. In the 2018 A-share environmental protection stocks, the top three gains were green power (601330, diagnostic stock) (+190%, new stock) and Huajian test (300012, Diagnostic stocks (+43%), Weiming Environmental Protection (603568, diagnostic stocks) (+17.5%), in addition to the above three listed companies, China Water (Hong Kong stocks 00855), China Water Industry Group (Hong Kong stocks 01129) throughout the year Realizing the positive gains, the rest of the environmental protection companies' overall share price fell.

Among them, *ST Kaidi (000939, diagnosis stock), Shenwu energy conservation (000820, diagnosis stock), Oriental garden (002310, diagnosis stock), Shengyun environmental protection (300090, diagnosis stock), Sanju Environmental Protection (300072, Diagnostics), Qidi Sander (000826, Diagnostics), Bishuiyuan (300070, Diagnostics), Mengcao Ecology (300355, Diagnostics), Tiehan Ecology (300197, Diagnostics), Section The stock price declines such as Rongrong Environment (300152, Diagnostics) exceeded 50%, and the top three declines were Shenwu Environmental Protection (300156, Diagnostics) (-83.7%) and Xingyuan Environment (300266, Diagnostics) (-78.8%). ), God fog energy saving (-78.6%).

The overall valuation of listed companies in the environmental protection sector has shrunk, which is related to the intensive bond defaults of private environmental protection listed companies in 2018, including the suspension of debt defaults in Shengyun Environmental Protection, Shenwu Environmental Protection and Kaidi Ecology. The company's shield security environment (002011, diagnostic stocks) controlling shareholder Dunan Group broke the 45 billion debt crisis.

Driven by national policies, the overall scale of the environmental protection industry has expanded rapidly. The dilemma faced by the environmental protection industry in 2018 and policy changes are also one of the reasons. The most important one is the PPP New Deal.

In November 2017, the Ministry of Finance issued the Notice on Regulating the Management of the Government and Social Capital Cooperation (PPP) Integrated Information Platform Project Library. Subsequently, Xinjiang, Hunan, Jiangsu and other places began to stop PPP projects, involving more than 2 trillion yuan, resulting in environmental enterprises that participated in these projects can not continue to obtain financing, financing costs have increased significantly.

In May 2018, the 1 billion yuan corporate bond that the environmental protection leading enterprise Oriental Garden proposed to issue was only raised to 50 million yuan. It was called "the most miserable debt case in 2018" and the Oriental Garden issued bonds. The big shrinkage triggered a chain reaction, and the difficulty of financing for environmentally-friendly listed companies is evident.

In addition to the oriental gardens, more than 10 listed companies such as Xingyuan Environment and Shengyun Environmental Protection encountered financial austerity, which led to the company's risk of cash flow obstacles and equity pledges.

State-owned enterprises

At the end of 2018, the financing environment for private environmental protection enterprises is gradually improving. In November 2018, policy solutions for private companies' equity pledges and debt risks were released intensively, including central and local governments, market institutions, state-owned capital and social funds.

On November 2, 2018, Bishuiyuan and Oriental Garden and Financial Institution signed a cooperation intention agreement on private enterprise bond financing support tools. On November 16, Bishuiyuan took the lead in completing the short-term financing bonds of the first single scale of 1.4 billion yuan.

Oriental Garden has signed the “Equity Transfer Framework Agreement” with Beijing Yingrun Huimin Fund Management Center (Limited Partnership). Yingrun Huimin Fund intends to participate in the shareholder's garden, and the transfer company does not exceed 5% of the total share capital, becoming the strategic shareholder of Oriental Garden. Behind the Yingrun Huimin Fund is the state-owned capital of Beijing Chaoyang District.

On November 7, 2018, Shenwu Group signed a “Project Investment Cooperation Agreement” with the Xinchang District Government of Jiangxi Province, which will support the construction of the Shenwu Environmental Protection Industrial Park Base and related projects. For Shenfu Environmental Protection, which was previously caught in a debt default, this is undoubtedly a shot in the arm.

In addition to the above-mentioned enterprises, Tianxiang Environment (300362, Diagnostics) is ready to introduce strategic investment of Sichuan Railway Industry Investment Group; Shengyun Environmental has a debt default crisis in 2018, and it is Sichuan Energy. The investment group is state-owned capital, and the controlling shareholder of Sanju Environmental Protection is also the Beijing Haidian Guotou.

"Using the resources of state-owned assets and giving full play to the enthusiasm of private enterprises can revitalize the vitality of enterprises." Huang Wenli, a researcher at the China Finance Research Institute of Zhejiang University of Finance and Economics, told the Times Weekly reporter.

Policy plus code

In order to solve the huge funding gap in the eco-environmental protection field, the Chinese government has tried to attract social capital into the environmental protection industry through policy incentives since 2014. On September 23, the Ministry of Finance issued the "Notice on Promoting the Use of Government and Social Capital Cooperation Models" and began to vigorously promote PPP.

In the following years, PPP experienced explosive growth. Among many PPP projects, eco-environmental projects have been an important part of local government fiscal expenditure because of the large amount of funds occupied and the difficulty in performance appraisal.

Ma Jun, director of the Green Finance Committee of the China Finance Association, revealed at the 2018 China Environmental Industry Summit: "In order to win the battle against pollution, China currently needs 4 trillion yuan of funds each year to invest in pollution control, clean energy, Green transportation and other environmental protection areas, butGovernments at the central and local levels can only spend more than 300 billion yuan a year, less than 10% of the total funding needs. "

In the opinion of the industry, this means that the development of the environmental protection industry is in an important stage of the growth period to the maturity stage, and there is still a large room for development and potential in the medium and long term.

[ 123] The "2018 Environmentally-Listed Companies' Performance Rankings" released on January 20, 2019, aggregated the operating income of 106 listed companies with environmental protection industry as their main business, and found that the total revenue of the environmental protection sector in the first half of 2018 186 billion yuan, a year-on-year increase of 13%. In terms of sectors, environmental restoration has the highest year-on-year increase of 40%. Environmental monitoring followed closely, with a year-on-year growth rate of 25%. Solid waste treatment, water treatment, atmospheric treatment and energy conservation The year-on-year growth rates were 18%, 12%, 3% and 1% respectively.

Some environmentally-friendly listed companies had outstanding performances. On January 22, Xianhe Environmental Protection (300137, diagnostic stocks) first disclosed 2018. The annual performance forecast, the annual full-year surplus of 244 million to 282 million yuan, an increase of 30% -50%. During the reporting period, benefiting from the increase in environmental protection policies, the environmental monitoring market is heavy, the company actively exerts product advantages and market advantages, plus Great market development efforts, set Continued growth.

Guojin Securities (600109, Diagnostics) released in January 2019, the investment research report said: "The new future of environmental protection" is mainly: in the context of winning the blue sky defense can help Local governments will rapidly improve air quality and are expected to become the atmospheric grid monitoring industry standard for urban air management; biomass power generation industry with large market growth and clear profit model; laws and standards have been introduced, and the industry is constantly regulated and is about to enter the growth stage. Soil remediation industry. "

At the National Ecological Environmental Protection Work Conference in 2019, Minister of Ecological Environment Li Ganjie said: "In 2019, we will formulate environmental policy measures to support the green development of private enterprises. "

For environmental companies, this may mean: Winter is over, will spring be far behind?

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