Wangneng Environment is a leading company in the field of environmental protection, and its business covers solid waste treatment, new energy and other fields. Recently, the company's dividend yield and market capitalization have attracted the attention of the market.
First of all, the company's dividend yield is currently at 45%, and there is still room for improvement. This is because the company's investment in the field of solid waste treatment will be completed within the year, which means that the company is about to enter a bumper harvest period of "lying down to win". Once the investment closes, the company expects to generate a stable operating profit of more than $1.5 billion per year, while the contraction of capital expenditure will also lead to more free cash flow. Currently, the company's 2022 dividend is only 2200 million, which means that the company's dividend yield and cash flow ratio are very low, so there is still a lot of room for dividend yield to improve.
Secondly, from the perspective of PE PB switching, the market value elasticity of Wangneng Environment is very prominent. The company's valuation has been on a downward trend over the past few years, with a current market capitalization of 6.5 billion, 8x PE and 1x PB. However, Chongqing Water, a benchmark in the environmental protection industry, has maintained a PE valuation of 15 times, not because of how fast Chongqing Water is growing, but because of its stable high dividend policy. If Wangneng Environment can meet the dividend ratio and dividend yield requirements similar to Chongqing Water, then its market value potential will be very large, even up to 20 billion. Of course, this is only an ideal calculation model and does not represent the company's views and plans. However, we expect that with the end of the investment and the increase in the overall dividend level of the industry, the market value of Wangneng Environment will also usher in the best opportunities.
Finally, in response to the market's doubts about the industry, we conducted three questions and three answers. First of all, is the payment guaranteed?The answer is yes. Wangneng Environment's projects are mainly concentrated in economically developed areas, such as Zhejiang and other places. These regions are developing rapidly and are in a good financial position, so their ability to pay can be guaranteed. Second, is it necessary to worry about the arrears and regression of state subsidies?The answer is that there is no need to worry too much. At present, the recovery of the stock arrears of Wangneng Environment has been accelerated, and the company is also taking various measures to reduce its dependence on national subsidies. Finally, what happens when the project expires?What is the risk of recovering and the rate of return?The answer is that the average maturity period is still 20 years, and half of the company's projects are BOO perpetual projects. This means that the company's investments in these projects will continue to yield benefits in the long term. In addition, the company is also actively laying out the coordinated development of the industrial chain to increase the cost of exit. Therefore, we can conclude that the investment risk of Wangneng Environment's project is relatively low, and the rate of return is guaranteed.
To sum up, Wangneng Environment is an environmental protection enterprise with development potential. As its investment in the field of solid waste treatment is about to be completed and enter a period of stable operation, the company's performance and market value are expected to usher in **. At the same time, in response to the market's doubts about the industry, we can see that Wangneng Environment has taken a variety of measures to ensure the stability and sustainability of its business development. Therefore, we recommend paying attention to and holding on to Wangneng Environment** and waiting for its future performance.
Note: The data and opinions in this article are provided by GF Environmental Protection Team and are for reference only.
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