no.1
Since the beginning of this year, despite the miserable CSI 300 index, some public utilities with defensive characteristics have performed poorly, and the local integrated water company, which holds more than 50% of the shares, Xingrong Environment, is one of them, still recorded an 18% increase for the year, significantly outperforming the CSI 300 index.
Let's first have a general understanding of the company's main business, as shown in the figure, the two sectors that contribute the most to the company's profits are tap water and sewage treatment, the two are equal, one of them is to earn residents' money with franchises, and the other is to make ** money, although it is described in the company's financial report, "the company is deeply involved in Chengdu at the same time, constantly expanding its business in Sichuan, actively expanding its business outside the province, and transforming from a local water platform to a national comprehensive service provider of water and environmental protection." However, judging from the current achievements, except for the southwest region (especially Chengdu), the rest of the regions contributed very little profit.
As we all know, these two businesses are basically lying down to make money, and there is no arrears of water charges for residents' water, and although sewage treatment is a financial expenditure, there may be an increase in the account period or even the receivables on the books.
According to the financial report data, in the past ten years, the company's revenue and profit have shown steady growth, especially since 2019, the increase has been more obvious, and the first three quarters of 2023 will hit a new high in the same period in history, and it has also caused a gradual increase in the accounts receivable on the books, accounting for 16% of the company's net assets in the latest financial report8%, as a result, the company's book cash did not increase with profits, but fortunately, the company's asset-liability ratio did not increase significantly with the increase in receivables, and after approaching 60% in 2020, it basically did not rise again in the next three years.
no.2 However, also in the last decade, the company's share price performance has been different. In addition to the hype in 2015, it was not until after February 2021 that it began to significantly outperform the CSI 300 index, and this phenomenon seems to have continued to this day.
Perhaps the main factor contributing to this phenomenon is the relative difference in their valuations, with the 2015 hype in which the PE valuation of Xingrong Environment was blown to 50 times and the dividend yield was only 02%, the stock price has been speculated to a maximum of 11 yuan, even after the so-called stock market crash, the stock price has fallen to more than half (around 5 yuan), but the company's PE valuation is still 20 times, which is twice the average valuation of the CSI 300 index in the same period. On the contrary, in February 2021, after several years of hype in the CSI 300 index, the PE valuation of the index was pushed to a maximum of 18 times, while the PE of Xingrong Environment was only 11 times in the same period, and the relative advantage of the two was undoubtedly revealed.
Although after the stock market crash in 2015 and until February 2021, Xingrong Environment's share price performance was not satisfactory (the lowest fell to less than 4 yuan), this did not prevent the company's operating performance from growing steadily, which led to the continuous decline in the company's valuation, in other words, it took more than 5 years for Xingrong Environment to pay off the "debt" left by the relatively high valuation in 2015.
At present, although the company's share price has faltered upwards compared to February 2021, its valuation continues to decline, to less than 10 times, and the dividend yield is still hovering around 2%.
Speaking of the 2% dividend yield, only from the data, no matter with the same industry, or some large dividends, there seems to be no relative advantage, but behind this is far lower than the dividend payment rate of other high-performing companies in the same industry, such as Chongqing Water's dividend payment rate of more than 60%, Hongcheng Environment has 50% in the past three years, if the major shareholders of Xingrong Environment can Xi also learn from these outstanding people, the current 2% dividend yield may still have some relative advantages.
END hereby declares that the above views are only a summary of the hunter's investment research, and may not be suitable for others, let alone as investment advice).