德银-中国-公用事业行业-中国环境：加强环境执法，改善现金流量，目标股价上调

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1、ChinaEnvironmentalDeutscheBankMarketsResearchAsiaIndustryDateChina13November2017ChinaEnvironmentalUtilitiesUtilitiesIndustryUpdateStrongerenforcement,improvingcashflow;raisingCEIEPS,TargetPriceThomasZhu,CFARecommendingBuy:strongerenvironmentalenforcement,improvingcashflowResearchAnalystC

2、hinausuallystrengthensenvironmentalenforcementduringthelastthreeyearsofFive-YearPlanperiods,asthecountrygetsclosertoassessmentdeadlines.We+852-22036235expectthesametotakeplacefrom2018,especiallyastheCPC's19thNationalMichaelTong,CFACongressrecentlymentionedthatChinaplanstosetupa"Nationa

3、lNaturalResearchAnalystResourcesandEcologyAdministration"soon.Weexpectthesefactorstobenefit+852-22036167thislaggardsector,togetherwithimprovingcashflowprofile/earningsqualitywithselectivecompaniesoverthenextfewyears.Toppick:CEIonpotentialearningsKeyChangesbeatandimprovingfreecashflowprofile

4、foritswaste-to-energysegment.CompanyTargetPriceRating002672.SZ13.34to12.00-Toppick:ChinaEverbrightIntl-potentialearningsbeatandimprovingcashflow0895.HK14.70to13.60-WeraiseCEIearningsby6%/14%in2017/18eonfastprojectconstruction0257.HK12.70to13.50-progressandourEPSis7%/9%aboveconsensus.Wec

5、alculatethattheWTE0270.HK13.50to13.20-segment'sfreecashflowshouldimprovefrom-HKD2.9bnin2017eto-HKD970m1257.HK7.70to7.90-in2019easoperationalcapacityshouldgrowsignificantlyandpositionthe1363.HK1.26to1.29-segmentwellforpositivefreecashflowthereafter.Thisispositive,asanypositiveSIIC.SI0.63to

6、0.61-freecashflowfromWTEwouldbeusedtosupporthigherdividendsaccordingtoSource:DeutscheBankmanagement,whileCEWandCEGwillfinancetheirowncapexviadebt/equityToppicksfinancing.TheimprovingfreecashflowprofileandimprovingearningsqualityChinaEverbrightInt'lBuy(operatingearningsas%oftotalearningsrisi

7、ngfrom40%in2017eto50%in(0257.HK),HKD10.82Source:DeutscheBank2019e)shouldleadtoare-rating,consideringthecompany'scheapvaluationof~10.7xPEin2018e.CompaniesfeaturedDongjiangBuyEnvironmentalBuyonBeijingEnterprisesWateronvaluation;cashearningfromPPPkey(0895.HK),HKD12.02Ourcalculationshows