Recently, listed environmental protection companies have successively released their annual performance reports for 2017. Although more than 70% of the companies are pre-happy, the phenomenon of intensified performance differentiation is prominent. In addition, the "small scattered" pattern of the entire environmental protection industry is still outstanding.
The 13th Five-Year Plan for the Development of Energy Conservation and Environmental Protection Industries proposes to improve industrial concentration, cultivate a number of large energy conservation and environmental protection enterprise groups with international competitiveness, and cultivate more than 100 key enterprises in key areas of energy conservation and environmental protection industries. In the opinion of experts and insiders, it is still the general trend for the environmental protection industry to speed up mergers and acquisitions, no matter from the policy orientation or the development of the industry itself, and there will still be a wave of mergers and acquisitions in the future.
Annual report performance is improving, but industry differentiation is intensifying.
Combing the disclosed 2017 annual report and performance forecast, it was found that there were 126 companies with pre-history performance during the reporting period, accounting for more than 70%; There are as many as 46 companies whose net profit is expected to double year-on-year, which shows that the overall development of the environmental protection industry is good, and the profits of related listed companies continue to grow significantly.
Judging from the published annual report, the net profit of leading enterprises such as Sanju Environmental Protection, Bishuiyuan and Oriental Garden all exceeded 2 billion yuan. Among them, Sanju Environmental Protection realized a net profit of 2.539 billion yuan, a year-on-year increase of 57.02%; Bishuiyuan achieved a net profit of 2.509 billion yuan, an increase of 35.95% year-on-year; The net profit of Oriental Garden was 2.178 billion yuan, a year-on-year increase of 68.13%.
However, it is worth noting that the performance differentiation of the entire environmental protection sector has intensified. Yishida, Fei Da Environmental Protection and Tianjin Membrane Technology suffered serious losses, and their net profit and year-on-year profit growth both showed red lights. According to the brokerage research report, the proportion of companies with a net profit of 0-0.5 billion has decreased, while the proportion of companies with a net profit of 0-0.5 billion has increased.
Among the listed companies in the A-share environmental protection sector, the growth rates of total profit and net profit attributable to the parent company of 16 companies with total assets of more than 5 billion yuan disclosed in the 2017 annual report were 25.3% and 21.6% respectively, while the growth rates of total profit and net profit attributable to the parent company of 18 listed companies with total assets of less than 5 billion yuan were only 8.2% and 10.7% respectively, and there was a huge difference in performance between large and small enterprises.
The "small scattered" pattern of the industry still exists.
The "small scattered" pattern of the environmental protection industry is still outstanding. From the perspective of hazardous waste industry, the data show that there are nearly 3,000 hazardous waste enterprises in China, the average qualification scale of licensed enterprises is less than 30,000 tons/year, and the market share of the top ten leading enterprises is even less than 10%. The hazardous waste treatment industry as a whole is scattered, small and weak. "At present, the technical equipment in the hazardous waste industry is weak, and the capacity utilization rate is less than 30%, showing a downward trend as a whole." Li Yongpeng, president of dongjiang environmental protection Co., Ltd., told the Economic Information Daily reporter earlier.
The sanitation industry is also scattered. According to the real-time tracking data of E20 data center, there are about 5,000 sanitation enterprises in the industry, but only one or two hundred of them have taken shape initially.
Xue Tao, managing partner of E20 Environment and executive dean of the Institute, pointed out in an interview with the Economic Information Daily that the concentration of environmental protection industry is relatively low, with about 50,000 upstream and downstream enterprises. He specifically analyzed that for the field of industrial pollution control, on the one hand, the categories are complex, Party A is scattered, and the technology is complex, which brings about the problems of low concentration and "small" and "scattered" environmental protection enterprises; On the other hand, the upgrading of industrial sewage management is not perfect, and zero tolerance for excessive sewage discharge has not been achieved, which has aggravated the situation of "small", "scattered" and especially "chaotic" in the industry.
"In the field of municipal utilities (mainly referring to the field of government payment), the main operators of municipal environmental protection facilities in thousands of counties and cities are naturally dispersed." Xue Tao further pointed out that the franchise reform in 2003 promoted the improvement of industry concentration. The data shows that the top ten social capitals now account for more than 20% of the total water supply in China, and 70% of new waste incineration projects are allocated by the top ten. However, the situation of "small", "scattered" and even "chaotic" is still obvious in the upstream equipment enterprises supporting investment and operation enterprises and other sub-sectors mainly focusing on engineering (rural environmental management, soil remediation, etc.).
Mergers and acquisitions will continue to deepen.
According to the "Thirteenth Five-Year Plan for the Development of Energy Conservation and Environmental Protection Industry", by 2020, the energy conservation and environmental protection industry will become a pillar industry of the national economy, emphasizing the need to improve industrial concentration and enhance industrial competitiveness. And clearly put forward "to cultivate a number of large energy-saving and environmental protection enterprise groups with international competitiveness, and cultivate more than 100 key enterprises in key areas of energy-saving and environmental protection industries".
In 2017, the environmental protection industry continued to expand the market and extend the industrial chain through horizontal and vertical mergers and acquisitions, and intra-industry, cross-industry and cross-border mergers and acquisitions have become a normal state. The data shows that in 2017, there were 86 mergers and acquisitions in the national environmental protection industry, involving an amount of 38.5 billion yuan. In the eyes of experts and insiders, this kind of M&A will continue to deepen, and a new wave of M&A is expected to set off again.
Xue Tao pointed out that due to the low ratio of fixed assets in the field of environmental protection, the process of improving industry concentration will be faster than other fields. Many expansions in this field are completed through mergers and acquisitions, and mergers and acquisitions will remain hot in the next few years. Many small-scale sanitation enterprises have low competitiveness in the process of marketization and will be squeezed out or merged in the next three years.
For example, Guan Qingyou, president of the Financial Research Institute and chief economist, also believes that the differentiation and restructuring of the environmental protection industry will continue to intensify, and the scale and proportion of some leading enterprises in the whole industry will increase.
"Strong and weak mergers and strong mergers between operating enterprises are benign and sustainable trends, and mergers and acquisitions will be the theme that will last for a long time." Xue Tao said that small and medium-sized enterprises with subdivided technologies have also been merged by large enterprises, but more are self-renewal and metabolism of many small and medium-sized enterprises. It happens from time to time that excellent enterprises strengthen mergers and acquisitions, but it will be more common to directly compete to squeeze out inferior enterprises.
However, in the opinion of experts, mergers and acquisitions in the environmental protection industry cannot be generalized. Chen Junhao, Senior Director of Investment in Major Projects Department of Fosun Group, said in an interview with the Economic Information Daily that at present, the vast majority of central enterprises engaged in environmental protection industry are subsidiaries. Although it is feasible in theory to carry out professional integration and asset transfer among subsidiaries, it should not happen in a large scale due to factors such as management system, assessment, personnel appointment and dismissal, and the effect of this administrative reorganization is not necessarily ideal.
"At the current stage of development, it is still necessary to encourage state-owned capital to enter the field of environmental protection. The key is to have a fair and reasonable market competition environment, so that enterprises with real R&D strength, market development and project operation capabilities can occupy more external market shares through marketization." Chen Junhao said.
From the international experience, such as Japan and the United States, decentralized municipal infrastructure operators are widespread. Even the "French duo" such as Veolia and Suez will be surrounded by many small and medium-sized environmental protection technology enterprises to provide supporting services and technological innovation. Xue Tao believes that the future pattern of domestic environmental protection industry, from the operational point of view, both industrial and municipal concentration will continue to increase, but various technical subdivisions will leave a large number of small and medium-sized enterprises with enough room for development. Considering the inherent characteristics of technological innovation and environmental protection subdivision, in this part of the region, "small scattered" is not the fundamental problem, "small scattered" is. The key to solving the "chaos" still needs to gradually put in place all kinds of supervision based on the effect of environmental governance. (Reporter Ban Juanjuan)