Let's take a look at an interesting listed company today - China Tianying . This is a large international listed company engaged in smart environmental services, renewable resource recycling utilization and zero-carbon environmentally friendly new energy.
When it comes to internationalization, we must mention its revenue distribution. In 2021, its domestic revenue accounted for 18.7%, and in 2020 it was as low as 11.8%. This can be said to be quite international. China Tianying’s largest revenue comes from Europe, and it also has a presence in the Americas and other parts of Asia. Why did international revenue decline in 2021, while domestic revenue increased? This will be mentioned later.
Its main businesses are urban environmental services, garbage disposal, environmental protection equipment, industrial waste treatment and water treatment business, among which urban environmental services are the absolute majority, accounting for nearly half.
In 2017, they were mainly engaged in environmental engineering equipment companies, and then in waste incineration for power generation. We all know that it was actually the new business brought after its acquisition of Jiangsu Dezhan that led to the explosive growth and large-scale spread of its revenue.
Let’s look at the bubble since 2019. The gap in revenue scale is huge. The revenue growth in 2019 reached more than 9 times. Of course, the growth in 2020 and 2021 has slowed down. The decline in 2021 is because it sold out again. Most of the overseas business.
’s performance in 2019 was quite impressive, rising from a 2 billion-level company to a 20 billion-level company in one fell swoop. Although the growth of net profit did not keep up with the growth of revenue, it still increased by 2.3 times. Although revenue growth was good in 2020, net profit fell. After selling part of its overseas business in 2021, revenue fell and net profit began to grow again.
The first and second largest businesses in 2021 both experienced a decrease of more than 10% year-on-year. The reasons have been mentioned before; while the traditional core business of environmental protection equipment has a growth of 38.8%. It seems that its acquisition of Shetonxiang is still Driven the company to a higher new platform.
The main area of decline is Europe. This is the business it sold in 2021, that is, the European Urbaser company. It is normal for revenue to shrink. Its main focus is on China and other parts of Asia. All have good growth.
It is impossible to say that selling the European business will have little impact on the company. In the first quarter of 2022, its revenue fell by 79.2% and net profit fell by 65.2%. Based on this calculation, the revenue for the whole year of 2022 may not exceed 5 billion yuan.
Despite the substantial growth in revenue, the industries involved have also undergone major changes. China Tianying's gross profit margin has plummeted by more than half, which has put great pressure on it. The return on net assets of
and also began to decline after a slight increase. Although these businesses still have certain benefits, it depends on the company's strength to support the continued operation of these businesses.
Obviously, interest-bearing liabilities of more than 20 billion yuan cannot support these low-yield environmental protection projects in the long term. Moreover, its asset-liability ratio also reached 75% in 2019 and 2020.
From the perspective of 's short-term solvency , there is not much of a problem, but you can't delay things until they are beyond control and then think of a solution. Dispose of these businesses early and make a small profit, which is obviously a wise choice. .
The previously relatively calm cash flow of and will definitely decline significantly after three years of high performance.
However, it still left a large amount of cash and some other overseas projects. It seems that this acquisition and disposal was still a bold and profitable adventure.
In the first quarter of 2022, China Tianying's gross profit margin increased significantly. Although the return on net assets hit a new low, this period of large-scale adjustment will generally affect efficiency. After all, there are many large non-routine expenses, etc. If everything goes well with the project, the follow-up can be adjusted. Although
's acquisition of Jiangsu Dezhan at the end of 2017 was not mainly completed by paying cash, it still used a large amount of indirect financing to operate these projects. We will regard it as a less standard leveraged acquisition of .Now it seems that although the effect is not perfect, it is still rewarding.
As the economy develops, more companies will try to go global. China Tianying has provided certain experience for subsequent companies with similar development needs. What is its subsequent development? Let’s look back after its semi-annual report is released.
statement: The above is a personal analysis and does not constitute investment advice to anyone!
