1. the profitability of the industry is good, and the total profit is highly dependent on government subsidies
since 2017, thanks to the continuous expansion of sewage treatment market and the promotion of new areas such as water environmental management, the revenue and profit scale of the water industry has continued to grow. in 2017, the sample companies realize business income amounted to 142.459 billion yuan, up 17.63% from a year earlier, the higher credit level of sample companies operating revenue contribution is outstanding, aaa level sample water companies in the current sample enterprises accounted for 61.39% of total revenue.
2017, sample enterprise deductions "other income" operating profit amounted to 18.719 billion yuan, year-on-year growth of 47.39%, a sharp weed out investment income, the sample companies keep 20.34% growth in operating profit, which is a sample enterprise scale effect further, during a small cost control ability (during the rate fell to 18.49% from 19.36% in 2016); grade aa and aa - sample companies operating profit is small, and there are a few companies operating profit is negative, mainly affected by their own scale and qualification, income structure is relatively single, depreciation and rising labor costs.
in 2017, the sample average operating margins and profit margins of 27.47% and 29.16% respectively, compared with last year fell 0.22% and 0.22% respectively, the water sector overall profitability remained stable. in 2017, the total profits of the sample enterprises totaled 26.16 billion yuan, an increase of 24.52 percent over the previous year, outpacing the growth of operating revenue. sample water during the enterprise business scale, cost control ability, the comprehensive influence such as investment income contribution to the larger, 2017 earnings and other non-operating income contribution to the total profit fell to 28.40% from 39.19% in 2016, but on the whole sample businesses remain high degree of dependence on government subsidies.
2. good cash flow status, strong ability to get cash, large scale of cash outflow from investment activities
in 2017, the sample companies operating activities cash inflow amounted to 167.08 billion yuan, up 5.92% year on year, operating activities net cash flows amounted to 23.007 billion yuan, down 36.22% year on year, the main department other activities related to business activities of cash outflows of larger scale. in 2017, the cash income ratio of the sample enterprises was 101.00%, with little change compared with the same period last year. the cash income quality of the sample enterprises performed well. the net cash flow of some sample enterprises' business activities is negative or the cash income ratio is lower than the average, mainly due to the insufficient return of government funds and the increase of other business inputs.
water conservancy infrastructure construction investment and maintenance of water supply network and the ppp model projects to promote characterized by large investment activities cash outflow, in 2017, the sample enterprises and construction of fixed assets, intangible assets, cash outflows amounted to 79.496 billion yuan, up 14.03% from a year earlier, with professional technology and capital advantage of sample companies to expand the ppp way or industrial chain integration showed year-on-year increase in investment scale is larger. the net cash outflow from the investment activities of issuing enterprises in 2017 was 90.626 billion yuan, up 11.62% year on year, in line with the overall development trend of the water sector. with the increasing demand in sewage treatment and water environment management, greater investment demand is expected in the future.
3. the asset structure of the sample enterprise is stable, mainly non-current assets, and the proportion of intangible assets has increased
with the progress of investment projects in the water sector, the scale of sample water enterprises will continue to expand in 2017. by the end of 2017, the total assets of sample water enterprises will be 10695.92 billion yuan, an increase of 14.67% over the previous year. assets structure is given priority to with fixed assets, projects under construction and intangible assets, the local water business territory, the water supply and drainage assets included in the fixed assets or under construction engineering, cross-regional expansion water projects often implemented by way of franchising, the part of the assets included in the intangible assets, by the end of 2017, fixed assets and intangible assets total 39.94%, slightly decreased, compared to the intangible assets accounted for 12.89%, up 2.87% from a year earlier. with the progress of ppp projects, the proportion of intangible assets and long-term receivables in assets will increase.
4. the debt level of the sample enterprises is controllable, and the debt burden of the aa enterprises is significantly increased
by the end of 2017, the debt scale of the sample enterprises totaled 340.226 billion yuan, up 16.77 percent year on year. interest-bearing debt is given priority to with long-term debt ratio of 70.01%, fell 5.09% year on year, main is a long-term project loan not landing stage through short-term financing flow, as well as the result of non-current liabilities due within one year on a large scale. bank loans are still the main source of financing for water enterprises. at the end of 2017, the balance of the sample enterprise's bonds on deposit accounted for 31.98% of all interest-bearing debts. sample enterprise debt burden increase slightly, of which the solid waste, environmental protection, water conservancy and hydropower industry to expand or trans-regional investment enterprise debt burdens rise significantly, 34% of the sample companies asset-liability ratio is more than 65%.
2016 ~ 2017, by water and related business scale expand the scale of financing infrastructure projects increase, water of different credit rating scale and corporate debt burden in certain differentiation, aaa, aa and aa sample enterprise debt from the end of 2016 growth of 26.29%, 11.25% and 18.67% respectively; aaa and aa sample enterprise average asset-liability ratio is increased by 0.17 and 2.05% at the end of 2016, aa a sample average asset-liability ratio down 0.36% compared with the end of 2016, aaa and aa sample enterprise debt burden basic flat, aa dibiao transformation in sample enterprises, production capacity and other local water companies account for higher investment demand is bigger, significantly increase the debt burden, but overall debt levels in a manageable level.
5. the short-term solvency of high credit level water utilities is weakened obviously, and the overall solvency is still good
short-term debt paying ability, at the end of 2017, aaa level enterprise short-term solvency indicators is value decreased obviously, the main enterprise in order to enhance the financing efficiency of enterprise funds, short-term debt, and large-scale long-term debt will expire in one year; in the same period, the short-term debt repayment indicators of the sample enterprises at aa level were weakened, and the short-term debt repayment indicators at aa level were similar. overall, the overall short-term solvency of the water sector has declined significantly, but it remains at a good level.
long-term debt paying ability, from 2016 to 2017, as the water sector ebitda growth is accelerated, the sample companies all debt/ebitda average fell, 8.17 times and 7.67 times respectively, water sector long-term debt paying ability improved.
sample enterprise long-term debt paying ability of aaa level was obviously higher than that of level lower sample enterprises, low level of sample companies by increased water demand, earnings growth is relatively slow, all debt/ebitda ratio is higher, to the whole sample enterprise long-term debt paying ability weakened obviously. it is expected that the solvency of the industry will continue to maintain a relatively stable situation in the future. enterprises whose debt repayment indicators are significantly weakened due to the excessive size of existing debts or the decline of profitability should pay more attention.
