Potential A-Share issuance to provide catalyst in 2H17E
Revising FY17E/18E net profit by 1%/34%
Maintain BUY with TP of HK$6.2 unchanged, 60% upside
Positive ahead With recent update on the company, we believe there arepositive catalysts ahead for Dynagreen, despite a delay in construction start insome projects. Dynagreen share price underperformed the market by 23% inrecent three months due to （1） lack of new projects secured since Feb-16 （2）delay of construction completion of Jurong project （3） delay of start ofconstruction of Shantou project and Bobai project. As （1） Jurong project hascommenced operation in Mar-17 and （2） Shantou project and Bobai project areexpected to start construction in 2H17E, we think the current price level appearsvalue for investment. As Dynagreen ranked 115th in the SSE IPO approval list, itis expected Dynagreen would be listed between late 2H17E and early 1H18E.With potential IPO and potential new projects rolling out after 19th NationalCongress of CPC, we expect more catalysts would drive better performance forDynagreen in 2H17E.
　　Earning revisions With delay in construction start, construction revenue isshifted from FY17E to FY18E, we revised FY17E/18E construction revenue by-24%/18%. We revised up FY17E/18E operations revenue by 7%/1% as 6%/20%better on-grid power per ton of MSW received in FY17E/18E （to 249/263 kwh）。With better operating efficiency and lower number of staff per project, we reviseddown FY17E/18E opex by 32%/27%. With （1） lower RMB assumption and （2）potential dilution effect of A share issuance in 1H18E, we revised FY17E/18EEPS by -3%/16%.
　　Maintain BUY Since A-Share is normally issued at or below 23x PE,Dynagreen H-Share is only trading at FY17E 8.4x PE would appear great value.We maintain our BUY rating on Dynagreen with TP of HK$6.2 unchanged basedon FY17E 13x PE, representing par to the mean of PE band and 60% upside.