The net profit of homing declined. 2021H1, the company achieved a total operating income of 1.56 billion yuan, an increase of 7.4% over the same period last year. From a business point of view, urban and rural sanitation and cleaning income is 1.51 billion yuan, accounting for 97.2% of the total revenue, and domestic waste disposal income is 40 million yuan, accounting for 2.4% of the total revenue. 2021H1 realized a net profit of 150 million yuan belonging to shareholders of listed companies, down 19.4% from the same period last year. This is mainly due to the cancellation of COVID-19 's preferential policy on the epidemic situation, the slowdown in the growth rate of the company's operation over the same period last year, and the fact that the performance of newly signed large orders has not yet been fully released. Of this total, 2021Q2's revenue was 790 million yuan, up 1.2% from the same period last year, and the net profit from 2021Q2 was 60 million yuan, down 36.3% from the same period last year.
The gross profit margin decreases, the expense rate increases, and the operating cash flow is good. The company's 2021H1 comprehensive gross profit margin was 25.2%, down 3.1pct from the same period last year, mainly because the operating cost growth rate was higher than the revenue growth rate, while the net profit margin was 11.4%, down 2.9pct from the same period last year. The rates of sales, management and financial expenses were 1.8%, 9.6% and 3.0% respectively, which increased by 0.7,1.4 and 1.0pct respectively compared with the same period last year. The increase in the expense rate was mainly due to the increase in the number of bids won by the company, the increase in the number of operating projects, the increase in incentives for marketing personnel, and the increase in the company's interest expenses.
The cash flow of 2021H1's business activities was 200 million yuan, up 34.7% from the same period last year, with a significant increase, laying the foundation for the company to further expand its main business and expand rapidly.
With the promotion of sanitation marketization, the company's 2021H1 won the bid amount first in the industry. At present, the market rate of sanitation services is only 53%, compared with 77% of the domestic waste incineration industry and 81% of sanitation services in the United States. The domestic market rate is in a period of rapid rise in the middle of the market. We expect that by 2024, the total market space for traditional sanitation plus new services will be 448.6 billion yuan, and the space will continue to release to promote the volume of orders. The company's business covers more than 70 cities in 25 provinces across the country. According to sanitation online statistics, the company's 2021H1 bid-winning amount ranks first in the industry, with about 26 newly signed environmental service projects, with an additional bid-winning amount of 8.6 billion yuan, including winning large orders for city management services, strategic focus on city butler, and further expansion of business territory.
Excellent performance in the past, strong market competitiveness. 1 the company has been working hard on the sanitation service business since 2003, and has enjoyed the outbreak of dividends in the industry under the first-mover advantage for 17 years; (2) excellent fine management ability, outstanding price advantage, and intelligent sanitation under the trend of mechanization upgrading, further promote the improvement of management efficiency and optimize the management model. (3) excellent past performance and strong market competitiveness. By the end of 2020, the company's cumulative annual amount ranks in the forefront of private sanitation enterprises, and has a strong ability to take orders for large-scale projects with strong profitability.
Investment advice. Overseas Chinese Bank has excellent performance in environmental protection history, and relies on excellent management and strong brand power to outperform others in the market-oriented bidding. At present, the market-oriented dividend of sanitation continues to be released, and the company strengthens its capital strength and brand strength after listing. And with the intelligent and integrated development of sanitation, the company's management and capital advantages are expected to gradually appear, and future orders are worth looking forward to. We estimate that the 2021-2023 net profit from homing will be 39 million yuan, 470 million yuan, and EPS0.96/1.14/1.48 yuan per share, respectively, and the corresponding PE will be 15.6 yuan 13.0 yuan 10.1x, maintaining the "buy" rating.
Risk hint: the marketization of sanitation is not as expected, and the competition of sanitation service is intensified.
