Event description:
2021H1, the company realized operating income of 8.626 billion yuan, an increase of 24% over the same period last year, a net profit of 1.429 billion yuan, an increase of 235.33% over the same period last year, and a non-return net profit of 762 million yuan, an increase of 96.37% over the same period last year.
Event comments:
Net profit increased significantly. 2021H1, the company's water operation and solid waste operation scale continued to grow, while some water projects completed price increases, solid waste project capacity utilization increased, driving the rapid growth of net profit. The company has achieved good results in fine management, reduced water consumption and electricity consumption per ton of water projects, and improved the operation efficiency of solid waste projects. In addition, the profits affected by the non-main business mainly include two aspects: (1) the transfer of 40% equity in the Deepwater Group by the joint venture GM first Water Investment Co., Ltd. will increase the profit by 544 million yuan; (2) the company will increase the profit by 118 million yuan by disposing of the 60% equity stake in the subsidiary. Combined with the above factors, the growth rate of net profit is higher than that of revenue.
The volume and price of water operation business has risen, and the gross profit margin of solid waste plate has increased significantly. 2021H1, the company has increased its water treatment capacity by about 39.74 million tons per day (3704 million tons per day of sewage; 27,000 tons per day of water supply). Among them, 7 projects have completed water price adjustment, urban water operation business has achieved volume and price increases, revenue has increased by 24.90% over the same period last year, and operating profit has increased by 46.34% over the same period last year. 2021H1, the company has a total of 73 solid waste projects in China, 2 more than at the end of 2020, with a total investment of about 17.8 billion yuan, and 68 domestic projects have entered the construction and operation period, 4 more than at the end of 2020. the company has added 3200 tons of waste incineration capacity per day, driving the revenue of the solid waste sector to increase by 32.4% to 2.913 billion yuan compared with the same period last year, and the gross profit margin increased by 5.49pct to 33.99% compared with the same period last year.
ROE increased significantly, and the asset-liability ratio decreased significantly. 2021H1, the company's net interest rate increased by 11.47pct to 18.33% year-on-year; led the company's ROE to rise by 3.37pct to 5.39% year-on-year. The company's asset-liability ratio fell 4.96pct to 63.99% from a year earlier.
The listing of REIT helps invigorate existing assets. On June 21, the company's first water REIT was officially listed for trading on the Shanghai Stock Exchange, becoming the only product in the first batch of pilot public offering REITs based on sewage treatment infrastructure. This REITs issue will help invigorate the company's stock assets and further improve the quality of the company's development.
Investment rating and valuation: we estimate that the company's 2023 net profit of 2021, 2022, and 2023 will be 2.228, 25.68, and 2.950 million respectively, corresponding to PE, which is multiple of 12-10-9, maintaining the "recommended" rating.
Risk hint: the scale of the new water supply / sewage project is not as expected; the landing progress of the hand-solid waste project is not as expected; the progress of water price adjustment is not as expected.