Green low-carbon landfill gas manufacturer, sub-industry leader. Baichuan Changyin is located in Zhengzhou City, Henan Province, founded in 2009, is a research and development, production and management as one of the energy-saving and environment-friendly new energy enterprises. The company has been deeply engaged in the field of landfill gas power generation and carbon emission reduction for more than ten years. After continuous accumulation and innovation, the company now has 37 patents, including 4 invention patents. The company now owns 106 Zi and Sun companies, which has formed a relatively obvious scale advantage, and won the honorary title of Henan Energy Saving and Emission reduction Science and Technology Innovation demonstration Enterprise and so on. By the end of 2020, the company has operated 82 projects, ranking first in the country. The company's operating income in 2020 was 519 million yuan, an increase of 11.76 percent over the same period last year, and the net profit after deducting non-return was 133 million yuan, an increase of 6.90 percent over the same period last year. The company has an average annual installed capacity of 171.25 MW in 2020. From 2016 to 2020, the company has an average annual market share of 19.68%, ranking first in the domestic market.
Landfill gas power generation business: driven by many factors, the growth momentum increases steadily. In 2021, 21 comprehensive utilization projects of landfill gas will be built and expanded, and strive to quickly occupy the core resources. 1), the biogas power generation policy protects the company, providing a full amount of electricity purchase policy and a certain electricity price subsidy, and the promotion of the construction of "beautiful countryside" in the future has brought a considerable increase in landfill demand. 2), the company is rich in upstream resources, agriculture, aquaculture, catering and other industries have brought broad market opportunities for the company. 3) in July 2021, the "opinions of the Central Committee and the State Council of China on promoting the High-quality Development of the Central region in the New era" was released, outlining a blueprint for the rise of the central region. The growth rate of the central and western regions is faster than that of the eastern region. It is expected that the follow-up development of the central and western regions will maintain a trend of rapid development.
Carbon emissions reduction trading: the market is heating up and is expected to create a performance flashpoint. The company actively participates in the carbon trading mechanism in the international and domestic markets, and has early laid out the carbon emission reduction and set up a carbon assets research team to expand the benefits of landfill gas treatment projects. The company has registered 19 CDM projects, 14 CCER projects, 1 gold VER project, 4 VCS projects and more than 70 reserve projects.
Profit Forecast and Investment rating: we estimate that the company's operating income from 2021 to 2023 will be 8.43 / 1.096 billion yuan respectively, and its net profit will be 1.94pm 2.74pm respectively, corresponding to EPS 1.21pm 1.71pm 2.25 yuan and PE 35.01x/24.74x/18.83x respectively. As the company has not yet restarted carbon emission reduction trading, if we restart trading, according to the CCER price of 50 yuan per ton, we estimate that the company's EPS in 2021-2023 will be 3.19x4.28x5.59 yuan respectively, and the corresponding PE will be 13.26x/9.88x/7.57x based on the closing price on September 24, 2021, and the thickening income from carbon emissions trading is obvious. Cover for the first time, giving a "buy" rating.
Risk tips: weaker policy support, lower subsidies for feed-in electricity prices, uncertain opening hours of companies' carbon reduction transactions, lower-than-expected profits of acquired companies, performance forecasts and valuation judgments fall short of expectations.
