Summary of events: the company issued a report for the third quarter of 2021, with a revenue of 15.226 billion yuan, an increase of 31.52% over the same period last year, and a net profit of 1.914 billion yuan (deducting 1.227 billion yuan), an increase of 106.20% over the same period last year (deducting an increase of 43.88% over the same period last year).
In the single quarter of Q3, the company's revenue was 6.6 billion yuan, up 42.85% from the same period last year; net profit was 485 million yuan, down 3.37% from the same period last year; and non-net profit was 465 million yuan, up 0.04% from the same period last year.
The profitability is improved, and the financial report is sound as a whole. During the reporting period, the company's net sales interest rate was 14.24%, up 5.23% from the same period last year, the expense rate during the sales period was 17.21%, down 2.87% from the same period last year, and ROE (weighted) 7.21%, an increase of 3.01% over the same period last year; profitability continued to improve; the asset-liability ratio decreased 3.13% to 63.91% from the same period last year, continuing the downward trend; the net economy was 1.634 billion yuan, down 36.09% from the same period last year. The cash-to-cash ratio is 77.21%, and there is room for improvement.
The water treatment faucet with a treatment capacity of more than 23.44 million tons still has great potential for growth. According to the company's 2021 semi-annual report, the company has a total water treatment capacity of more than 2344 million tons per day, ranking in the forefront of the domestic water industry. At present, the scale of water supply (holding) that has been put into operation is about 5.8924 million tons per day, and the scale of sewage treatment (holding) is about 831.62 million tons per day. The company's water investment and engineering projects are distributed in 28 provinces, autonomous regions and municipalities directly under the Central Government, covering more than 100 cities, forming a regional competitive advantage in Hunan, Shandong, Anhui and other provinces, producing obvious scale effects. and initially realized the in-depth expansion of water business in villages and towns. The company now has sufficient orders for hand water treatment, and has a large production capacity under construction, and there is still a lot of room for improvement in the future.
Solid waste business has become a new growth engine of the company. The company's solid waste business section has covered more than 20 provinces and cities, including Beijing, Jiangxi and Henan, and has gone abroad. At present, there are more than 70 reserve projects (including 25 waste power generation projects, 7 landfill projects, 7 anaerobic treatment projects, 21 garbage collection, storage and transportation projects, 9 hazardous waste comprehensive treatment projects, 2 waste electrical disassembly projects and 2 biomass power generation projects), with a total investment of about 17.8 billion yuan. The total design scale is that the annual garbage disposal capacity is about 13.72 million tons, and the annual disassembly volume of electrical and electronic equipment is about 3.2 million pieces. The solid waste business led by waste incineration power generation will provide sufficient impetus for the company's future performance growth.
Driven by the 2030 carbon Neutralization Action Plan, there is a huge space for the development of solid waste industry during the 14th and 15th five-year Plan, and we estimate that there is still more than 200 million tons of space for waste incineration by the end of the 14th five-year Plan.
The company will continue to benefit from the outbreak of the market in the field of solid waste.
The underlying assets are large and excellent, and REITs accelerates the company's high-quality growth. REITs can effectively activate the existing assets and open up a new way for asset pricing of the environmental protection industry. At the same time, it will promote the high-quality development of the industry and improve the quality of industrial assets, which is of great significance. As the first batch of products involved in the field of water affairs in the country, the first water REIT has been successfully listed and widely recognized by the market. We estimate that the bottom assets of the company's solid waste + water are more than 100 billion yuan, and the texture is excellent. In the future, with the gradual landing of the company's REITs project, the follow-up will not only improve the company's debt structure, enhance liquidity, but also promote the company to continue to improve the level of management, increase the improvement of the quality of the underlying assets, and form a virtuous circle.
Profit forecast and investment advice: the company's net profit in 2021-2023 is expected to be 2.167 billion yuan, 2.543 billion yuan and 3.08 billion yuan respectively, corresponding to 0.30 EPS 0.35 yuan 0.42 yuan, corresponding to PE11.35/9.67/7.98 times. With the gradual landing of REITs, the company's asset structure continues to improve and its performance has great potential for sustained growth. Give a "buy" investment rating.
Risk Tip: the risk that the company's order acquisition and project promotion are not as expected.