Hongcheng Environmental Protection Technology (2265.HK), China's leading gold mine waste disposal leader, was officially listed for trading on the main board of the Stock Exchange on November 12.
After yesterday's dark market closed higher, today's listing on the first day of poor performance, which is highly related to the trend of today's Hong Kong stock environmental protection sector. In fact, Hongcheng Environmental Protection, as the most outstanding subscription and dark market comprehensive performance of several new stocks recently, has gained sufficient recognition in the market, especially in the current environment of depressed sentiment in the new stock market. Since the second half of this year, the sentiment in the new stock market has continued to cool, especially since the end of October, the intensive breaking of new shares and the sharp decline in the subscription mood of new shares. According to public statistics, only three of the 17 new stocks listed in Hong Kong have risen on the first day since the beginning of August, and only one of the 11 new stocks has risen on the first day since the beginning of October.
As a general rule,The short-term market is a voting device, and short-term market fluctuations are more dominated by capital and emotional games, while value weighing depends on the fundamental changes of the company in the long cycle.therefore,What will be the future performance of Hongcheng Environmental Protection after listing?This must be what the market is more interested in at this stage.In terms of Hongcheng's environmental protection track prosperity, pattern, barriers and potential growth points in the future, the future value may be high.
The track has high business cycle + high barriers, and the company has excellent growth and profitability.
Hongcheng Environmental Protection, as the leader in the disposal of hazardous wastes from gold mines in China, focuses on the two major business directions of hazardous waste disposal and renewable resources, and is also the two most prosperous races among the many subdivided industries of environmental protection. The recent three-quarter report has once again verified this fact.
According to the report of China-Thailand Research Institute, solid waste is the largest segment in the environmental protection industry, and the overall performance growth rate of Q3 is still ahead of other sectors, which is quite rare. From the point of view of re-splitting the solid waste plate, although garbage disposal is the largest plate, but the explosive performance of hazardous waste disposal and renewable resources sub-plate is the most obvious.
In addition to the high growth expectations given by the high prosperity of the track, Hongcheng's profitability is also outstanding. At present, the overall gross profit margin of the large environmental protection sector is close to 30%, the net profit rate is about 10%, and the return on net assets is about 7%. Hongcheng environmental protection's gross profit margin has been basically maintained at more than 60% in the past two years, and the net profit rate has been above 30% for a long time, and there are still great opportunities for growth and a certain degree of flexibility in the future. In addition, although Hongcheng Environmental Protection's return on net assets has declined year by year in recent years, it is still as high as nearly 70%. Although the leverage level is high, it has shown an obvious downward trend in recent years.
So,Hongcheng environmental protection can be said to occupy the golden track in the environmental protection industry, so it has both growth and profit.
With the significant centralization of the industry head, what are the potential growth points in the future?
If the growth benefits from the high prosperity of the industry under the new policy cycle, then the excellent profitability benefits from the high barriers in the gold mine hazardous waste disposal industry, and the business with significant barriers is obviously one of the important universal criteria for a good investment. determines the sustainability of a company.
Specific reference can be made before such as "overbought nearly 24 times!" What is the logic of Hongcheng Environmental Technology (2265.HK) being sought after against the trend? "wait for many articles. To put it simply, it mainly includes qualification, technology and capital, in which qualification is essentially a kind of franchise, and the key to technology lies in talents and equipment, and the necessary investment of funds, including these and core resources such as land. Due to the comprehensive consideration of the above professional and technical threshold and cost, gold smelting companies often outsource tailings treatment to third-party professional processing companies with technical and large-scale processing capacity, such as Hongcheng Environmental Protection, and as environmental protection requirements become stricter, the degree of dependence will also increase.
The distribution law of gold mine hazardous waste industry is highly linked to the gold mining industry of the main upstream customers, showing an obvious "28 effect".According to the Frost Sullivan report, CR5 in China and Shandong are 68 per cent and 65 per cent respectively in terms of 2020 earnings. Among them, Hongcheng Environmental Protection ranks second in Shandong Province and third in China with 10% and 15% market share respectively.Such a centralized industry structure, in fact, also ensures the certainty of future performance growth of leaders such as Hongcheng environmental protection.
The future growth of the company can be seen from two major lines of business:First, the gold mine hazardous waste disposal plate, which benefits from the world-class gold-rich location advantage of Yantai City, Shandong Province, and a stable long-term relationship with customers of head Mining Group like Shandong Gold Mining, will provide central support for its sustained growth.，At the same time, considering the continuous growth of gold demand after the epidemic and the stricter environmental protection policy, the company's bargaining power is expected to continue to improve in the future, and there is a chance to usher in a situation of rising volume and price.；
Second, the renewable resources sector, as the main line of the circular economy model.On the one hand, due to the strong demand for sulphuric acid downstream, the price trend of sulfur concentrate is significant, and the gross profit margin may be further increased in the future.；On the other hand, it will also benefit from the incremental market space brought by the expansion of new categories (such as the layout of building aggregates, the Chinese market has reached trillion levels, and the company is expected to complete the construction of 18.5 tons of annual production capacity in the first quarter of 2023). With the company gradually put into production in the future, it will help its business volume to a new level.。
The concept stock of "specialization and special new" has been highly hyped and is expected to become a sub-item of emotional warming.
Therefore, in terms of track advantages and company occupation, the long-term value of Hongcheng environmental protection is self-evident.It is expected that after listing, the company will also get more resources, so as to speed up the pace of expansion.。
It is worth noting that Hongcheng Environmental Protection was also recognized as a "specialized and special new" small and medium-sized enterprise by the Shandong Department of Industry and Information Technology in August this year, and with the recent opening of the Beijing Stock Exchange, the theme of "specialized and special new" has become the target of capital pursuit. According to WIND statistics, the A-share specialization and special new concept plate has risen nearly 10% since the beginning of this month. This may also be a favorable catalyst for the company to accelerate the warming of market sentiment in addition to green shoes.