On March 1, 2022, the company disclosed its annual report for 2021. During the reporting period, the company realized operating income of 1.166 billion yuan, an increase of 22.67% over the same period last year, a net profit of 202 million yuan, an increase of 27.99% over the same period last year, and basic earnings per share of 0.48 yuan.
Analysis and judgment:
"Water + solid waste" two-wheel drive, the annual performance is in line with expectations.
In 2021, the company achieved an operating income of 1.166 billion yuan, an increase of 22.67% over the same period last year, and a net profit of 202 million yuan, an increase of 27.99% over the same period last year. In 2021, the company continued to focus on the dual main business of "water + solid waste" and water market expansion, continued to seize new water market orders, and accelerated the landing of the company's existing projects, reconstruction and expansion projects. The annual water business income was 300 million yuan, an increase of 32% over the same period last year. In 2021, the market development of solid waste and waste power generation projects started with the acquisition of Shijiazhuang waste power generation project and Taihe sludge drying disposal project, realizing the rapid growth of revenue and profits of solid waste plates, and the revenue of solid waste business for the whole year was 193 million yuan, an increase of 304.44% over the same period last year. In the future, with the orderly production of all kinds of projects under construction, the scale of operating projects will gradually increase, and the capacity utilization rate will climb effectively, and the performance is expected to maintain steady growth.
The issuance of convertible bonds has been approved, and the follow-up of solid waste is expected to continue.
On June 16, 2021, the company issued a preliminary plan to issue convertible corporate bonds to unspecified objects, with a plan to raise 864 million yuan. On January 11, 2022, the CSRC approved the company's application for registration of issuing convertible corporate bonds to unspecified targets. The funds raised are mainly used for Chengde Luyuan thermal power construction project in Chengde County, domestic waste incineration power generation project in Dancheng County and supplementary liquidity. In recent years, the company has accelerated the development of solid waste business. as of November 30, 2021, the company has operated waste power generation projects with a treatment capacity of 2300 tons per day, and the scale of waste power generation projects under construction is 2100 tons per day. In 2021, the company's gross profit margin increased by 35.75% compared with the same period last year, mainly due to the increase in the proportion of solid waste business income. The company's solid waste income accounted for 16.59% from 5.03% in 2020, and the solid waste gross profit margin was 42.05%, which was higher than the company's overall gross profit margin, making a positive contribution to the improvement of the company's gross profit margin. With the continuous growth of the company's solid waste business disposal scale, the company's solid waste income contribution will increase steadily. At that time, the company's "sewage + solid waste" double main business will work together, and the company's performance can be increased steadily.
Operational efficiency improves cash flow is excellent, debt structure continues to optimize.
In 2021, the company's net operating cash (excluding cash paid for investment in franchise projects) continued to shine, that is, 226 million yuan, an increase of 104.25% over the same period last year. The company's cash flow performance is still strong, mainly due to the increase in receipts in the current period. We judge that the increase in the company's collection is mainly due to the increase in the scale of the company's operating projects and the significant enhancement of operational efficiency, of which investment and operation service income increased by 79.23% over the same period last year, realizing cash inflow of 977 million yuan from operating activities, an increase of 22.14% over the same period last year. The company has also strengthened its operation in the capital market, the total amount of project loan financing has also reached a record high, the proportion of long-term debt has increased significantly, and the amount of long-term loans at the end of the period has increased by 28.15% compared with the same period last year, thus optimizing the debt structure. In 2021, the net cash flow of fund-raising activities reached 678 million yuan, an increase of 8.98% over the same period last year, mainly due to the increase in the scale of financing. On the premise of expanding its leverage to ensure the financial stability of projects under construction, the company still maintains a relatively safe asset-liability ratio of 58.37% as of the end of December. The company has a number of projects under construction and excellent financial structure, which lays a good foundation for the sound and sustainable development of the company's business, and helps the company to effectively promote the project process and put into production in an orderly manner as planned, which is conducive to the long-term development of the company.
Investment suggestion
The company has formed a "sewage + garbage" two-wing development pattern, sewage treatment business and garbage incineration business go hand in hand, helping the company's performance to grow at a high speed. Based on the current operation scale of the company's solid waste business, the construction progress of projects under construction and new orders, we have lowered our profit forecasts for 2022 and 2023, and for the new 2024 forecast, the operating income for 2022-2023 will be reduced from 1.983 billion yuan and 2.659 billion yuan to 1.457 billion yuan and 1.816 billion yuan, respectively, an increase of 25.0% and 24.6% respectively over the same period last year, an increase of 21.8% over the same period last year. From 2022 to 2023, the net profit of homing decreased from 330 million yuan and 432 million yuan to 260 million yuan and 330 million yuan, respectively, an increase of 28.7% and 27.1% respectively, an increase of 22.7% over the same period last year. The corresponding EPS was 0.61,0.78 and 0.96 yuan, and the PE was as much as 15-12-10, maintaining the "buy" rating.
Risk hint
1) the acquisition of new orders is not as expected.
2) the advance of on-hand orders is not as expected.
3) the slope climbing speed of the newly built MSW incineration project is not as fast as expected.