Event
On March 15, 2022, Dongzhu Ecology issued a performance forecast for 2021, which is expected to achieve revenue of about 2.75 billion yuan in 2021, about 17.62% of the same period last year, and a net profit of 456 million yuan to 475 million yuan in 2021, which is expected to reach the standard of the first unlocking period of the employee stock ownership plan. In a single quarter, Q4 is expected to achieve revenue of 960 million yuan in 2021, + 86.77% month-on-month, + 64.38% year-on-year; net profit from 0.96 to 115 million yuan, + 15.66% to + 38.55%, and + 200.00% to + 259.38% compared with the same period last year.
Comment
The company's revenue and performance achieved steady growth in 2021, mainly due to the increased demand for ecological and environmental protection, the revitalization of the new countryside and the acceleration of the emerging infrastructure market in the context of double carbon. The company's two traditional business lines of ecological restoration and municipal landscape are moving forward together.
The main industries of ecological restoration and municipal landscape are booming, winning the bid and signing contracts for the whole year are + 48.66% and 24.87% respectively compared with the same period last year. In 2021, the company and its subsidiaries won a total of 16 new bid projects (13 landscaping ecological engineering construction business + 3 planning and design business), with a total bid winning amount of 2.884 billion yuan, + 48.66% compared with the same period last year. In 2021, the company and its subsidiaries signed a total of 16 new project contracts (14 landscaping ecological engineering construction business + 2 planning and design business), with a total project amount of 2.355 billion yuan, + 24.87% compared with the same period last year. In a single quarter, Q4 company and its subsidiaries won 5 new bids in 2021, with a total winning amount of 1.395 billion yuan, + 151.71% compared with the same period last year, and 6 newly signed project contracts with a total project amount of 952 million yuan, + 13.15% compared with the same period last year.
With the rapid expansion of forestry resources, carbon sequestration business will benefit from the progress of landing and the restart of CCER. Relying on the advantages of market, team, capital and cooperation, the company quickly and deeply laid out the forest carbon business, and became the only forestry company selected among the 100 carbon neutralization index stocks on the Shanghai Ring Exchange in October last year. From the perspective of the company's forestry resources expansion process, the company's forestry resources expanded rapidly. In November last year, the company signed a cooperation agreement on carbon sequestration development of far more than 5 million mu of forest resources with the Yangtze River Afforestation Bureau of Sichuan Province. In December last year, it signed a strategic cooperation framework agreement with the people's Government of Ninghua County (the woodland area is about 2.79 million mu). In January this year, we signed a strategic cooperation agreement with the Yongde County people's Government (with a forest area of about 3.3 million mu) and a project investment framework agreement with the Yongping County people's Government (with a forest area of about 3.03 million mu). In February this year, we signed a project investment framework agreement with Luzhou Aviation Development Group Co., Ltd. (woodland area is about 9.2 million mu). The company's forest carbon business is expected to land one after another. From a policy point of view, both the Shanghai Ring Exchange and Beijing Ring Exchange publicly say that CCER is expected to restart this year, and the company's carbon sequestration business will benefit from the restart of CCER.
Investment suggestion
Taking into account the steady growth of the company's traditional business and the accelerated layout of the company's forest carbon business, we give the company a forecast of 1.05 EPS for 2021-22-23, respectively, and the corresponding PE is 10pp8max 5X, maintaining a "highly recommended" rating.
Risk hint
The order performance is not as expected; the policy landing is not as expected; the promotion of carbon trading is not as expected.
