Zhejiang Fu Holdings: the new leader of hazardous waste is rising slowly. In 2020, the company entered the field of dangerous waste through asset reorganization, bringing new performance growth. 2021Q1-Q3 realized revenue of 10.55 billion yuan, an increase of 87.5 percent over the same period last year, and a net profit of 1.87 billion yuan, an increase of 138.2 percent over the same period last year. As of 2021Q3, the company's production capacity is as follows:
The front end relies on Shenlian Environmental Protection and other companies, harmless & preliminary resource utilization has been put into operation with a production capacity of 1.78 million tons, with a capacity of 970000 tons under construction.
The back-end relies on Jiangxi self-supporting subsidiary, and the recycling capacity of recycled metals is as follows: electrolytic copper 242000 tons, electrolytic zinc 23000 tons, crude lead 11700 tons, gold 7.9 tons, silver 170tons, palladium 4.65tons, nickel 3300 gold tons, electrolytic tin 7280 tons.
In addition, the company actively distributes the disposal market of waste liquid, waste residue and other hazardous waste produced by power storage battery recycling and disassembly units, and is building 15,000 tons of refined cobalt sulfate and 790 tons / year lithium carbonate production line to be put into production.
Front-end: industry brings hazardous waste increment, strict supervision drives the market to release. China divides hazardous waste into 46 categories, a total of 467 kinds, which requires strong compatibility of enterprise disposal technology. Hazardous waste disposal industry is mainly divided into two business models: harmless and resource utilization. The upstream and downstream of the industrial chain are both To B end, with a high degree of marketization.
According to our estimates, the metal resource treatment capacity is expected to be 2249-25.3 million tons in 2025, and the 5-year CAGR will be 11.8%. The effective production capacity is expected to be about 20.03 million tons in 2025, and the CAGR8.9%, production capacity will continue to be less than that of waste production in 5 years. Therefore, we believe that in the context of tighter supervision from 2021 to 2025, the gap between supply and demand has not been eliminated, providing sufficient raw material protection for front-end resources. The hazardous waste industry as a whole shows a competitive pattern of "scattered, small and weak":
In the resource qualification, the average scale of a single operating license is 429000 tons / year, and the proportion of enterprises with an annual processing capacity of less than 20,000 tons is as high as 51.91%.
The leading market share of dangerous scrap metal recycling industry is less than 5%: the market share of Zhejiang Fu Holdings, Dongjiang Environmental Protection, Feinan Resources and high-energy environment metal resource qualification is 3.44%, 1.45%, 1.00% and 0.93% respectively, and the industry concentration is expected to increase.
Back-end: recycled metal highly matches the development concept of carbon neutralization
1) recycled metals match "carbon neutralization", and effectively alleviate the shortage of metal resources in China, enjoy a number of preferential tax policies; 2) the product attributes ensure stable cash flow: the turnover of back-end metal products is fast, and the company's production and sales rate is close to 100%. The cash-to-cash ratio is more than 100%. 3) there are barriers to entry of time and funds for the deep recycling of hazardous wastes: it takes 2-4 years from obtaining the EIA to putting into production, the first-entering enterprises can occupy the first-mover advantage; the investment in the back-end per ton capacity is 7690 yuan / ton, far exceeding the front-end 1707 yuan / ton, and the back-end entry capital barrier is high.
Four advantages to build a strong moat
1) upstream and downstream integration to enhance the company's profit space; 2) technological advantages: the company can coordinate the disposal of solid and liquid hazardous waste, 27 types of hazardous waste and 11 kinds of enriched metals, all of which are in the forefront of the industry; 3) raw material protection: the company layout waste production provinces of Jiangsu and Zhejiang, ensuring the source of hazardous waste collection; 4) the company's capacity expansion is rapid, and the production capacity under construction is sufficient. Considering the future production capacity and climbing rhythm, it is estimated that the return net profit of the company from 2021 to 2023 is 2.24 billion yuan, 2.58 billion yuan and 2.91 billion yuan respectively, corresponding to the PE of 16.6x, 14.9x and 13.1 x respectively from 2021 to 2023.
On September 17, 2021, the National Energy Administration issued the medium-and long-term Development Plan of pumped Storage (2021-2035). It is estimated that the equipment investment in the three five-year period from the 13th to 16th five-year Plan is 180 billion, 120 billion and 60 billion respectively. Tips for concentrated risks in China's hydropower equipment industry
1. Production capacity climbing is not as expected.
2. Metal price fluctuation.