This report is read as follows:
The company's annual financial report for 2021 was prepared and implemented in document No. 14, which confirmed the construction income, which led to the adjustment of the income structure and the change of profit margin. The release of reserve capacity drives the rapid growth of the company's performance.
Main points of investment:
Maintain the "overweight" rating. Due to the adjustment of the company's revenue recognition method in 2021, according to the company's 2021 report data and actual operating conditions, we raise the forecast net profit of the company from 2022 to 2023 and increase the forecast net profit of the company in 2024 to 10.4 (+ 24%), 12.4 (+ 27%) and 1.42 billion yuan, respectively, and the corresponding EPS is 0.75,0.89,1.02 yuan respectively. As one of the leaders in the waste incineration industry, the company still has abundant reserve capacity, laying a solid foundation for future performance growth and maintaining the target price of 15.39 yuan.
The release of reserve capacity drives the rapid growth of the company's performance. 1) in 2021, the company achieved operating income of 5.057 billion, an increase of 122% over the same period last year; deducting 686 million of non-attributable net profit, an increase of 42% over the same period last year, the growth was mainly due to the increase in operating projects and the increase in capacity utilization of some operating projects, as well as the recognition of BOT project construction income. 2) the annual financial report of the company in 2021 will be prepared and implemented in document 14, confirming the construction income, resulting in the adjustment of the income structure. 3) 2021Q4 estimates the impairment loss of RMB 184 million on the Ninghe straw power generation project, which is a drag on the company's 2021Q4 single-quarter results.
The project in hand is carried out smoothly and the operation is sound. 1) in 2021, the company increased production by 7500 tons, and increased production capacity by more than 6000 tons for three consecutive years. 2) the scale of operation has reached a new level, the volume of garbage disposal has exceeded 10 million tons for the first time, and the online electricity consumption of tons of garbage has reached the best level in history.
Convertible bonds were issued smoothly to provide further financial support for the company. 1) the company still has 21000 tons of production capacity that has not yet been put into production, and the peak of capital expenditure is expected to continue in the next two years. 2) A public offering of 2.36 billion yuan of convertible bonds was listed on March 23, 2022, raising funds for five waste incineration projects (a total of 5000 tons) and replenishment. The issuance of convertible bonds provides sufficient financial support for the company's new projects, replenishing working capital and repaying bank loans will effectively alleviate the financial pressure on the company's development.
Risk tips: project schedule is lower than expected, industry policy changes, etc.