Performance review
2021 performance is in line with our expectations
The company announced 2021 results: revenue of 22.233 billion yuan, an increase of 15.6% over the same period last year; net profit of 2.287 billion yuan, an increase of 55.6% over the same period last year, deducting 1.634 billion yuan of non-return net profit, an increase of 19.5% over the same period last year, in line with our expectations. Non-recurrent gains and losses mainly include 745 million yuan of profit and loss on disposal of non-current assets.
Fine management leads to continuous growth of performance. In 2021, the company implemented fine management, and the efficiency was further improved. In terms of urban water operation business, the company has increased its water treatment capacity by about 1.46 million tons per day, and in terms of solid waste environment business, the company has realized a new incineration construction to operate on a scale of 4000 tons per day, driving the company's urban water operation business / solid waste environment business income to increase by 22.3 percent to 89.13,687 million yuan. In other businesses, revenue from comprehensive water environment management business / equipment and technical services decreased by 7.1% to 1.66 billion yuan from the same period last year.
The cost remained stable during the period. In 2021, the company's expense rate was 18.1%, which was basically the same as the same period last year. Cash flow from operating activities decreased by 29.4% to 3.145 billion yuan compared with the same period last year, mainly due to the implementation of new accounting standards this year, showing construction expenses incurred during the construction of PPP projects under construction that were recognized as financial assets as cash flows from operating activities.
Trend of development
Increase the expansion of light assets, and continue to optimize the business structure. In 2021, the company acquired a total of 51 light asset projects, with a total contract size of 12 billion yuan, an increase of 122% over the same period last year. Among them, the signing scale of urban water business and ecological environment business was 5 billion yuan and 6.7 billion yuan respectively, and the amount of newly signed light assets contracts for solid waste environment business and industrial atmosphere business also increased steadily compared with the same period last year. We believe that the company's optimization of investment standards will help to further optimize the business structure and improve the quality and stability of earnings.
The public offering REITs was issued smoothly, widening the financing channels and invigorating the existing assets. In 2021, the company initiated Water REIT to be officially listed for trading on the Shanghai Stock Exchange, creating Water REIT as the country's first batch of listed products related to the water sector, reflecting the company's high-quality underlying assets and lean operation capacity. We believe that the entry of REITs will help to broaden the financing channels of the company, invigorate the existing assets and improve the liquidity of the existing assets. As REITs has higher requirements for project operation and cash flow quality, we believe that as an industry leader, the company is expected to further strengthen its competitive advantage.
Profit forecast and valuation
The net profit forecast for 2022 will remain unchanged at 2.122 billion yuan and the net profit will be introduced to 2.44 billion yuan in 2023. The current share price corresponds to a price-to-earnings ratio of 11 times 2023 / 10 times 2023. Maintain an outperform industry rating and a list price of 4.20 yuan, corresponding to a price-to-earnings ratio of 15 times 2023, which is 29% higher than the current stock price.
Risk.
Project progress is not as expected, profitability decline risk.