The net profit of homing is high, maintaining "buying".
The company realized revenue / return net profit of 5631 million yuan in 2021, an increase of 66 percent over the same period last year, and the return net profit was slightly higher than Huatai's forecast (Huatai expectation: 950 million yuan). According to the company's project construction and operation, we increase the waste disposal capacity and ton of waste power generation, and the operating income of waste incineration is raised accordingly, and then raise the 22-year return net profit forecast to 1.109 billion yuan (former value: 995 million yuan). The introduction of 23 / 24 return net profit forecast 1.197 billion pounds, corresponding to the 22-24 year EPS is 1.73x1.86 pounds 1.92 yuan. We forecast that waste incineration power generation / road traffic will be 526 million yuan in 22 years' net profit, with reference to waste incineration power generation / road traffic comparable company's 22-year Wind average expected PE 10.1x/8.2x, considering that the waste incineration market in Henan Province tends to be saturated, and there is some uncertainty in the expansion of projects outside the province and overseas, give the company waste incineration power generation / road traffic 22 years PE 8.1x/8.2x Corresponding to the target price of 14.05 yuan (the previous value of 17.40 yuan), corresponding to the 22-year PE 8.1x, maintain the "buy".
Road traffic performance repair, waste power generation to improve quality and efficiency
Affected by COVID-19 's epidemic situation, the company's road traffic business revenue base was low in 2020. In 2021, road traffic business was steadily repaired, with revenue of 1.375 billion yuan, an increase of 14.5% over the same period last year, and gross profit margin increased by 5.2 percentage points to 58.0%. In terms of operation and management, the comprehensive power consumption rate of the garbage power generation project was reduced by 2%, and the comprehensive power consumption rate of the Jiyuan project was 11.96%, which was at the leading level in the industry, and the power generation per ton of garbage increased 20kW/h. With the rapid increase of operating capacity of garbage power generation and the continuous improvement of quality and efficiency of operation business, we expect the revenue of environmental protection business to reach 1.71 billion yuan (2021: 777 million yuan) in 2022.
Garbage power generation production peak, equity acquisition continues to advance
In 2021, the company's revenue from environmental protection project contracting and equipment business increased sharply by 97% to 2.896 billion yuan compared with the same period last year, accounting for 8.2% of the total operating income to 51.4%. Changes in the income structure affected the composite gross profit margin fell 4.0 percentage points year-on-year to 34.1%, and the expense rate fell 1.0 percentage points to 10.9% year-on-year, thus promoting the return net interest rate to decline 0.9 percentage points to 17.7% year-on-year. The company has entered the peak of construction and production of waste power generation projects under construction, realizing the smooth operation of 17 waste power generation projects in the whole year, and putting 3 projects into production ahead of schedule. In 2021, the company obtained 8 garbage power generation and 5 medical waste projects through equity acquisition, and made a breakthrough in external mergers and acquisitions. At the same time, the environmental issues of stock exchange absorption and merger are still in progress.
Multi-channel financing with strong cash flow
In terms of capital operation, the company received a 6 billion project loan from CDB to provide an overall solution for the financing of county-level garbage power generation projects. 600 million yuan of ultra-short financing was successfully renewed, and the interest rate was the lowest in the same period. In the past 21 years, the operating cash flow has increased from 951 million yuan to 1.273 billion yuan. With the continuous repair of road traffic business and the release of waste power generation capacity, we expect the company's operating cash flow to maintain strong growth.
Risk tips: garbage power generation price reduction risk, project schedule is not as expected, project operation risk and so on.