Introduction to this report:
A subsidiary company, Dongzhu Carbon Exchange, was set up to lay out the carbon sink sector; new bid orders won 53% in 2021, new signings increased 262% in 22Q1; ecological restoration/municipal landscape revenue increased 13/ 21% in '21; brand/first-mover advantage promoted ecological restoration business.
Key points of investment:
Maintain the increase in holdings. Net profit increased 26% in '21, but fell 18% in 22Q1. The forecast for EPS in 22-23 to 1.22/1.36 yuan (previously 1.35/1.51) was 13/ 12%, and the EPS in '24 was predicted to grow at 1.51 yuan by 10%. As sector valuations declined, the target price was lowered to 12.85 yuan, corresponding to 11 times PE in 22 years.
Revenue increased 16%, net profit increased 26%, and net operating cash flow turned negative. 1) Revenue was 2.7 billion yuan (+16%), and Q1-Q4's single-quarter revenue growth rate was 27/-5/-6/58%. Net profit of 500 million yuan (+26%), Q1-Q4's single-quarter growth rate of 26/5/-18/ 281% (same period last year - 3/42/121/ -72%), 2) depreciation of 150 million yuan (+151%), gross profit margin of 30% (+0.7pct), net operating cash flow of 400 million yuan (-1882) was due to increased project investment and delays in settlement and collection of superposition projects. 4) ROE 14% (+1.7 pct). 5) 22Q1 revenue was 400 million yuan (-18%), and net profit of the mother was 80 million yuan (-18%).
New bids won in '21 increased 53%, and ecological restoration/municipal landscape revenue increased 13/ 21%. 1) 2
1 year of winning the new bid
29 billion (+53%) yuan, and a new contract of 2.4 billion yuan (+26%) was signed. 2) Ecological restoration/municipal landscape achieved revenue of 14 (+13%) /13 (+21%) yuan respectively. 3) By region, East China/Central China/South China/Southwest China achieved revenue of 13 (+30%) /5 (+6%) /3 (+7%) /6 (+8%) billion yuan, accounting for 49/19/11/21% respectively. 3) 22Q1 won the bid 600 million (+244%) and signed a new contract of 1.7 billion (+262%).
Actively explore forestry carbon sinks, mine treatment, soil restoration, and optimize and upgrade the industrial chain. 1) Continuously strengthen brand advantages/first-mover advantages in ecological restoration fields such as ecological wetlands/water body management/mine restoration/national reserve forests/forest parks. 3) A new wholly-owned subsidiary, Dongzhu Carbon Hub, was established; “Strategic Cooperation Agreements” were signed with the Sichuan Yangtze River Afforestation Bureau and the Ninghua County People's Government respectively. The agreement agreed to jointly develop forestry resources in the relevant regions in the future.
Risk warning: policy tightening beyond expectations, repeated epidemics, etc.
