Q2 performance increased 24% year over year, and full-year performance growth can be expected as the turbulence of preferential tax policies is eliminated and orders are released at an accelerated pace. The company released its 2022 semi-annual report, achieving revenue of 1,914 million yuan in the first half of the year (+22.87% over the same period), and Guimu's net profit of 156 million yuan (+3.88% year on year). Tax incentives from the 2021 Q1 epidemic increased current performance, putting pressure on the company's growth rate in the first half of 2022. However, with the elimination of the short-term factors mentioned above and the continuous release of new orders, the company's second-quarter performance growth rate returned to the right track, achieving net profit of 79 million yuan (+24.36% year-on-year). Referring to the company's outstanding order acquisition situation in the first half of the year, it is expected that the company's performance in the second half of the year will reach a higher level.
Sanitation operating revenue increased 23% year over year, gross margin remained stable, and the amount of new bids won in the first half of the year ranked among the highest in the industry. The company achieved urban and rural sanitation revenue of 1,852 billion yuan (+22.28% year-on-year) in the first half of the year, with a gross margin of 24.78%. Under the intensification of overall industry competition, the company's revenue growth rate and gross margin level remained at the leading level of the industry. Looking at orders, the total number of new contracts added in the first half of the year was 5,060 million yuan, the annualized amount was 620 million yuan, and the total number of orders to be executed was nearly 55 billion yuan.
Looking at the layout area, the company has newly entered important regions such as Shanghai and achieved the signing of new projects in 32 provinces/municipalities, demonstrating the company's outstanding order competitiveness and ensuring the company's long-term growth potential.
Take the lead in setting up “big city managers” in depth, and enhance enterprise vitality through management optimization and intelligence. As a pioneer in the “big city manager” model, the company has successively won bids for the “6.1 billion Jingzhou County Project” and the “1.1 billion Zumiao Street Project” since this year, continuing to consolidate the company's competitive advantage in “big city administration” operations, and is expected to usher in an order harvesting period. Furthermore, the company initiated performance evaluations for all employees, promoted the city management system to optimize corporate governance, and accelerated cost reduction and efficiency.
Profit forecasting and investment ratings: City managers have significant advantages and maintain a “buy” rating. The company's net profit for 2022-2024 is estimated to be 306/366/429 million yuan respectively. According to the latest closing price, the 2022-2024 PE is 16.3/13.7/11.6 times respectively, leading the high-growth sanitation sector. Combining comparable company valuation levels and company performance growth, the company was given 20 times PE valuation in 2022, corresponding to a reasonable value of 14.99 yuan/share, maintaining the “buy” rating.
Risk warning. Order acquisition falls short of expectations; rising labor costs; risk of changes in fiscal policy.