Incident: The company released its 2022 mid-year report: it achieved revenue of 1,914 million yuan in the first half of the year, +22.87% year on year; it achieved net profit of 156 million yuan, +3.88% year on year. Meanwhile, as of July 12, 2022, the company has implemented and completed the 2021 annual equity distribution plan, distributing a cash dividend of 1 yuan for every 10 shares, with a total cash dividend of 0.4 billion yuan.
Comment:
We have been deeply involved in sanitation services for 20 years and have built a leading domestic comprehensive improvement service provider for the living environment. The company is the first A-share listed sanitation service company in China. The company has now formed a nationally leading urban and rural public habitat environment management service system. The scope of services covers more than 80 cities in 26 provinces across the country, participated in the management of more than 300 projects, and was rated by the E20 Environmental Platform as the top ten influential enterprises in sanitation in China for four consecutive years.
Revenue from urban and rural sanitation and cleaning services has stabilized, and the capacity to accept large orders has increased. 2022H1's urban and rural sanitation and cleaning business achieved revenue of 1,852 billion yuan, +22.28% year on year, accounting for 96.72% of revenue; gross margin was 24.78%, +0.05pct year on year. In the first half of 2022, the company added a total of 5.060 billion yuan of contracts, with an annualized amount of 620 million yuan. The number of new orders signed was at the forefront of the industry, and the total number of orders to be executed was nearly 55 billion yuan. Among them, the comprehensive urban and rural waste treatment project in Yangcheng County, Jincheng City, Shanxi Province was confirmed to have won the bid on April 30, 2022. The contract amount reached 2,189 billion yuan, and the company's ability to handle large orders continues to improve.
Jointly with Road Technology to enter the field of charging stations, the layout of city managers has been further improved. Together with Zhangjiakou Road Technology Co., Ltd., the company established Zhangjiakou Qiaohui Road Technology Co., Ltd., with a registered capital of 1 million yuan. Its business scope includes sales of power exchange facilities for new energy vehicles; energy storage technology services; charging pile sales, etc. After the establishment of the subsidiary, it can meet the charging and switching needs of NEV users, and the urban management layout will further develop in a multi-level, comprehensive, and diversified direction.
Profit forecast: First coverage, giving a “increase in holdings” rating. We predict that in 2022-2024, the company will achieve operating income of 3.691/40.70/4.499 billion yuan respectively, net profit of the mother will be 345/382/423 million yuan respectively, and PE will be 14.79x/13.35x/12.06x respectively.
Risk warning: domestic epidemic control falls short of expectations; order acquisition and business expansion fall short of expectations; related cost increases exceed expectations; subsidiary construction falls short of expectations; profit forecasting and valuation models fall short of expectations
