This report is read as follows:
The new recognition of construction revenue according to article 14 leads to the downward fluctuation of the company's performance. The company maintains sound operation, actively promotes projects on hand, and the reserve capacity is still flexible.
Main points of investment:
Maintain the "overweight" rating. We maintain the forecast net profit of the company from 2022 to 2024 is 10.4,12.4 and 1.42 billion yuan, corresponding to EPS is 0.75,0.89 and 1.02 yuan. The company's waste incineration reserve capacity is still rich, laying a solid foundation for future performance growth and maintaining the target price of 15.20 yuan.
The performance is in line with expectations, and the new recognition of construction revenue in accordance with Article 14 leads to the downward fluctuation of the company's performance. 1) 2022H1 realized revenue of 2.263 billion yuan, down 10% from the same period last year; net profit attributable to 417 million yuan, down 5% from the same period last year; and deducting 414 million yuan from non-attributable net profit, down 4% from the same period last year. 2) Construction income is recognized in accordance with document 14 in 2021, and the base figure for the same period in 2021 is data including construction income. 3) the new recognized construction revenue leads to the downward fluctuation of the company's performance. Affected by the epidemic and the scale of projects under construction decreased compared with the same period last year, the construction revenue of the current period decreased by 362 million yuan, but the operating income continued to grow steadily, increasing by 101 million yuan compared with the same period last year. 4) the year-on-year improvement in gross profit margin (2022H1 36.01%) (2021H1 33.16%) is mainly due to the decrease in the proportion of construction revenue in the current period compared with the same period last year, and the gross profit margin of construction is significantly lower than that of operations.
Maintain sound operation, actively promote projects on hand, and reserve capacity is still flexible. 1) 2022H1 handled a total of 5.5 million tons of domestic waste, an increase of 8% over the same period last year. 2) projects under construction are progressing steadily. By the end of June, phase II of Huludao, Shuozhou, Enshi, Wuhan, Jingxi and Zhangqiu accounted for 93%, 92%, 87%, 19%, 7% and 8% of the total completed projects, respectively. 3) A total of 34000 tons of projects have been put into operation and 6600 tons are under construction, and the reserve capacity is still flexible to support the continued growth of future performance.
Convertible bonds were issued smoothly, providing sufficient financial support for the company. The public offering of convertible bonds 2.36 billion was listed in March 2022. The issuance of convertible bonds provides sufficient financial support for the company's new projects. Replenishing working capital and repaying bank loans will effectively alleviate the financial pressure on the company's development.
Risk tips: project schedule is lower than expected, industry policy changes, etc.