Main points of investment
The company announced the 2202 2H1 performance: in March, the company spun off the industrial solid and hazardous waste disposal business, and listed the conch environmental protection parallel spin-off. The company's continuing business income was 3.82 billion yuan, an increase of 21.5% over the same period last year; the net profit attributable to shareholders in continuing business was 2.43 billion yuan, down 24.2% from the same period last year. No interim dividend is paid.
Our comments are as follows: just look at the continuing business, 22H1 gross profit 29.6%, year-on-year + 4.0ppt, mainly due to waste disposal operation projects to increase the gross profit margin, shareholders should share of the main business net profit of 540 million yuan, an increase of 16.4% over the same period last year. The gross profit margin of waste disposal is 28.8%, + 4.3 ppt compared with the same period last year; the profit of the associated company in the first half of the year should be 1.89 billion yuan,-31.3% compared with the same period last year, mainly due to low demand in the cement industry and unstable coordination.
The scale of the project has been continuously expanded, with 24 new contracted projects (including 11 M & A projects) during the period. by the end of June, the scale of municipal solid waste disposal has reached 1957 million tons / year, with an increase of 2.4 million tons / year.
The revenue of 22H1 waste disposal increased by 14.5% to 3.05 billion yuan over the same period last year, of which the operating income of grate furnace waste incineration increased by 163.1% to 1.18 billion yuan, the waste incineration volume of grate furnace increased by 141.0% to 4.73 million tons, and the online power generation decreased by 15 kWh to 342kWh.
Actively lay out the whole industry chain of new energy materials, including cathode materials, anode materials and lithium battery recycling business.
Cathode material: the first phase of the lithium iron phosphate cathode material project is planned to have an annual output of 50,000 tons, which is expected to be completed and put into production in October. The second phase is planned to have an annual production capacity of 150000 tons, and is expected to be put into production in 2023.
Negative electrode material: the first phase of the negative electrode project of power energy storage battery has a planned annual output of 40,000 tons, has started and is expected to be put into production in May 2023. The project has a total planned annual production capacity of 200000 tons.
Lithium battery recycling: strong cost competitiveness. The company, together with Kawasaki heavy Industry, jointly developed the CKB lithium battery recycling project, which has the advantage of cost-safety and environmental protection, and has the technical advantage of seizing the development highland of the industry.
The project has officially entered the production trial stage, the pilot line can dispose of waste lithium batteries with an annual production capacity of 5000 tons.
Our point of view: the company has formulated a "new two-wheel drive" development strategy for the two major industries of domestic waste disposal and new energy materials, and the new energy materials vision planning 500000 tons of positive electrode + 200000 tons of negative electrode + million tons of lithium battery recycling, especially the CKB lithium battery recycling project, with the technical advantage of seizing the development highland of the industry, the company plans to rapidly promote the project next year to seize the commanding heights of the industry and gradually enter the market verification period. Regardless of the profit contribution of the new energy and materials business for the time being, due to the decrease in the profits of the associated companies, we downgrade our profit forecasts. It is estimated that the net profit from 2022 to 2024 will be 50.9,58.0 and 6.35 billion yuan respectively, and the net profit attributable to equity shareholders will be 11.4,14.9 and 1.68 billion yuan respectively, with year-on-year growth rates of 53.2%, 30.4% and 12.6% respectively. The target price is HK $20.66.
Risk hint: project construction is not as expected; environmental supervision has declined; Anhui Conch Cement's profit has dropped sharply.