Event
Dongzhu Ecology released the mid-2022 report, with revenue of 970 million yuan in the first half of 2022, down 24.3 percent from the same period last year, and net profit of 180 million yuan, down 35.8 percent from the same period last year.
Brief comment
The first-half results fell short of expectations. The company's revenue in the first half of 2022 was 970 million yuan, down 24.3% from the same period last year, and its net profit was 180 million yuan, down 35.8% from the same period last year. The performance declined greatly, mainly due to: 1. 49.0% of the company's revenue in 2021 came from East China, and the progress of the company's construction projects was slow due to the epidemic in the Yangtze River Delta in the first half of the year, and the settlement of revenue and profits was delayed. 2. At the company level, the management expenses, R & D expenditure and the previous period are the same, while the financial expenses are rising, resulting in a larger decline in net profit than in revenue. With the normal development of the company's business, revenue is expected to recover in the second half of the year.
Profitability remains strong and gross profit margin remains high. The company's gross profit margin in the first half of the year was 29.6%, down 0.7% from the same period last year, and only 0.1% lower than that for the whole of 2021. The newly awarded contract amount of the company in the first half of the year was 600 million yuan, down 50.7% from the same period last year, and the newly signed contract amount was 2.16 billion yuan, up 85.5% from the same period last year. The higher newly signed contract amount provides sufficient guarantee for the company's short-and medium-term operations.
Actively explore dual-carbon business. In July 2022, the company signed a strategic cooperation framework agreement with the Management Committee of Haidong Hehuang New District of Qinghai Province. cooperation was reached on infrastructure construction, new energy and carbon sinks development and trading center headquarters project, Haidong global carbon sequestration development and photovoltaic power generation and operation, respectively. As a service provider of ecological restoration and governance, the company actively arranges and promotes double carbon business, and has technical and layout advantages in forestry carbon sequestration business. with the gradual development of domestic carbon sequestration transactions, it is expected to create a second growth curve.
Maintain buy ratings and downgrade earnings forecasts and target prices. We adjust the company's EPS to 1.11 EPS from 2022-2024 to 1.43,1.71 yuan (the original 1.18max 1.35 yuan from 2022-2023). Give the company and the industry comparable companies the same PE valuation level of 17X in 2022, corresponding to the target price of 18.79 yuan.
Risk tips: 1, the impact of the epidemic exceeds expectations; 2, the progress of carbon sequestration business is not as expected.
