The company has a sound operation, excluding the impact of one-time income in the same period in 2021, 2022Q3 net profit increased by 20% compared with the same period last year, and the performance was in line with expectations.

Main points of investment:

Maintain the "increase in holdings" rating. We maintain the forecast net profit of the company from 2022 to 2024 is 12.98,15.52,1.688 billion yuan respectively, and the corresponding EPS is 0.77,0.92,1.01 yuan respectively. Maintain the target price of 13.13 yuan and maintain the "overweight" rating.

Excluding the impact of one-time income in the same period in 2021, 2022Q3's net profit increased by 20% compared with the same period last year, and the performance was in line with expectations. 1) 2022Q3 achieved revenue of 4.261 billion yuan, down 5% from the same period last year; net profit attributable to 860 million yuan, down 22% from the same period last year; deducting 842 million yuan from non-attributable net profit, down 22% from the same period last year The reason for the decline is that the company's Baiguo Garden, Fuling, Korla projects and their associated units were included in the list of renewable energy power generation subsidy projects in the same period last year. Excluding the subsidy factors confirmed at one time, the net profit of 2022Q3 increased by 20% compared with the same period last year. 2) Q3 achieved 1.403 billion yuan in revenue in a single quarter, up 2% from the same period last year; net profit attributable to 271 million yuan, down 20% from the same period last year; excluding the influence factors of one-time subsidies, Q3 net profit in single quarter increased by 3% over the same period last year.

Profitability remains stable. 1) the gross profit margin of 2022Q3 decreased slightly to 32.24% compared with 2022H1, and the net profit margin decreased slightly to 21.10% by 0.26pct. 2) compared with 2022H1, the sales expense rate remains stable by 0.25%; the R & D expense rate increases slightly by 0.11pct to 0.91%; the financial expense rate increases by 0.20pct to 5.39%; the management expense rate increases by 0.47pct to 4.97%; and the expense rate is well controlled.

Solid waste business continues to provide growth momentum. By the end of 2022H1, the company has put into production 43150 tons of waste incineration projects per day, including 35000 tons of holding projects and 13700 tons of projects under construction. The reserve capacity is still flexible, and the construction and new expansion projects lay a solid foundation for future performance growth.

Risk tips: project schedule is lower than expected, industry policy changes, etc.