Core ideas:
Zhejiang regional electricity waste + hazardous waste leader, production capacity + business expansion without worry. The company's main business is electric waste disassembly and hazardous waste disposal, and the proposed layout of front-end recycling, 2021 revenue of 528 million yuan and 52 million yuan return net profit. Among them, the dismantling volume of 1.7686 million sets of electric waste ranked first in Zhejiang in 2021, with revenue of 403 million yuan (76.4%). Benefiting from factors such as the increase in capacity utilization, the rise in metal prices and the increase in the proportion of white electricity dismantling, the compound growth rate of revenue in 2017-21 was 21.5%.
The acquisition of shareholder assets "Tiger Brother Environment" will be increased, and the layout of residents' waste resources will open the growth limit.
In the near future, the company plans to issue shares to acquire 100% equity of "Tiger Environment", a controlling asset of major shareholders (910 million yuan, 25.28 yuan per share), and lay out the front-end waste recovery and resource utilization links of "waste-free city". And raise 560 million yuan for the intelligent upgrading of "Tiger Environment" and other projects. The business scope of the underlying asset coverage has increased rapidly, with the number of households increasing from 420000 in 2020 to 770000 at the end of August 2022. The net profit of deducting non-return net profit from 2020 to 2021 is 0.38 trillion yuan, and the non-return net profit target for 2022 to 2024 is 0.63 million.
The trillion waste resource market of "waste-free city" is opened, and the advantage of "Tiger Brother Model" is remarkable. According to the goal plan of the 14th five-year Plan, the construction of "waste-free cities" has been rolled out from more than a dozen pilot projects to more than 100 key cities, and the market potential of waste recycling in corresponding cities has reached trillion levels. However, there are some problems in the front-end garbage recovery and utilization of the traditional "waste-free city", such as weak willingness to classify garbage at the resident end, overlapping management of multi-government departments, limited utilization rate of waste resources, and so on. "Tiger Model" effectively solves the above pain points by getting through C-end collection, B-end scale supply of recycled materials, and G-end digital platform supervision, and the project is accelerating replication from some urban areas of Zhejiang to different places, with outstanding long-term growth.
Profit forecast and investment advice. Excluding asset acquisition, it is estimated that the return net profit of the company from 2022 to 2024 is 0.58 trillion yuan, respectively, and the corresponding PE is 24.18 times that of 40.20, 28.35.
The company still has room to double its waste capacity, and in the future, after the merger and acquisition of Tiger, the whole industrial chain will be opened up to further enhance the recycling capacity and lay out a "waste-free city". With reference to the growth rate and the valuation of peer companies, it is given a "buy" rating of 35 times PE in 2023, corresponding to the reasonable value of 34.12 yuan per share.
Risk hint. The standard of fund subsidy is declining; fund subsidy is lagging behind; industry supervision and so on.
