Main points of investment
The company issued a profit warning for 2022: net profit is expected to fall 30-50% year-on-year in 2022.
1) the shortage of industrial waste, the decline of the prosperity of the hazardous waste disposal industry, and the intensification of market competition, and the price of hazardous waste disposal is expected to continue to decline, which is the main reason for the company's profits. With the repeated epidemic situation and the complex industrial production activities in the international environment, the decline in the volume of operation has a direct impact on the decline in the overall demand of the industrial hazardous waste disposal industry, and in recent years, under the environment of rapid growth of domestic approved hazardous waste qualification and insufficient demand of the industry, the fierce competition participated by many entrants has intensified, the disposal price of industrial hazardous waste has dropped significantly, and the industry has accelerated clearance. The traditional harmless disposal leader Dongjiang Environmental Protection is expected to lose 4.3-510 million yuan in 2022, and many traditional harmless disposal enterprises are already planning for transformation.
2) the peak-breaking strength of cement kiln increased in 2022, which affected the capacity utilization rate of cement kiln collaborative project and limited the company's waste into the plant.
During the downward period of the industry boom, the company's operation focused on high-speed volume and progressed smoothly. The company continues to make every effort to open up customers and carry out technical reform at the same time. It is expected that the general hazardous waste disposal volume of the 22Q4 industry will reach a new high, and the industrial hazardous waste will still achieve reasonable growth in 2022. In the future, Anhui Conch Cement will increase collaborative support for conch environmental protection, including support in helping to achieve cooperation among enterprises in the cement kiln collaborative hazardous waste disposal industry, and improving the priority of the use of conch environmentally friendly cement kilns.
Our view:
Competitors are declining, the market for hazardous waste disposal has hit bottom, collaborative disposal of cement kilns will quickly replace traditional disposal, conch environmental protection is still in the high-speed growth period of obtaining projects and capacity release, after entering the harvest period after "horse racing enclosure", the company expects 23Q1 prices to bottom. Anhui Conch Cement holding Conch Environmental Protection has also dispelled the hidden worries of the market on the distribution of long-term benefits. We downgrade the company's profit forecast that the company's annual income in 22-23-24 is expected to be 18.1 yuan 23.4 / 3.01 billion yuan, + 6.3% respectively, 29.8%, 28.4%, 42.7%, 35.1%, respectively, and the target price is 7.37 Hong Kong dollars.
Risk hints: the epidemic repeatedly affects enterprise production and waste and inter-provincial transportation, project construction is not as expected, payment is not as expected, market competition is intensified, potential environmental risks