Core views:
The exclusion of subsidies affected a 19% year-on-year increase in 2022 performance, and the growth of leading solid waste companies remained strong.
The company released its 2022 annual report, achieving annual revenue of 6.023 billion yuan (+2.5% year-on-year) and Guimu's net profit of 1,139 million yuan (-8.0% year-on-year). The decline in performance was mainly due to the company's one-time confirmation of national supplementary revenue of 381 million yuan in 2021. After exclusion, Guimu's net profit increased 18.9% year-on-year. Looking at a single quarter, 2022Q4 has returned to high growth. Revenue and net profit returned to the mother grew 25.7% and 95.8%, respectively. Growth can be expected under endogenous growth, extended mergers and acquisitions, and overseas layout.
The gradual introduction of on-hand production capacity has accelerated the reversal of cash flow, the correction of free cash has been achieved, and operating efficiency is still leading the industry. By the end of 2022, the company had an operating capacity of 37,600 tons/day, a participating production capacity of 13,300 tons/day, and a production capacity of 0.89 million tons/day under construction and construction. There is still room for expansion. Also, along with the increase in production capacity and contraction in capital expenditure, the company's hematopoietic advantage has been reflected. The net operating cash inflow in 2022 reached 1,949 billion yuan; FCFF and FCFE reached 0.23 and 0.53 yuan/share per share, the first correction in three years. Furthermore, from an operating perspective, the company's holding project generated 422 tonnes of electricity per day (excluding heating projects), and the 12.4% plant electricity consumption rate continued to maintain the industry's leading level.
Overseas deployment has accelerated, and equipment advantages have laid the foundation for long-term expansion. The company relies on more than 20 years of incinerator R&D and product advantages to accelerate the expansion of overseas markets. In 2022, the company successfully signed 8 equipment supply contracts in Aha, Jaipur and other places in India, involving 14 incineration line products, with a total processing capacity of 9750 tons/day. By the end of 2022, the company's technology and equipment had been applied to 239 incineration projects and 393 incineration lines at home and abroad, covering more than 210,000 tons/day of garbage production capacity.
Profit forecasts and investment suggestions: Equipment advantages are remarkable. Industrial chain expansion and overseas travel acceleration are expected to raise growth expectations and maintain the “buy” rating. The company's net profit for 2023-2025 is estimated to be 1,312, 15.20 and 1,755 billion yuan respectively. Corresponding to the latest PE is 9.32, 8.05 and 6.97 times, respectively. The accelerated release of production capacity under construction and construction was accelerated, and the company was given 15 times the PE valuation in 2023, corresponding to a reasonable value of 11.73 yuan/share, maintaining the “buy” rating.
Risk warning. Low expectations for project construction; overseas expansion falls short of expectations; low expectations of national subsidies, etc.