The growth rate of performance is relatively fast

The company realized revenue of 475 million yuan in the first half of the year, a sharp increase of 106% over the previous year, and realized net profit of 54 million yuan, an increase of 34.4% over the previous year. The revenue growth rate was significantly higher than net profit growth. The reason was that revenue growth was mainly due to construction services with low gross margin.

The construction business is developing rapidly

Construction service revenue increased 15.1 million yuan in the first half of the year, a sharp increase of 1425.5% over the previous year, water supply revenue increased by 40.7 million yuan, an increase of 53.3%, and water treatment revenue increased by 32 million yuan, an increase of 24.4%. The increase in construction services revenue was the most rapid. Mainly, the company added 3 BT projects in the first half of the year.

Steady progress of operations

As of the first half of the year, the company had 47 sewage treatment projects under construction and operation, with a total treatment volume of 866,500 tons, an increase of 5 items over the first half of last year. The new treatment volume was 189,000 tons. The usage rate for sewage treatment was 63.8%, and the average unit price was RMB 1.04 per unit. As of the first half of the year, the company had 17 water supply projects, with a total treatment volume of 546,000 tons, an increase of 14 over the first half of last year. The new processing volume was 365,000 tons.

valuations

The company completed its IPO this year and has a large amount of cash in its hands for future project construction and acquisition. The company's current average loan interest rate is 6.79%, which remains stable compared to last year. Loans and loans may increase in the future. It is expected that the company's two new projects will grow much faster in the coming years. We lowered the company's target price to HK$5.82 in favor of a “buy” rating. (Current prices as of January 6)