The better-than-expected performance of Q3 mainly comes from the improvement of gross profit margin in the current period. The company's three-quarter report revealed that during the reporting period of Q3, the operating income was 920 million yuan, and the net profit was 79 million yuan, which was higher than our expected net profit of 40 million yuan. The better-than-expected Q3 performance was mainly due to the increase in the company's current gross profit margin, from 6.87% of Q3 in 14 years to 10.98% in 15 years.
To promote the water business, the group environmental protection platform pattern is emerging. The training of the power plant water treatment project and the implementation of Erlang's first power plant "water island" demonstration project have doubled the company's water integration service capacity. The company established Chongqing Yuanda Water Co., Ltd. The water treatment contract in Beipiao City reflects the rapid response of the company's new management to the strategic objectives of water development, and the company's rapid expansion is expected. In addition, in the future, the company is expected to take advantage of the platform resources to carry out catalyst recovery and disposal business and enter the field of hazardous waste treatment.
The company enters the field of hazardous waste disposal through catalyst treatment and opens up the development space of the company. The wholly-owned subsidiary of the company cooperates with New Zhongtian Environmental Protection in the form of cross-shareholding. New Zhongtian Environmental Protection is a local hazardous waste treatment company in Chongqing, with a complete industrial chain of hazardous waste disposal, the supporting unit of the National Environmental Protection and Hazardous waste disposal Engineering and Technology (Chongqing) Center, and the holding subsidiary Zhongtian Electric waste enjoys WEEE fund subsidies, which has complementary advantages with the catalyst subsidiary in hazardous waste treatment. Among the two projects in this cooperation: the hazardous waste centralized incineration project, the China Power Yuanda Catalyst Company plans to contribute 22.5 million yuan, holding 45% of the shares, and Zhongtian 55%; the registered capital of the waste catalyst treatment project is 20 million yuan, which is still in the early stage. Up to 45% of the shares will be transferred to Zhongtian in accordance with the provisions of the transfer of state-owned property rights, and then Yuanda Catalyst Company still holds 55% of the project. Yuanda enters the hazardous waste industry through catalyst treatment, which is in line with the development plan determined by the company at the beginning of the year, completes the catalyst life cycle industrial chain for the company, and smoothly opens the development space of the company.
The first listing platform of domestic nuclear environmental protection continues to ferment with the upward concept of the industry. The company is one of the only three enterprises with medium and low level nuclear waste disposal license in China, and it is also the first company to undertake nuclear power plant off-reactor nuclear waste disposal project by EP. Relying on the implementation of the SRTF project of Shandong Haiyang Nuclear Power Station, the company is beginning to have the capability of full-process nuclear environmental protection services, and is expected to achieve performance growth in the field of nuclear waste disposal.
Investment rating and valuation: we maintain the company's income forecast of 38.39,42.03 and 4.515 billion yuan for 15-17 years (3.484 billion yuan for 14 years), and 15-17 net profit of 4.14,3.17 and 347 million yuan respectively. The corresponding fully diluted EPS is 0.69,0.53,0.58 yuan per share respectively. Considering the strength of the company's water sector, the company has entered a golden period of development, maintaining a "buy" rating.