The growth rate of 3Q20 income / homing net profit slowed month-on-month, maintaining the "overweight" rating of 1-3Q20 company realized revenue / homed net profit / deducted non-homed net profit 60.010 trillion RMB, compared with the same period last year, + 6% plus 1% plus 2% 3Q20 revenue / return net profit / deduction non-return net profit 27.5 5pct/-19pct 2.1 / 190 million yuan, year-on-year + 14% Universe 1% Universe 3%, revenue / return net profit growth month-on-month-5pct/-19pct. Taking into account the slowdown in the growth rate of income / homing net profit in the third quarter, we adjust the forecast of EPS for 2020-2022 to 0.810x1.1 yuan, and give it a target price of 9.18yuan, corresponding to 10.9 times of PE in 2020, maintaining the "overweight" rating.
3Q20 revenue / return net profit year-on-year + 14% 5pct/-19pct 1%, growth slowed down month-on-month, 3Q20 achieved revenue / return net profit of 2.75 billion yuan, year-on-year + 14% debacle 1% (growth rate-5pct/-19pct); gross profit margin decreased by 1.3pct to 13.9% year-on-year, we believe that gross profit margin of building materials business may be suppressed by the increase in unit cost of purchased limestone. Good cost control, 3Q period expense rate year-on-year-0.4pct to 7.1%, of which sales / management / R & D / financial expense rate year-on-year-1.3pctswab "0.3pcthand" 0.1pctUniverse 0.6pct; non-operating income increased 66% year-on-year to 30 million yuan, mainly due to the receipt of local government subsidy funds; superimposed non-operating expenses increased by 10 million yuan year-on-year, driving pre-tax profit growth of 5% year-on-year Income tax rose 37 per cent year-on-year to 50 million yuan, affecting net profit from + 1 per cent year-on-year to 210 million yuan.
With the steady progress of the traditional hazardous waste project, the collaborative disposal of cement kiln has accelerated into the field of traditional hazardous waste. Nine projects of the company have been put into operation / have been approved by EIA, totaling about 819000 tons / year. among them, the production capacity of integrated comprehensive disposal and resource utilization projects are 155,000 tons / year (both have been put into operation) and 664,000 tons / year (436,000 tons / year approved by EIA). In the field of collaborative disposal of hazardous wastes in cement kilns, the company has accelerated its progress by virtue of first-mover advantages, mature technology and smooth benefit distribution mechanism. China News has announced 12 collaborative projects of cement kilns in hand, with a total production capacity of 8.03 million tons / year, of which 553 thousand tons / year has been put into operation as of 10pm 25 (230,000 tons / year of new operation in 20 years), and the remaining projects have been approved by EIA. We expect Ankang Xuan long Environmental Protection / Chongqing Zhongsi Runhe to be put into production this year, with a total increase of 150,000 tons / year. It is expected that with the continuous landing of hazardous waste projects, the company's profits are expected to further improve.
The introduction of central enterprises as strategic partners will help the company's future development, maintain the Investment Framework Agreement between the rating company and China Energy, and plan to reach a strategic cooperation with it in the field of environmental protection business. China Machinery Technology has an annual capacity of 140000 tons of Maoming hazardous waste project, which is expected to form coordination with Heyuan Jinyuan cement kiln project. Taking into account the slowdown in revenue / profit growth in the third quarter of the company, we adjust the 20-22 homing net profit forecast of 60,000,000,000 yuan (the previous value is 7.7x8.8x10.0). It is estimated that the 20-year return net profit of building materials / environmental protection business is 4160 million yuan. Reference to the 20-year PE average of the comparable building materials company is 8x, and the 20-year PE average of the hazardous waste comparable company is 19x, giving the company's building materials business 20-year PE 8 times. The 20-year PE of environmental protection business is 19 times, corresponding to the target price of 9.18 yuan in 2020 (the previous value is 8.54 to 9.51), and 10.9 times of PE in 20 years.
Risk hint: the progress of the hazardous waste project is not as expected, and the profit level of the hazardous waste project is not as expected.