Maintain an “increase in holdings” rating. According to financial data and the company's latest project progress, we lowered the company's 2023-2024 forecast and increased the net profit forecast for 2025 by 13.11 (-16%), 14.65 (-13%), and 1,625 billion yuan respectively. The corresponding EPS was 0.78, 0.87, and 0.97 yuan respectively. We believe that in the domestic market, in the process of waste incineration gradually moving from “incremental competition” to a “stock game”, the company's industry has accumulated deep, and Sanfeng Rou has a broad customer base, laying a good foundation for future mergers and acquisitions of the company's inventory projects. In overseas markets, the company's international genes plus the whole industry chain have significant collaborative advantages. It is promoting overseas market development, and we look forward to continued progress in the future. Maintain the target price of 13.13 yuan and maintain the “increase in holdings”.
Excluding the impact of one-time revenue for the same period in 2021, net profit attributable to the company increased steadily 19% year over year in 2022. 1) Achieved revenue of 6.023 billion yuan in 2022, up 3% year on year; net profit attributable was 1,139 million yuan, down 8% year on year; net profit after deducting unattributed net profit was 1,116 million yuan, down 9% year on year. 2) The decline in profit growth was mainly due to the company's one-time confirmation of some project subsidy revenue in the same period last year.
The operation was steady, the storage project progressed smoothly, the garbage disposal volume of the holding project increased 16% over the previous year, leading the industry in operating efficiency. 1) By the end of 2022, the company had put into operation 37,600 tons/day for waste incineration holding projects and 13,100 tons/day for participating projects. Currently, the company is constructing or preparing projects of 8850 tons/day, and reserve production capacity is still flexible. 2) The average plant electricity consumption rate of 12.4% continues to be at the leading level in the industry.
The collaborative advantages of international genes+the whole industry chain are remarkable, boosting the development of overseas markets. The company targets markets along the “Belt and Road” region such as Southeast Asia. With a complete international business team and rich multinational business experience, the company leverages the collaborative advantages of the entire industry chain to provide local customers with a full range of core waste incineration equipment products such as incinerators and leachate treatment. Overseas business development has progressed significantly, and we look forward to continued growth.
Risk warning: Project progress is lower than expected, industry policy changes, etc.