Event: conch Environmental Protection disclosed 23H1 performance: revenue from + 11.8% to 970 million yuan, operating profit from-14.5% to 300 million yuan, net profit from home-19.7%, month-on-month + 151.4% to 220 million yuan.
Comments: in the first half of the year, the recovery of domestic industrial production is weak, the amount of waste production is still insufficient, the market competition is fierce, conch environmental protection still continues the strategy of giving priority to grabbing quantity, and the disposal amount of industrial solid and hazardous waste continues to grow rapidly. the overall hazardous waste disposal price has been confirmed to have hit bottom. Operational efficiency has been significantly improved, and cost savings have driven a significant improvement in profit compared with the previous month.
-- the disposal volume of industrial general hazardous waste business has increased steadily, and the bottom of the price has been confirmed. The disposal volume in the first half of the year was 486000 tons, an increase of 43.6% over the same period last year, and an increase of 11.1% compared with the same period last year. It is estimated that the unit price of hazardous waste disposal in the second quarter is basically the same as that in the first quarter. To confirm the position at the bottom of the price, the average unit price per ton disposal in the first half of the year is 1132 yuan, a month-on-month decrease of 151. the cost per ton decreased by 74 yuan from the previous month, and the gross profit per ton decreased by 77 yuan to 632 yuan from the same period last year.
The disposal volume of the oil sludge project was greatly reduced to 30,000 tons, down 34.4% from the same period last year and 43.8% from the previous year. The cost of technical transformation and the commissioning of new projects increased by 473 yuan to 1028 yuan, and the gross profit per ton decreased by 337 yuan to 324 yuan compared with the same period last year.
The technical transformation of the fly ash Wuhu project has been completed, the efficiency has been improved, and the volume of pull disposal has increased by 36.6% to 31000 tons compared with the same period last year, an increase of 20.9% from the previous month, and a decrease of 66 yuan to 445 yuan per ton gross profit from the previous year.
-- the volume of industrial solid waste disposal is quickly obtained, and the price of contaminated soil is pulled down by the intensification of competition. In the first half of the year, the disposal volume of industrial solid waste increased by 15.4% to 1.036 million tons compared with the same period last year, an increase of 48.9% over the previous year. The unit price per ton was improved by 29 yuan to 283 yuan, the cost per ton was-36 yuan, and the gross profit per ton was improved by 66 yuan to 146yuan. We estimate that the unit price per ton has declined in the quarter, mainly due to the drag of fierce competition in the polluted soil market, with a gross profit of about 129 yuan per ton in the second quarter.
-- exploring the new alternative fuel business in the business of comprehensive utilization of resources. In the first half of the year, a total of 11000 tons of comprehensive utilization products were sold, and 41000 tons of alternative fuels were disposed of and supplied, with the share of income rising to 4.7 per cent.
The efficiency is improved and the cost savings are obvious. The per capita production efficiency increased significantly in the first half of the year, with sales expenses / management expenses / financial expenses per ton compared with the same period last year. The sales expenses per ton, management expenses and financial expenses were-8.3, 3.6 and 1.9 yuan, respectively, compared with the same period last year. The three fees per ton were-13.7 to 160.7 yuan, and the month-on-month comparison was-118.5 yuan.
The pace of signing has slowed down and capital expenditure has been gradually reduced. In the first half of the year, there were no general dangerous newly signed projects, and the total production capacity of the newly signed projects was about 700000 tons, with the pace slowing down, and the net investment cash outflow decreased by 25.2% to 470 million yuan compared with the same period last year.
The payback accelerated, and the operating cash flow in the first half of the year increased by 14.9% to 280 million yuan compared with the same period last year.
Our point of view: the traditional harmless disposal leader has lost money for a year in a row, the acquisition of new conch environmental protection projects has gradually come to an end, the price bottom of the hazardous waste disposal market has been basically confirmed, and the company has guided that the amount of industrial solid waste disposal for the whole year will increase by 37% compared with the same period last year. Industrial hazardous waste disposal increased by 24% year on year, and conch environmental protection entered the harvest period after the "horse race enclosure". The company is actively exploring new growth momentum, including alternative fuel business, fly ash, sludge disposal and so on. We basically maintain our previous profit forecast. It is estimated that the annual income of the company in 23-24-25 will be RMB 2.776 billion, 35.4% and 34.7% respectively, respectively, compared with the same period last year. The net profit of the company will be 4.10%, 5.79, and 768 million yuan, respectively, and + 24.7%, 41.2%, 32.7%, respectively, compared with the same period last year. The profit increment mainly comes from the continuous completion and production of hazardous and waste projects, and maintains the "buy" rating. Raise the target price to HK $3.53.
Risk tips: domestic economic recovery is not as expected, project construction is not as expected, payback is not as expected, market competition is intensified, potential environmental risks.