Items:
On August 18, 2023, the company disclosed its half-yearly report for 2023. During the reporting period, the company achieved operating income of 2.893 billion yuan, an increase of 27.99% over the same period last year; net profit of 1.026 billion yuan, an increase of 13.02% over the same period last year; net cash flow from operating activities was 918 million yuan, an increase of 4.42% over the same period last year; and basic earnings per share was 0.6 yuan, an increase of 15% over the same period last year.
Comments:
The business of environmental protection operations grew in an orderly manner. The revenue of 2023H1's operating business reached 1.456 billion yuan, an increase of 30.94% over the same period last year. 1) at the project level: with the formal operation of Chengjiang Project, Minqing Project and Wuping Project, and the commissioning of Lulong Project and Changli Project, 49 waste incineration projects (33700 tons / day) and 6 projects under construction are invested and controlled by the company. As the Chengjiang kitchen project was put into operation, Dongyang kitchen project was put into trial operation, and 13 kitchen waste disposal projects invested and controlled by the company at the end of the period were reported (including 1 trial run). 2) at the core profit factor level: the storage volume of the company's domestic waste was 5.315 million tons, an increase of 23.77% over the same period last year; online electricity was 1.511 billion kWh, an increase of 19.32% over the same period last year, and 284 kWh per ton of garbage.
The equipment business is steadily increasing. The company's 2023H1 equipment manufacturing and service business achieved revenue of 1.424 billion yuan, an increase of 43.69% over the same period last year. In the first half of the year, the company signed the EPC general contract for the domestic waste incineration power generation project in Chongyi County, and the new materials and equipment mainly signed the equipment procurement contract for Qingmeibang Phase II laterite Nickel Mine Wet smelting Project, Yongxu Mining equipment supply contract and Weiming Shengqing equipment Engineering contract. Weiming equipment complete sets of environmental protection equipment manufacturing industry base phase I project put into trial production, will further increase the company's equipment plate production capacity and enhance equipment manufacturing capacity.
The new energy business is progressing smoothly. The company actively promotes the development of new energy business: 1) the 40,000 ton Indonesian high matte nickel project of Jiaman Company, a subsidiary of the company, is progressing smoothly; 2) the 40,000 ton Indonesian high matte project of Jiamanda Company, a subsidiary of the company, has obtained the overseas investment project record notice of Zhejiang Provincial Development and Reform Commission and the overseas investment certificate of Zhejiang Department of Commerce; 3) Wenzhou lithium battery new materials project has obtained about 180 mu of land for the second phase of the project, effectively promoting the progress of construction. 4) the company completed the joint venture agreement of 100000 tons of battery electrolyte project and the joint venture agreement of Indonesia laterite nickel smelting to produce new energy nickel raw material (20,000 tons of nickel / year) project (nickel wet method project); 5) Weiming Shengqing completed the investment increase of Green Mei, at the same time, Weiming Shengqing completed the investment increase of Fu'an Qingmei project.
At present, the company has a project production capacity of 130,000 tons / year and an equity capacity of 77500 tons / year.
Investment suggestion: both the company's traditional and new business are promoted in an orderly manner. Considering the actual production and profit release of the high matte project, the forecast is slightly downgraded. We estimate that the company's net return profit in 2023-2025 will be 2.0452.826 trillion yuan (compared with the previous forecast of 28783.933 billion yuan in 2023-2024). Using the segment valuation method, most of the company's waste incineration projects are located in the economically developed province of Zhejiang, with high calorific value and leading profitability in the industry. in recent years, it has enjoyed a valuation premium higher than the industry average, giving the environmental protection business 15 times PE combined with the historical valuation level. In the part of new energy, we selected Zhongwei and Huayou Cobalt, which also invested in high matte projects in Indonesia, as comparable companies. Because the company has the advantages of Castle Peak energy and side-blowing furnace technology accumulation, it is given 10 times PE, corresponding to the 2024 target price of 23.52 yuan, maintaining the "recommended" rating.
Risk tips: increased competition in the industry, project production is not as expected, capacity utilization is not as expected, accounts receivable is not as expected, commodity prices fluctuate sharply.