Introduction to this report:
The company's solid waste business is progressing steadily, the environmental protection and new materials and equipment business is developing rapidly, and the new energy materials business continues to break through.
Key points of investment:
Maintain the “increase in holdings.” According to the company's new energy materials business development progress and current nickel prices, 2023-2024 was lowered, increasing the predicted net profit of 19.50 (-24%), 23.68 (-32%), and 3,016 billion yuan for 2025, corresponding to EPS 1.14, 1.39, and 1.77 yuan. The company's solid waste management is steady, and is actively developing the new energy business to create a secondary growth curve. Currently, solid waste (incineration, biomass, landfill gas, etc.) companies have an average value of 18.5 times EPE in 2023, giving the company 20 times PE in 2023, lowering the target price to 22.80 yuan.
The 2023H1 performance was in line with expectations. 2023H1 achieved revenue of 2,893 million yuan, an increase of 28% over the previous year; of these, environmental protection project operation revenue was 1,456 billion yuan, equipment manufacturing and service revenue was 1,424 billion yuan; attributable net profit of 1,026 million yuan, an increase of 13% over the previous year; net non-attributable profit of 988 million yuan was deducted, an increase of 13% over the previous year. The operation is steady, and the performance is in line with expectations.
The solid waste business is progressing steadily. 1) The 2023H1 Chengjiang, Minqing and Wuping projects were officially put into operation, the Lu Long and Changli projects were put into trial operation, and the company put into operation 33,700 tons/day of waste incineration projects. The storage volume of household waste was 5.32 million tons, an increase of 24% over the previous year. 2) The construction of ongoing projects went smoothly. At the end of the period, the company was constructing 6 waste incineration projects and 4 food waste treatment projects. The construction of each project progressed smoothly.
The new energy materials business continues to break through. 1) Jiaman's 40,000-ton high ice nickel project in Indonesia is progressing smoothly. 2) Jamanda's 40,000-ton high ice nickel project in Indonesia has obtained an overseas investment project registration certificate and overseas investment certificate. 3) The Wenzhou Lithium Battery New Materials Project obtained new land for the second phase of the project. 4) The joint venture agreement for the 100,000 ton battery electrolyte project and the Indonesian laterite nickel ore smelting and production of new energy nickel raw materials (20,000 tons of nickel/year) project (nickel wet method project) were signed. 5) Wei Ming and Sheng Qing completed a capital increase in Grimmie. 6) Weiming Shengqing completed a capital increase to invest in the Fu'an Qingmei project. We look forward to the performance contribution of new energy materials.
Risk warning: Project progress falls short of expectations, sharp fluctuations in commodity prices, etc.