1H23 returns home net profit + 2% compared with the same period last year, maintaining "buy" rating
According to the semi-annual report released by Chengfa Environment, H1 realized revenue of 3.236 billion yuan (yoy+17.50%), net profit of 594 million yuan (yoy+2.09%) and non-net profit of 586 million yuan (yoy+6.47%) in 2023. Among them, Q2 realized revenue of 1.716 billion yuan (yoy+9.83%,qoq+12.83%) and net profit of 287 million yuan (yoy-19.66%,qoq-6.47%). We estimate that the EPS of the company will be 1.95,2.14,2.36 yuan from 2023 to 2025, and 1.20pm 0.75 yuan for solid waste / highway EPS in 2023. Comparable company Wind 2023 unanimously expected PE mean 9.4x/9.7x, considering that there is some uncertainty in the expansion of solid waste projects outside Henan Province and overseas, giving solid waste / highway 2023 PE 7.5x/9.7x, corresponding to the target price of 16.26 yuan (the previous value is 16.07 yuan), corresponding to 2023 PE 8.3x, maintaining "buy".
The production capacity of garbage power generation has reached 26500 tons, and the amount of online electricity is + 15% compared with the same period last year. As of June 30, 2023, the total volume of orders in the field of domestic waste incineration power generation by the company is 28550 tons per day (excluding shareholding companies). Among them, 30 projects have been operated, with a garbage disposal capacity of 26450 tons per day, and 2 new projects under construction (Daqing project and Changji project, the company is expected to be put into operation by the end of 2023), with a scale of 2100 tons per day. In the first half of the year, the volume of garbage entered was 4.86 million tons, an increase of 21.5 percent over the same period last year, and the amount of electricity connected to the Internet was 1.02 billion kilowatt-hours, an increase of 15.1 percent over the same period last year. The main reason was the increase in operation capacity, and the electricity consumption rate of comprehensive plants decreased by 0.9 percent over the same period last year.
Actively expand the business of environmental protection solution integration
The environmental protection solution integration business is mainly managed by Walkman, a wholly-owned subsidiary, providing comprehensive solutions such as EPC around solid waste treatment, water pollution treatment, kitchen sludge disposal, ecological restoration, new energy and other areas. According to the company's announcement on August 17, Walkman and Henan Investment Group intend to sign the EPC general contract for the second phase of China Central Plains Human Resources Service Industrial Park and the EPC general contract for decoration and decoration of the exhibition hall at Building 4, Outer Ring of Longhu Financial Center, with a contract amount of 321 million yuan / 34.5 million yuan respectively. Industry experience, general contracting qualifications and resource advantages are expected to promote the development of EPC business.
Highway revenue is + 6% year-on-year, and the net operating cash flow is + 80% year-on-year. Pingnan Company is responsible for investing and operating the company's highway business, including Xuchang-Pingdingshan-Nanyang Expressway, Anyang-Linzhou Expressway, Linzhou-Changzhi (provincial boundary) expressway, operating mileage of 255.36 km. In the first half of the year, the company's average daily vehicle flow was + 26.6% to 44500 vehicles compared with the same period last year, and the toll income was + 4% to 705 million yuan over the same period last year, mainly due to the concentrated release of travel demand and the increase in bus flow. Highway business revenue from + 6.0% to 715 million yuan, gross profit margin of 55.9%, year-on-year-1.3pp.
The net operating cash flow of the company's 1H23 is 694 million yuan, + 80% compared with the same period last year. Environmental protection operations and highway assets are expected to bring sustained and stable cash flow.
Risk hint: waste incineration project operation risk, operation efficiency improvement is not as expected, engineering business development is not as expected.