Event description
Yingfeng Environment achieved operating income of 6.133 billion yuan in the first half of 2023, an increase of 8.18% over the same period last year, and its net profit was 373 million yuan, an increase of 14.85% over the same period last year. 2023Q2 realized operating income of 3.461 billion yuan, an increase of 21.62% over the same period last year, and its net profit was 217 million yuan, an increase of 18.20% over the same period last year.
Event comment
New energy sanitation equipment has increased rapidly, and sanitation service orders have driven steady growth in revenue. From the perspective of business in the first half of the year: 1) the revenue of sanitation equipment in the first half of the year was 2.566 billion yuan, down 9.22% from the same period last year, mainly due to the financial pressure of the government and the lack of willingness to purchase sanitation equipment, but the company sold 885 new energy products in the first half of the year. Year-on-year growth of 46.5%, market share of 36.6%, ranking first in the industry, mainly due to local governments have issued new energy sanitation equipment promotion policies. Drive a high increase in sales 2) the revenue of sanitation service business in the first half of the year was 2.594 billion yuan, an increase of 36.38% over the same period last year. The company signed a total of 42 urban service projects, with a total new contract value of 5.812 billion yuan and an annualized contract value of 1.007 billion yuan, ranking first in the same industry market. Continuous new sanitation service projects led to steady growth of the company's sanitation service business income. By the end of June, the company operated a total of 254 urban service projects. The annual contract value of the stock market is 6.283 billion yuan.
The gross profit margin stabilized and rebounded, and the expense rate increased during the period. In the first half of the year, the company's comprehensive gross profit margin was 25.33%, an increase of 1.87pct compared with the same period last year, in which the gross profit margin of sanitation equipment increased by 0.96pct to 26.84%. It is estimated that this is due to the high increase in new energy equipment, the change in the income structure of equipment business led to an increase in the gross profit margin of the business, and the increase of 3.42pct to 21.74%. The main reason is that the effectiveness of fine management has gradually begun to highlight after the signing of the project. In terms of expense rate, the expense rate during the first half of the year was 16.81%, which was increased by 1.98pct compared with the same period last year, of which the sales expense rate increased by 1.46pct to 7.72%, mainly due to the development of new target markets and the increase in market promotion fees, and the management and R & D expense rate increased by 0.92pct to 8.51%, mainly due to the expansion of smart service business and the corresponding increase in management costs, while the financial expense rate decreased to 0.58%. It is mainly due to the reduction of VAT deduction received in the first half of the year.
The cash-to-income ratio has improved, but the net-to-cash ratio still needs to be improved. In the first half of the year, the company's income-to-cash ratio was 94% (86% in the same period last year), an improvement over the same period last year, but there is still room for improvement. The net-to-cash ratio in the first half of the year was only 27% (54% in the same period last year), mainly due to a decrease of 448 million yuan in notes payable compared with the end of 2022. The company recorded a credit impairment loss of 107 million yuan in the first half of the year, which was also a drag on the current profit.
It is expected that the continuous promotion of sanitation services and the growth of new energy sanitation equipment will lead to an improvement in performance. On January 30, 2023, eight departments, including the Ministry of Industry and Information Technology, issued the Circular on organizing the pilot work in the pilot area of full electrification of vehicles in the public domain. It is proposed that: "start the pilot work in the pilot area of full electrification of public domain vehicles nationwide", requiring that the proportion of new energy vehicles in new and updated sanitation vehicles in the pilot areas should strive to reach 80%. Although the penetration rate of new energy equipment is only about 6%, the growth of new energy sanitation equipment is more flexible in the future.
It is estimated that the net profit of homing from 2023 to 2025 is 8.9,10.4 and 1.21 billion yuan respectively, corresponding to PE 17x, 15x and 13x, maintaining the "overweight" rating.
Risk hint
1. The marketization process of sanitation is lower than expected.
2. The competition pattern of new energy equipment is deteriorating.