2023Q2's performance rose 13 per cent year-on-year and operating cash flow rose 30 per cent year-on-year. The company released its semi-annual report in 2023, with revenue of 1.54 billion yuan (+ 5.12%) and net profit of 351 million yuan (+ 4.95%) in the first half of the year, of which the net profit of 187 million yuan (+ 13.07%) in the second quarter was mainly due to the steady growth of solid waste business and the improvement of profitability of recycling business. In addition, the company achieved a net operating cash flow of 469 million yuan (+ 29.55% compared with the same period last year) in the first half of the year, but a net investment cash outflow of 481 million yuan (- 40% compared with the same period last year). With the increase in operating cash but the rapid contraction of capital expenditure, free cash flow is accelerating to become a regular employee.
The waste incineration project has made steady progress, and the amount of food waste plate is significant. (1) the income from the operation of the municipal solid waste project is 1.047 billion yuan (+ 2.38% compared with the same period last year). At present, the transportation and incineration capacity is 216,000,000 tons / day, and the trial operation + construction capacity is 1700 tons / day. In the first half of the year, the total garbage storage volume is 4.6426 million tons, the power supply is 1.277 billion tons, and the heat supply is 530100 tons. (2) the operating income of the kitchen waste project is 172 million yuan (+ 4.12% compared with the same period last year). At present, the company has a transportation capacity of 2650 tons / day and a production capacity of 670 tons / day. The total amount of extracted oil is 12000 tons (+ 23.71%) in the first half of the year.
The resource recycling business strives for steady progress, and the characteristic of high dividend is expected to be highlighted gradually. In terms of power battery recycling, the company started cooperation with Xunying New Energy; in the field of recycled rubber, the first phase of 30,000 tons of butyl recycled rubber production line has been officially put into operation in the first half of the year, and the second phase of 70,000 tons is also under construction, and customer supply is gradually restored. The recycling business steadily promotes the growth of performance, but as a light asset business, its investment intensity will decline significantly. The company's average dividend rate for the three years from 2020 to 2022 is 30%, and the dividend yield TTM has reached 3.16%. The follow-up dividend potential is worth looking forward to.
Profit forecast and investment advice: underestimate the pure operation of solid waste leader, look forward to the follow-up dividend potential.
It is estimated that the net profit of homing from 2023 to 2025 is 809 million yuan, corresponding to the latest PE of 8.45 Universe 7.52 Plus 6.64 times. With reference to the interbank valuation and the company's high dividend yield, the company is valued at 15 times PE in 2023, with a reasonable value of 28.24 yuan per share and maintaining a "buy" rating.
Risk hint. The risk of payback of accounts receivable; low profit expectation of recycling business; low expectation of dividend.