9M23 homing net profit yoy+30%, maintains profit forecast and target price Han Blue Environment Forecast 9M23 realizes homing net profit of about 1.127 billion yuan (yoy+30%), deducting non-net profit of about 1.1 billion yuan (yoy+30%), corresponding to 3Q23 homing net profit of 437 million yuan (yoy+37%,qoq+15%) and deducting non-net profit of 430 million yuan (yoy+42%,qoq+16%). Solid waste treatment capacity and net profit continued to grow, and the energy business turned from losses to profits compared with the same period last year, thanks to the improvement of the price gap between natural gas purchase and sale. Maintaining the profit forecast, we estimate that the 23-25 year return net profit of the company will be 1.672 million yuan 1.613 million 1.725 billion yuan for the company, and 1.80 yuan 1.98 million 2.12 yuan for EPS. Comparable company's 23-year Wind unanimously expects the average PE to be 15x, giving the company a 23-year 15xPE with a target price of 27 yuan, maintaining a "buy" rating.
New waste incineration power generation project is put into operation, 3Q23 power generation may increase sharply, according to the production and operation data disclosed by the company, waste incineration power generation is 831 million kilowatt-hours (yoy+41%) and online electricity is 706 million kilowatt-hours (yoy+30%) from July to August. We expect high growth in September and 3Q23, mainly due to a total increase of 3750 tons per day in waste incineration power generation capacity from July 22 to June 23 (equivalent to 14% at the end of June 22). According to the pace of the company's construction and planning projects, the next batch of new projects will be put into production in 1H24, and we are optimistic that the company's profits from waste incineration and power generation will continue to grow for 23-24 years.
The energy business turned from loss to profit compared with the same period last year, and the water supply and drainage business was relatively sound.
1) Energy: July-August natural gas sales yoy+0.5%,1H23 energy sector has turned losses to profits compared with the same period last year, and 3Q23 is expected to continue to make a profit, mainly due to the improvement of natural gas pricing mechanism, diversification of gas source structure and the growth of non-sales gas business; 2) Water supply: July-August water supply yoy+3%, reverses the trend of year-on-year decline in 1H23 3) drainage: from July to August, the sewage treatment capacity yoy+5%, is slightly lower than the year-on-year growth rate of 1H23 (+ 9%), and 2H23/1H24 is expected to increase sewage treatment capacity by 4.5 million square meters per day (based on the progress of projects under construction disclosed in the 2023 report).
The valuation is expected to be repaired and the target price is maintained.
Comparable to the company's 23-year average 15xPE (Wind consensus expectations). The company's current stock price corresponds to only 9xPE for 23 years, and the depressing factors of valuation are expected to be gradually eliminated. The catalysts include: 1) waste incineration capacity increases again, 2) CCER restart brings increased profits, 3) cash flow situation improves (1 billion yuan of accounts receivable claims were successfully transferred at the end of September). Give the company a 23-year 15xPE with a target price of 27 yuan per share.
Risk hint: the production progress of waste incineration project is lower than expected; the financing trend has been greatly reversed; the rise of natural gas prices has exceeded expectations.