Event: the company issued a report for the third quarter of 2023, with revenue of 4.621 billion yuan in the first three quarters, an increase of 38.93% over the same period last year, and a net profit of 1.571 billion yuan (deducting 1.526 billion yuan), an increase of 25.08% over the same period last year (26.05%). 23Q3 achieved a revenue of 1.728 billion yuan in a single quarter, an increase of 62.15% over the same period last year, and a net profit of 545 million yuan, an increase of 56.52% over the same period last year.
The sharp rebound in equipment business promotes high performance growth, and profitability continues to be strong: in the first three quarters of 2023, the company's sales gross profit margin was 47.14% (year-on-year-2.73pct), net profit rate was 34.60% (year-on-year-2.21pct), and period expense rate was 8.74% (year-on-year-2.21pct). We judged that the company's revenue growth was mainly due to a large rebound in revenue from the equipment sector, while the operation sector maintained steady growth. During the reporting period, the company's asset-liability ratio was 47.61% (year-on-year-0.64pct), which remained at a relatively reasonable level; the current net amount was 1.382 billion yuan, an increase of 7.85% over the same period last year, and the current net amount basically matched the net profit. ROE (weighted) is 15.74%, an increase of 0.76% over the same period last year, maintaining a strong profitability.
Operation business: there is a large increase in waste disposal capacity and electricity generation, and the operation business continues to grow steadily: at the end of the third quarter, the company put into operation 49 waste incineration projects (including 6 trial operations) and 13 kitchen projects and trial operations. In the first three quarters, the company completed a total of 8.7037 million tons of garbage (including 8.3032 million tons of domestic waste), an increase of 27.39% over the same period last year.
In the first three quarters, the company's revenue from environmental protection project operation reached 2.262 billion yuan, an increase of 20.26% over the same period last year.
In terms of project expansion, dining and kitchen projects: the daily handling capacity of camphor trees signed by the company is not less than 50 tons, the service period of the coastal project is 3 years, the cumulative handling capacity is 50,000 tons, with a total price of 14.925 million yuan; sludge project: Linhai project annual amount of 3.8095 million yuan, Ruian project 1 year 8.877 million yuan, Wuyi project 3 years 6.435 million yuan.
The treatment of leachate is 3.3755 million yuan for Yongkang project and 2 million yuan for Longwan project.
Equipment business: new energy materials and equipment opens up new growth space: the company's equipment manufacturing and service business achieved revenue of 2.339 billion yuan in the first three quarters, an increase of 66.48% over the same period last year. During the reporting period, the company added 845 million yuan in contracts for related equipment and services such as waste incineration, cogeneration and new energy materials, while the company obtained a pressure vessel production license. the acquisition of new orders and manufacturing qualifications will effectively ensure the release of the company's follow-up equipment manufacturing business performance.
The company actively carries out the R & D and manufacturing of nickel pyrometallurgical and hydrometallurgical equipment and new material production equipment, which will not only meet the needs of related equipment in the development of its new energy business, but also become a new performance growth point in the equipment manufacturing sector of the company.
New energy materials business: create the second growth curve, the Jiaman project is about to be put into production: the company has actively transformed the layout of new energy materials business in recent years, building nickel metal smelting projects in Indonesia upstream and building lithium battery new materials industry base projects downstream, including battery grade nickel sulfate, power battery precursors, power battery ternary cathode materials and so on. During the reporting period, the company continued to improve the layout, and proposed to participate in 20% of the joint investment of US $500 million with Grimm et al to build a project of 20,000 tons of new energy nickel raw materials per year. Weiming Shengqing plans to invest 700 million yuan to build a 50,000-ton high-purity electrolytic nickel project in Wenzhou.
In the third quarter, the 40,000-ton Indonesian high-matte nickel project of the company's Jiaman Company has entered the stage of equipment installation, and Wenzhou lithium batteries are also advancing rapidly. It is expected that the company's new energy material project will gradually enter the operation period in 2024 and will become a new performance growth pole of the company.
Valuation analysis and rating description: it is estimated that the company's homing net profit from 2023 to 2025 is 1.961 million yuan, 2.693 billion yuan, respectively, corresponding to EPS 1.15, 1.73, 2.17 yuan per share, and corresponding PE, respectively, 15.5x/10.3x/8.3x, maintaining the "recommended" rating.
Risk hints: the risk that the production progress of waste incineration power generation projects is not as expected; the risk that the construction progress of new energy materials projects is not as expected; the risk of intensified competition in the industry.