Summary of events: on October 27, the company released its three-quarter report of 2023, with operating income of 4.539 billion yuan in the first three quarters, an increase of 6.52% over the same period last year; net profit of 985 million yuan, up 14.47% over the same period last year; and net profit of 954 million yuan, up 13.33% over the same period last year. In the third quarter, the company achieved operating income of 1.559 billion yuan, an increase of 11.05% over the same period last year, a net profit of 352 million yuan, an increase of 30.02% over the same period last year, and a non-return net profit of 348 million yuan, an increase of 32.8% over the same period last year.
Solid foundation, solid waste treatment steadily improved: from January to August 2023, the company's wholly-owned, holding and shareholding projects totaled 12.7564 million tons of garbage, an increase of 10.01 percent over the same period last year; power generation of 4.744 billion kilowatt-hours, an increase of 8.28 percent over the same period last year; online electricity consumption of 4.14 billion kilowatt-hours, an increase of 8.74 percent over the same period last year; and factory-owned electricity consumption rate of 12.73 percent, a year-on-year decline of 0.44pct, to achieve further optimization. Adhering to the principle of reducing cost and increasing efficiency, the company's waste incineration power generation project operation capacity continues to enhance. As of June 2023, the company has a total processing capacity of 59550 tons / day, of which 55050 tons / day has been put into operation (including equity participation). With the gradual commissioning of new projects and capacity climbing, the profitability of waste incineration power generation business is expected to further improve, which will lead to the coordination of kitchen (kitchen waste) waste, sludge and other projects to contribute new performance growth points for the company.
"buyback + increase" two-pronged approach, optimistic about the company's long-term development: on October 26, the company announced that it planned to buy back shares through centralized bidding transactions, with a total repurchase capital of no less than 50 million yuan and no more than 100 million yuan. On October 27, the company announced that the water environment, the indirect controlling shareholder, planned to increase its holdings in the company by means of block trading or centralized bidding, with a cumulative increase of no less than 50 million yuan and no more than 100 million yuan, indicating confidence in the future development of the company.
Investment suggestions: the company's solid waste projects operate stably, reduce costs and increase efficiency significantly; indirect controlling shareholders increase their holdings and are optimistic about the long-term development of the company. Combined with the company's operating situation, we maintain the profit forecast for the company. It is estimated that the company's annual EPS on 23-24-25 will be 0.78 PE per share, respectively, and corresponding to the closing price of 8.6 PE on October 27, 2023, 7.8 times. The company will be given an 11.0 times PE in 2023 with a target price of 8.58 yuan per share, maintaining a "cautious recommendation" rating.
Risk tips: the progress of project construction and operation is not as expected; the risk of slowing down the growth rate of the industry; the risk of slowing down the speed of being included in the national subsidy catalogue; and the risk that the development of large solid waste business is not as expected.