3Q23's homing net profit is + 3.4% compared with the same period last year, and the utilization rate of resource-based new capacity has been greatly improved. space company 1-9M23 realized revenue / return net profit of RMB 74.90 million, which was 9.1% compared with the same period last year. The corresponding 3Q23 revenue / return net profit was from + 37.8% Universe 3.4% to 3.022 billion RMB respectively. The company's 1-9M23 revenue growth over the same period last year is mainly due to the operation of Jiangxi Xinke and Jinchang companies. Jiangxi Xinke project is the largest production capacity and the most complete industrial chain project so far, if the project capacity utilization is improved, it is expected to bring greater contribution to the company's performance growth. By reducing the utilization rate of the company's hazardous waste capacity and gross profit margin, we estimate that the company's 23-25 year return net profit will be 9.4 pound 1.56 billion yuan (previous value:
11.1x14.1 pound), considering that the improvement of the company's hazardous solid waste recycling capacity and the extension of the industrial chain will improve its profitability, it is given the company's 23-year 17x target PE (Wind consensus expected PE average 13x), with a target price of 10.39 yuan (previous value: 13.07 yuan), maintaining a "buy" rating.
The performance of the new project increased year-on-year. The acquisition of Zhongxin Hongwei horizontally expanded the revenue of 1-9M23 plastic recycling company + 21.0% year-on-year, of which the revenue of 3Q23 company was significantly + 37.8% year-on-year, which was higher than that in the first half of the year, mainly due to the new production capacity of Jiangxi Xinke and entry company. 1-9M23 company sales expenses year-on-year + 36.5% to 109 million yuan, mainly due to the increase in solid waste recycling projects, the company increased the procurement of raw materials, market costs and the need to pay staff costs all growth. In order to horizontally expand the resource comprehensive utilization and recovery business of PA, PET and other recycled plastics, the company plans to invest 140 million yuan to acquire 51% equity of Zhongxin Hongwei, Zhongxin Hongwei 1-5M23 has revenue of 124 million yuan and net profit of 7.3951 million yuan. By the end of May 2023, the owner's equity is 96.7047 million yuan, and the company's acquisition price corresponds to PB 2.8x.
Affected by the stock of Jiangxi Xinke project, inventory increased significantly compared with the same period last year.
On the basis of increasing the capacity of front-end hazardous waste disposal, the company has extended the industrial chain to the back-end deep processing field. In order to ensure the normal production and operation of Jiangxi Xinke and Jinchang high-energy project, the company has stored raw materials. Although some products have been sold back after the project was put into operation, most of the raw materials have not yet been processed and sold. By the end of September 2023, the company's inventory was 4.492 billion yuan, an increase of 2.706 billion yuan over the same period last year. As a result, the net cash flow of the company's 1-9M23 operating activities dropped sharply to-1.198 billion yuan. In the follow-up, with the improvement of the capacity utilization of Jiangxi Xinke and Jinchang high-energy projects, the company's inventory has declined, and the operating cash flow problem may improve. The net investment cash flow of 1-9M23 company was + 56.1% to-750 million yuan compared with the same period last year, mainly due to the reduction of investment expenditure after the waste incineration power plant was put into operation.
Maintain a "buy" rating with a target price of 10.39 yuan
We estimate that the company's 23-25 EPS is 0.61 EPS 1.02 yuan, giving the company a 23-year 17x target PE of 10.39 yuan, maintaining a "buy" rating.
Risk hint: solid waste and hazardous waste resource capacity expansion / environmental repair new orders / waste incineration project capacity utilization increase / financial expense rate is lower than expected.