Events:
The company released its three-quarter report in 2023, with revenue of 7.49 billion yuan in the first three quarters, an increase of 21.00% over the same period last year, and a net profit of 658 million yuan (deducting non-574 million yuan), an increase of 9.13% over the same period last year (4.42%). 23Q3 achieved a revenue of 3.022 billion yuan in a single quarter, an increase of 37.78% over the same period last year, and a net profit of 164 million yuan, an increase of 3.4% over the same period last year.
Resource plate is a drag on performance, and there is room for improvement in cash flow.
Affected by the economic environment and the low capacity utilization rate of new production projects such as Jinke, the gross profit margin of the resource plate of the company has declined, which is the main reason for the decline of the company's profitability. During the reporting period, the company's gross profit margin and net profit margin were 18.87% and 9.23% respectively, year-on-year-4.56pct and-1.36pct; period expense rate 11.26%, year-on-year-0.90pct, ROE (weighted) 7.12%, year-on-year-2.77pct. During the reporting period, the company's asset-liability ratio was 60.08%, which was + 3.40pct compared with the same period last year. During the reporting period, the company's net economic turnover was-1.198 billion yuan, a decrease of 283.02% compared with the same period last year. The large net cash outflow was mainly due to the commissioning of Jinke projects, resulting in a substantial increase in inventory and intermediate products. It is expected that as Jinke and other new projects enter the normal operation link, the company's cash flow will be greatly improved.
Capacity into a rapid release period, the layout of deep resources to open up the industrial chain, enhance the overall profitability.
With the commissioning of Jiangxi Jinke project, the company's recycling capacity of metal hazardous waste has reached about 1 million tons / year, and the company has formed a nationwide platform company covering metal, plastic glass, tires, rubber and other renewable resources. to achieve the horizontal and vertical layout of the whole field, multi-category and deep resources, and effectively provide comprehensive service capacity of the whole industry chain for the utilization of solid waste and hazardous waste resources. The room for growth will be further opened.
The company obtains upstream copper-nickel scrap and nickel anode mud in Gansu subsidiary high-energy medium color, Jinchang high-energy and Zhengyu high-energy. Through the deep resource utilization of Jinchangxin Shengyuan and sine wave project, the company can produce 26000 tons of battery-grade cobalt nickel sulfate and 2700 tons of nickel oxide every year, realizing the closed loop of metal nickel from waste to material. In addition to the metal nickel cycle, the company's Gaoneng Pengfu, Chongqing Yaohui and other projects can deal with wastes containing copper, lead and zinc to get crude copper, matte, crude lead, zinc ingots and other products. After the deep resource utilization of Jingyuan High Energy Phase II and Jiangxi Xinke, it can produce 100000 tons of electrolytic copper, 25000 tons of electrolytic lead and a small amount of rare and precious metals and other high-value products every year, improving the company's profitability.
Merger and acquisition of Zhongxin Grand cut into PA/PET recycling, layout of recycled plastics to improve the layout of solid waste resources.
At the same time, the company announced that it intends to buy 51% of Anhui Zhongxin Hongwei for 140 million yuan, and the performance commitments for 2023 to 2026 are: 208.3 × N (the number of months remaining from the date of industrial and commercial change registration), 2500, 35 million yuan, and 45 million yuan. At present, the main business of the target company is the comprehensive recovery and utilization of various kinds of plastics, such as PA66, PA6, PET, etc., which fills the gaps in the company's related fields. Plastic recycling is a large segment of solid waste resources. With the help of this merger and acquisition, the company will strive to expand its market share and market influence in the recycled plastics industry and create new performance growth points.
Valuation analysis and rating description: the company's net profit from 2023 to 2025 is expected to be 916 million yuan, 1.213 billion yuan and 1.581 billion yuan respectively, corresponding to 13.5,10.2 and 7.8 times of PE respectively, maintaining the "recommended" rating.
Risk hint: the risk that the profitability of engineering project expansion and resource utilization project is lower than expected.