The target price is 25.60 yuan/share to maintain the “buy” rating
The national level promotes the deepening of infrastructure investment and financing system reforms, regulates government and social capital cooperation mechanisms, proposes user-paid projects, and prioritizes the participation of private enterprises. Solid waste operations, represented by waste-to-energy generation, are ecological protection and environmental treatment projects with operational benefits. We believe that Weiming Environmental Protection is expected to benefit. The company won the bid for the Kunshan Renewable Resources Comprehensive Utilization Project on November 7. The waste incineration treatment capacity is 2,250 tons/day, and there is still room for growth in the waste-to-energy business. Raising the equipment revenue forecast, we expect net profit of 21.50/30.44/3.475 billion yuan in 23-25 (previous value: 20.50/29.79/3.471 billion yuan). Considering the company's excellent operating capacity and opening up room for growth in the new energy business, it was given 14.3x PE in 2024 (referring to the average PE value of 11.9x for wind in 2024), with a target price of 25.60 yuan (previous value of 25.80 yuan), maintaining the “buy” rating.
Environmentally friendly operation is steady, and equipment advantages have moved to the field of new energy
The company's environmental protection operating revenue for the first three quarters was 2,262 billion yuan, +20% year-on-year, and completed garbage storage volume of 8.7 million tons, an increase of 27% over the previous year, and feed-in electricity volume of 2.32 billion kilowatts, an increase of 20% over the previous year. The company gave full play to its traditional advantages in equipment R&D and manufacturing. Equipment revenue in the first three quarters was +66% to 2,339 billion yuan. Weiming Equipment signed equipment contracts for waste power generation in Fuyuan County, Indonesia's Morowali cogeneration, and Grimmie beneficiation facilities. The contract amounts were 0.86/2.38/492 million yuan respectively. The company is actively promoting the execution of equipment orders. Grimm's Indonesia Qingmeibang project is an important customer of Weiming Equipment's overseas supply of new energy materials and equipment. According to a report on Weiming Environmental Protection's public account on November 6, the company has already deployed hundreds of staff to organize delivery and installation on site.
The oxygen-rich side blowing route of laterite nickel ore has been verified. Deepening investment and cooperation in the Indonesian market. According to Zhongwei Co., Ltd.'s announcement on October 19, the first ice nickel production line at the Morowali industrial base in Indonesia was officially put into trial production and successfully produced ice nickel. The project uses laterite nickel ore as raw material and uses an oxygen-rich side blowing process. The Gamann project is the first high-ice nickel project invested by Weiming. The project is located in Weidabai Park in Qingshan, Indonesia. It is the same oxygen-rich side blowing process as the Zhongwei project, and has undergone several technical improvements. Weiming believes that the Gamann project will further develop the technical advantages of this process. The total scale of the Jiaman project is to produce 40,000 tons of high-ice nickel and nickel-containing metals per year. The equipment installation stage has already begun in the third quarter. On November 14, the Zhejiang Provincial Government and the Indonesian Maritime Investment Coordination Department co-hosted an economic and trade cooperation exchange meeting in Jakarta. Weiming Environmental Protection participated in the signing of the project to deepen investment and cooperation in Indonesia.
Risk warning: Waste-to-energy project operation risks, new material project construction progress falls short of expectations, and nickel price fluctuations are higher than expected.