The target price is 18.88 yuan, reaffirming the “buy” rating
On December 23, Longjing Environmental Protection issued an announcement: Zijin Mining, the controlling shareholder of the company, increased its holdings of the company's shares by 17.12 million shares between December 5 and 22, accounting for 1.58% of the company's total share capital. Controlling shareholders have continuously increased their holdings, national policies are favorable to the atmospheric management business, and Huawei and Qiangqiang have joined forces to create a full-scenario clean energy benchmark:
We continue to be optimistic about Longjing's environmental growth space. Maintaining the profit forecast, we expect the company's net profit from 2023-2025 to be 9.4/15.5/2.3 billion yuan, respectively, and the net profit from environmental protection/new energy to the mother of 98/570 million yuan in 2024. According to Wind's unanimous expectations, the average PE value of environmental/new energy comparable companies in 2024 was 9.4/19.7x, giving the company a 2024 PE 9.4/19.7x, corresponding to a total market value of 20.4 billion yuan and a target price of 18.88 yuan (previous value of 18.68 yuan), reaffirming the “buy” rating.
The fixed increase was terminated, and Zijin continued to increase its holdings to strengthen the position of the Longjing New Energy Platform on December 2. In view of the low proportion of capital raised previously, the company plans to discontinue the fixed increase program. The company issued convertible bonds in March 2020 to raise 2 billion yuan. As of June 30, the unspent capital was 1,375 billion yuan. It plans to invest in projects such as the first phase of 200MW scenery in Duobaoshan, Heilongjiang. Since October, Zijin Mining has continuously increased its holdings through centralized bidding. As of December 23, Zijin Mining's holdings in Longjing Environmental Protection increased to 18.44%, with a voting ratio of 28.35%. We believe that the continued increase in Zijin's holdings has effectively strengthened Longjing's position as an environmentally friendly new energy platform, demonstrating Zijin's 2029 carbon peak ambition.
Promoting air quality improvement at the national level to benefit leaders in atmospheric management. On December 7, the State Council issued the “Action Plan for Continuous Improvement of Air Quality”. The document suggests that by 2025, the concentration of PM2.5 in prefecture-level cities and above nationwide will drop 10% compared to 2020, the proportion of days with severe pollution and above will be kept within 1%, and total emissions of nitrogen oxides and VOCs will be reduced by more than 10% compared to 2020; support the cultivation of a number of leading enterprises in the fields of VOCs pollution control, ultra-low emissions, and environmental and atmospheric composition monitoring; by 2025, the whole country More than 80% of steel production capacity has completed ultra-low emission transformation tasks, all key regions have achieved ultra-low emissions in the steel industry, and basically completed the ultra-low emission transformation of coal-fired boilers; and the improvement of air pollutant emission standards in key industries and fields has been accelerated. As a leading air pollution control enterprise in China, Longjing Environmental Protection is expected to benefit from the Air Quality Action Improvement Plan.
Strategic cooperation with Huawei to create a benchmark for full-scenario clean energy power plants. On December 10, Longjing Environmental Protection and Huawei Digital Energy Technology Co., Ltd. signed a strategic cooperation agreement at the Huawei headquarters in Shenzhen. The two sides will jointly develop mining and metallurgical microgrid solutions, support Longjing's environmentally friendly batteries, PACK modules, and batteries to match Huawei's digital energy product plans, and jointly create a benchmark for full-scenario clean energy power plants and a future-oriented mine microgrid power supply plan.
Risk warning: New environmental protection orders fell short of expectations, green power operations and production capacity construction fell short of expectations, and competition in the energy storage cell industry intensified.