Description of the event
Sainz released a performance forecast. It expects revenue of 750-850 million yuan in 2023, an increase of 36.8%-55.1% over the previous year; net profit of 80-086 million yuan, an increase of 20.8%-29.9%; and net profit of 0.80-086 billion yuan, an increase of 20.8%-29.9%; and net profit of 0.70-078 million yuan, a year-on-year increase of 25.5%-39.9%.
Corresponding to 2023Q4, it achieved revenue of 350-450 million yuan, a year-on-year increase of 60.7%-106.7%, a year-on-month increase of 165.3%-241.2%; net profit of 0.26-032 million yuan, a year-on-year increase of 54.3%-90.2%, a year-on-month increase of 44.3%-77.9%; net profit of 0.25-033 million yuan, a year-on-year increase of 79.5%-137.6%, and a month-on-month increase of 98.0%-162.0%.
Incident comments
Policies drive the release of industry demand, integrated solutions confirm revenue at the end of the year, and drive high performance in 2023Q4. 1) All year round:
The company expects to achieve revenue of 750-850 million yuan in 2023, and is expected to complete the 2023 equity incentive assessment target (800 million yuan); net profit growth is lower than revenue growth, presumably due to lower gross margin and amortization of share payment expenses during the reporting period of the equity incentive plan. 2) Single quarter: 2023Q4 revenue and net profit accounted for 46.6%-52.9% and 32.2%-36.9% of the year, showing strong seasonality. It is speculated that the main reason is the acceleration in revenue confirmation for Q4 integrated solutions. 3) Judging from the business structure, it is expected that integrated solutions will contribute to the driving force of growth. In 2023, the copper, lead and zinc industry began to implement special emission limits. Environmental inspections, soil surveys, and the Jiangxi heavy metals incident led to rapid growth in the company's comprehensive solution performance; the performance growth rate of the operation service sector was stable. Looking ahead to 2024, the company has sufficient orders for comprehensive solutions. The approved integrated solution projects are expected to be converted into new operating projects to contribute revenue, and growth momentum is strong.
Zijin Mining is the company's core customer, and cooperation continues to deepen. Judging from the customer structure, it is estimated that Zijin Mining is still the largest customer. The transaction amount between 2023M1-11 and Zijin Mining was 151 million yuan, +57.4% year-on-year, accounting for 28.3% of the company's revenue, an increase of 3.29pct over the previous year. The amount of related transactions between the company and Zijin Mining is expected to reach 450 million yuan in 2024, which is 218.4% more flexible than in 2022. On the one hand, because the approved comprehensive solution projects will be converted into operating revenue, and on the other hand, Zijin Mining, as the industry leader, continues to deepen its environmental management and the incremental demand from overseas projects, so cooperation between the company and Zijin Mining is expected to continue to deepen in the future. Since 2022, the company has cooperated with Zijin Mining to go overseas. The cooperation includes projects such as the Norton Goldfield project in Australia and Serbia, and the overseas layout continues to advance.
The increase in ownership of actual controllers shows confidence in development. 2023/10/31-2023/12/08 Mr. Gao Weirong, the actual controller and chairman of the company, increased his holdings by a total of 311,700 shares, accounting for 0.33% of the company's total share capital, and the direct shareholding ratio after the increase was 25.35%, demonstrating confidence in subsequent business development.
New technology, new models, or contribution to increased performance. 1) New technology: The company lays out new energy waste acid treatment and metal material recycling. Currently, the new copper foil material water treatment project and power battery recycling wastewater treatment project have been commissioned; 2) New model: the company realizes targeted absorption of rare metals such as rhenium in sewage wastewater through technology research and development, and recovers valuable resources such as sodium chloride, sodium sulfide, sodium sulfate, sulfuric acid, hydrochloric acid and hydrofluoric acid from wastewater waste acid. In the future, it may obtain revenue from valuable resource recycling.
Profit forecasting and valuation: Company equity incentive plan to fully motivate employees. The promotion of the “Heavy Metal Pollution Prevention and Control Policy” in 2024, environmental inspection, and soil surveys are all conducive to the release of market space in the industry. The company is a leading enterprise in heavy metal pollution control and is expected to benefit. The company's net profit from 2023-2025 is expected to be 0.83/1.15/152 million yuan, +25.3%/38.1%/33.0% year-on-year, and the PE valuation is 44.6x/32.3x/24.3x, maintaining the “buy” rating.
Risk warning
1. The risk of iterative technological upgrades; 2. The risk of the sustainability of operational service projects.