Incident: The company released its annual report. The company's total revenue in 2023 was 1,947 million yuan, yoy +53.05%; net profit to mother was 283 million yuan, yoy +39.91%; after deducting non-net profit of 274 million yuan, yoy +46.52%; the company's 2023 annual profit distribution plan is to distribute 1.7 yuan (tax included) to all shareholders for every 10 shares transferred 4 shares. The company's performance was in line with expectations.
The company's orders increased dramatically in 2023, and the annual contract was 4.457 billion yuan. Specifically, 1) Water management: 33 new water environment treatment projects were added throughout the year, and contracts amounting to more than 2.4 billion yuan were signed. 2) Environmental energy: 6 new waste incineration power generation projects have been added one after another, and the cumulative daily garbage disposal has reached 4,500 tons. After the project is put into operation, it will greatly increase the company's subsequent fixed income. 3) Solid waste disposal: The business layout clearly revolves around sludge treatment, integrated urban and rural sanitation, fly ash disposal, etc., and has successively undertook projects such as integrated urban-rural transportation and service projects for Shizong domestic waste, centralized sludge treatment in Chishui City, etc., with a total contract amount of 150 million yuan. 4) High-end environmental protection equipment: In 2023, revenue increased by 2100.51% compared to 2022.
At the same time, 56.46 million yuan was invested throughout 2023 to transform and upgrade the equipment manufacturing production line to achieve intelligent and automated manufacturing, and ensure that the annual production capacity of the equipment manufacturing business reached 1 billion yuan.
The company's operating cash flow declined to -104 million yuan in 2023, mainly due to the growth of the company's EPC business, failure to reach the payout point regardless of the project, and an increase in operating project receivables. The net cash flow from the company's operating activities in 2023 was -104 million yuan, compared to 116 million yuan in the same period last year.
The company's strategy is clearly to deepen cooperation with Huawei's liquid-cooled fast charging technology, develop a charging station business layout, and gradually form a new pattern of “big environmental protection sector+green energy sector+high-end environmental protection equipment manufacturing+new industrial investment+overseas project expansion”. Specifically, continue to increase investment in fixed income projects such as water services and solid waste; steadily develop e-waste treatment services such as waste lithium batteries and waste photovoltaic panels. Gradually develop industrial investment and industrial support for wind, light, and energy storage; develop hydrogen energy projects in due course; deepen cooperation with Huawei's liquid-cooled fast charging technology, and develop a nationwide business layout for charging stations. In the field of high-end equipment manufacturing, it forms an extension of the business industry chain in various sectors within the scope of the company's business. Vigorously develop overseas waste-to-energy businesses and speed up the layout of channels for export and export of environmental protection equipment.
By the end of 2023, the controlling shareholder invested 43.91 million yuan to increase the company's holdings by 4.14 million shares. In August 2023, the company announced that the controlling shareholder plans to increase their holdings by a total amount of 40 to 80 million yuan, which will be completed within 6 months from the date of the announcement of this plan.
Investment analysis opinion: Maintain the 2024-25 net profit forecast of 385/495 million yuan, respectively, and add the 2026 net profit forecast of 584 million yuan. The current market value corresponds to the 24-26 PE of the company is 10/7/6 times, maintaining the “buy” rating.
Risk warning: Project progress falls short of expectations, new orders fall short of expectations, new business expansion falls short of expectations, pressure on accounts receivable rises, and production progress of new operating assets falls short of expectations.