Introduction to this report:
The company's deducted non-net profit increased 47% year over year in 2023, in line with expectations. The company's main water environment and solid waste business are actively expanding, the high-end environmental protection equipment business has improved markedly, and there are sufficient orders in hand.
Key points of investment:
Maintain an increase in holdings rating. Maintain the company's 2024-2025 and increase the 2026 forecast net profit of 414, 4.97, 593 million yuan, and EPS of 0.98, 1.18, and 1.41 yuan. Technology+experience+service capability throughout the industry chain created outstanding core competitiveness. The company's project development capability exceeded expectations and maintained a target price of 15.14 yuan.
High performance growth is in line with expectations. 1) In 2023, the company achieved revenue of 1,947 billion yuan, a year-on-year increase of 53%; attributable net profit of 283 million yuan, an increase of 40% over the previous year; net profit after deducting non-vested net profit of 274 million yuan, an increase of 47% over the previous year. The overall environmental protection solutions and environmental equipment business are developing rapidly, driving performance growth.
2) The company's comprehensive gross profit margin was 29.38%, which was basically the same as in 2022; the net profit margin was 14.58%, a slight decrease of 1.37 pct from the previous year. 3) The sales and management expense ratio decreased slightly year on year, and control was better; the financial expense ratio increased by 1 pct to 0.73% year on year, mainly due to the increase in interest expenses due to the issuance of bonds; the R&D expense ratio increased 0.25 pct to 2.71% year on year, mainly due to increased investment in R&D.
The main environmental protection business is actively expanding, the high-end environmental protection equipment business has improved markedly, and there are sufficient orders in hand. 1) The company actively explores the market. In 2023, the company's overall orders increased dramatically, and the annual contract was 4.457 billion yuan. Among them, ① in the water environment business, 33 new water environment treatment projects have been added, with a contract amount of more than 2.4 billion yuan; ② in terms of environmental energy, 6 new waste incineration power generation projects have been added one after another, with a cumulative daily waste treatment of 4,500 tons. 3) High-end environmental protection equipment business: The company's equipment manufacturing business achieved revenue of 156 million yuan in 2023, returning to a growth trajectory.
The new energy business is looking forward to a breakthrough. In 2023, the company set up a new energy industry partnership fund to develop the new energy business. It will use existing sewage operation assets and the advantages of government and customer resources to actively cooperate to develop fields such as distributed scenery and hydrogen energy, and focus on the company's progress in the new energy business.
Risk warning: Project progress falls short of expectations, business development falls short of expectations, industry policy changes, etc.