Net profit returned to mother +23% year-on-year in '23, maintaining a “buy” rating
Weiming Environmental Protection released its annual report. In 2023, it achieved revenue of 6.025 billion yuan (yoy +34.66%), net profit to mother of 2,048 billion yuan (yoy +23.09%), and deducted non-net profit of 1,988 billion yuan (yoy +25.27%).
Among them, Q4 achieved revenue of 1,403 million yuan (yoy +22.99%) and net profit of 478 million yuan (yoy +17.54%) to mother. The company plans to pay a dividend of $0.25 per share, with a dividend ratio of 21% and a dividend ratio of 1.2%.
We expect the company's 2024-2026 EPS to be 1.77, 2.11, and 2.70 yuan respectively. Comparatively, the company's 24-year Wind unanimously expected an average PE value of 15.0 times. Considering the company's excellent operating capacity and the new energy business to open up room for growth, the company was given 19.5 times PE in 24 years, with a target price of 34.52 yuan (previous value 25.6 yuan), maintaining a “buy” rating.
Environmental protection project operating revenue increased 19% in '23, and nine waste incineration project operating companies achieved revenue of 3,076 billion yuan from environmental protection project operations in '23, +18.97% year-on-year, mainly due to an increase in the number of operating projects. The gross profit margin was 59.34%, +2.63pp compared to the same period last year. The company put into formal operation/trial operation of 9/1 waste incineration projects throughout the year. By the end of 23, the number of operations/trial runs reached 48/1, with a total treatment scale of about 34,200 tons/day (excluding shareholding and commissioned operation projects). The Fengxin Project and the Zhangshu Project were successfully included in the renewable energy power generation project subsidy list. As of the end of 23, the company invested in the formal operation/trial operation of 13/4 food waste projects. By the end of 23, the company was constructing 8/5 waste incineration/kitchen projects, which is expected to guarantee a steady increase in the operating capacity and revenue of future environmental protection projects.
Equipment sales revenue in '23 was +56%. With more than 3.5 billion new orders, the company's equipment manufacturing business achieved revenue of 2,917 billion yuan in fiscal year 23, or +56.45% year-on-year. Weiming Equipment Group's Dushan Manufacturing Park was officially put into operation. The company took advantage of equipment manufacturing advantages and signed new equipment orders of 3,545 billion yuan in '23, including 478/3,076 billion for new materials, including orders for environmentally friendly power generation equipment such as Chongyi, Fuyuan, Shanghai Dingxin, and Grimmie, as well as many new material equipment contracts such as Yongxu Mining, Grimmie, and Weiming Shengqing.
The new energy materials business is progressing smoothly
Weiming Environmental Protection has invested in 3 high-ice nickel projects, with a total planned production capacity of 130,000 tons/year, corresponding to equity production capacity of 77,500 tons/year; Weiming Shengqing (Weiming holds 60% of the shares) invests in 200,000 tons of high-nickel ternary cathode materials per year. The Jiaman project has entered the equipment installation stage. The Carmanda project has obtained an overseas investment certificate, the Wenzhou lithium battery new material project has begun installing equipment, and obtained about 180 acres of new land for the second phase of the project.
Risk warning: Waste-to-energy project operation risks, new materials project construction progress falling short of expectations, nickel price fluctuations higher than expected.