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联合水务(603291):海外业务有条不紊 污水处理贡献增量

United Water Services (603291): Increased contribution to orderly sewage treatment in overseas business

民生證券 ·  Apr 29

Incident: On April 28, the company released its 2023 annual report. In 2023, it achieved operating income of 1,128 million yuan, a year-on-year decrease of 2.52%; net profit to mother of 159 million yuan, an increase of 22.80%; net profit after deducting non-return to mother of 121 million yuan, an increase of 7.78% over the previous year; and a cash dividend of 1.50 yuan (tax included) for every 10 shares. The company released its 2024 quarterly report, achieving operating income of 235 million yuan, a year-on-year decrease of 2.48%; net profit to mother of 34 million yuan, an increase of 96.90%; net profit after deducting non-return to mother of 17 million yuan, an increase of 45.92% over the previous year.

The increase in comprehensive gross margin was compounded by government subsidies, and the performance increased: in 2023, benefiting from the reduction in chemical costs in the sewage treatment business and the obvious energy saving and consumption reduction effects of water plants, the company's comprehensive gross margin was 35.08%, an increase of 3.20 pcts over the previous year, and profitability was further enhanced; the company achieved other revenue of 47 million yuan, an increase of 105.77% year on year, mainly due to increased subsidies. In the first quarter of 2024, the company's net profit to mother increased by 96.90% year-on-year, mainly due to receiving large government subsidies and lower financial expenses than during the same period.

Water supply operations are developing steadily, and overseas projects are in an orderly manner: by the end of 2023, the company had about 2.7 million meters of production capacity related to water supply, water treatment and resource utilization? /d, of which the scale of the water supply agreement is 2.1 million meters? /d, built on a scale of 905,000 meters? /d. In 2023, the company sold 193 million meters of water? The year-on-year increase was 7.88%; the operating income of the water supply and derivatives business was 617 million yuan, an increase of 0.02%; the gross profit margin was 39.26%, a year-on-year decrease of 0.96pct, mainly due to increases in depreciation and amortization, direct materials, and employee remuneration. In 2023, the company achieved a year-on-year increase of 29.14% in net cash flow from operating activities of 350 million yuan, and the cash flow continued to be good. Taking advantage of the “Belt and Road” initiative, the company continued to increase its overseas layout, obtained the first phase of the commercial operation certificate for the Dhaka project in Bangladesh in January 2023, and achieved the goal of officially opening the water supply and production for the first phase. Currently, the second phase of the project has entered the preliminary preparation stage, which is expected to further enhance the company's performance.

The improvement in quality and efficiency is obvious, and the sewage treatment business is expected to continue to contribute to the increase: by the end of 2023, the company will have 600,000 meters of sewage treatment agreements? /d, built on a scale of 483,000 meters? /d. In 2023, the company's sewage treatment and resource settlement volume reached 152 million meters? , up 8.16% year on year; achieved revenue from sewage treatment and recycling of 297 million yuan, up 13.73% year on year; gross profit margin was 39.12%, up 8.09 pct year on year, mainly benefiting from a significant drop in pharmaceutical costs. In 2023, the second phase of the Jingzhou Upgrading and Renovation Project has been officially put into operation, and the sewage treatment capacity will increase from 30,000 meters? /d expand the capacity to 52,000 m? /d. The company actively promotes the construction of smart water services, further achieves energy saving and consumption reduction, and enhances the efficiency of water operation, management and maintenance. In addition, the company achieved revenue of 44.8409 million yuan from related businesses such as water treatment and aquatic ecological restoration in river and lake basins, an increase of 8267.85% over the previous year.

Investment suggestions: The company's water supply business is developing steadily, overseas projects are progressing smoothly, and cash flow is maintained well; the sewage treatment business has improved quality and efficiency, which is expected to drive the company to achieve endogenous growth. Based on the company's operating conditions and maintaining the company's profit forecast, EPS is expected to be 0.49/0.61 yuan/share for 24/25, and 0.76 yuan/share for the additional 26 years, corresponding to the closing price PE on April 26, which is 29/23/19 times, respectively. It will give 30 times PE in 24 years, and the target price is 14.70 yuan/share, maintaining the “Cautious Recommendation” rating.

Risk warning: industry policy risks; local financial pressure; fluctuating raw material prices; project expansion falls short of expectations.

The translation is provided by third-party software.


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