Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 12.631 billion yuan, a year-on-year increase of 3.06%, and realized net profit of 498 million yuan, an increase of 19.00% over the previous year, and a cash dividend of 1.25 yuan (tax included) for every 10 shares; 2024Q1 achieved operating income of 2,998 million yuan, an increase of 12.23% year on year, and achieved net profit of 172 million yuan, an increase of 10.31% year on year.
New contract amounts for urban services have been among the highest in the industry, and sanitation equipment sales have ranked first in the country for 23 consecutive years.
(1) In 2023, the company's smart service business revenue increased 35.38% year on year to 5.630 billion yuan. Profitability was restored under the construction of the “mechanization+operation intelligence+service standardization” operation model, and gross margin increased 1.23 pcts to 16.68% year over year. In 2023, the company signed 82 new urban service projects, with an annualized contract amount of 1,553 billion yuan (second in the industry), and a total contract amount of 7.652 billion yuan (third in the industry); by the end of 2023, the company had operated 263 urban service projects, the stock market had an annualized contract amount of 6.567 billion yuan, and the total number of contracts to be executed reached 43.809 billion yuan, which can guarantee the steady growth of the company's future performance.
(2) In 2023, the company's intelligent equipment business revenue decreased by 16.42% year on year to 5.085 billion yuan. Environmental protection equipment sales have ranked first in the country for 23 consecutive years. Profitability has been restored as sanitation electrification continues to advance, and gross margin increased 1.79 pcts to 27.71% year on year. In 2023, the company's sales volume of intelligent equipment fell 15.68% year on year to 14,903 units, mainly due to the continued decline in overall industry sales (-6.21% year-on-year to 76,304 units in the industry).
(3) In 2024Q1, the company's revenue and net profit to mother both increased by 10+%. Profitability also improved month-on-month, and gross margin increased 4.78 pcts month-on-month to 22.89%.
Digital transformation continues to advance, and sanitation electrification is leading the industry.
(1) The company insists on digitalization as one of the core strategies for enterprise transformation, achieving standardized management of urban services through digital technology, improving the company's refined process management, improving control capabilities, reducing costs and risks, empowering operations, and achieving cost reduction and efficiency. (2) The company firmly promotes the development of the new energy sanitation industry and has the richest new energy product line in the industry. In 2023, the sales volume of pure electric sanitation vehicles was 1974, ranking first in the industry with a market share of 32.4%.
Maintaining a “buy” rating: Yingfeng Environmental is a sanitation service investor and operator with “smart sanitation” as the core. Revenue and profits are under pressure due to the macroeconomic environment. We expect the company to achieve net profit of 6.44/753/883 million yuan (29% down/ 31% /increase) in 24-26, and the current stock price is 25 times the 24-year PE. The company's market position is stable, and the smart service business is growing rapidly. The new energy business is expected to increase performance and maintain a “buy” rating.
Risk warning: Risks such as project construction and industrial policies falling short of expectations and limited local payment capacity; business development falls short of expectations due to fierce market competition.