Performance continues to increase, profits in the main business are steady, and the new energy business is about to expand. The company released the 2023 annual report and the 2024 quarterly report. In 2023, it achieved operating income of 6.025 billion yuan (+34.66%) and net profit to mother of 2,048 billion yuan (+23.09%); 2024Q1 achieved operating income of 2,008 billion yuan (+50.11% year over year) and net profit to mother of 712 million yuan (+40.29% year over year). The rapid increase in performance is mainly due to the steady commissioning of environmental protection operation projects, a high increase in new material and equipment business orders, and the 40,000 ton Indonesian high-ice nickel project and the Wenzhou lithium battery new material project are about to be completed and put into operation. The company is expected to usher in a change in the growth engine and maintain high growth.
Solid waste business: A large proportion of ongoing projects are transferred, reflecting the hematopoietic advantages of waste incineration. In 2024, we achieved environmental operating revenue of 3,076 billion yuan (+19% year over year) and stored 11.76 million tons of garbage (+26% year over year). By the end of 2023, the company had an operating and trial run waste incineration production capacity of 34,200 tons/day, and there were only 8 production capacity left. After a large proportion of the projects were put into operation, the main traditional solid waste business became a stable cash cow, providing sufficient financial security for the development of the company's new energy business. For the full year of 2023, the company achieved net operating cash flow of 2,321 billion yuan (+5.52% year over year).
The new energy and new materials business layout is being accelerated to create an integrated advantage in the ternary industrial chain. In the field of new energy, the company's 40,000 tons/year Indonesian high-ice nickel project has entered the equipment installation stage and is about to be put into operation, with a long-term planned production capacity of 130,000 tons/year. Furthermore, the company plans to invest 700 million yuan to build a 50,000 ton high-purity electrolytic nickel project, participate in the 20,000 tons/year Indonesian laterite nickel raw material project, and the 200,000 tons/year Wenzhou lithium battery project is also being accelerated. In the field of equipment, the company signed a new 1.8 billion yuan Grimmie equipment contract and 953 million yuan Yongxu Mining supply contract, and orders for new materials and equipment have entered the expansion period.
Profit forecasting and investment advice: high-efficiency solid waste leading transformation to new energy. We expect the company's net profit to be 25.95/33.76 billion yuan in 2024-2026, and PE corresponding to the latest closing price is 14.45/11.11/9.31 times, respectively. The company's waste incineration profitability is outstanding, the integrated layout of the high-ice nickel-cathode materials industry chain is ongoing, and the environmental protection+new energy transformation is underway. For reference, comparable companies gave 20 times PE in 2024, with a reasonable value of 30.45 yuan/share, maintaining a “buy” rating.
Risk warning. Risk of obtaining new orders; risk of issuing subsidies; low expectations for the commissioning of new energy projects.