Introduction to this report:
The company's environmental operation business is steady, equipment orders are growing rapidly, and the new energy business is progressing smoothly.
Key points of investment:
Maintain an “Overweight” rating. According to the development progress of the company's new energy materials business, we raised 2024-2025, and increased the 2026 forecast net profit of 26.48 (original value 23.68), 34.17 (original value 30.16), and 4.216 billion yuan, corresponding to EPS of 1.55, 2.00, and 2.47 yuan. Currently, the average value of 2024E PE for solid waste companies is 14 times. Considering that the company is actively developing new energy business and sufficient orders to support high performance growth, the company will be given 20 times PE in 2024, the target price will be raised to 31.00 yuan, and the “increase” rating is maintained.
Revenue from operations, equipment, and EPC services grew rapidly. In 2023, the company achieved revenue of 6.025 billion yuan, an increase of 35% over the previous year; after deducting non-vested net profit of 1,988 billion yuan, an increase of 25% over the previous year. 2024Q1's revenue was 2.08 billion yuan, up 50% year on year; net profit without attribution was 669 million yuan, up 40% year on year. The company's operation is steady, and the operating income of environmental protection projects and revenue from the equipment, EPC and service businesses have increased steadily.
Environmentally friendly operations are steady, and equipment orders are growing at a high rate. 1) In 2023, the company's operating revenue was 3,076 billion yuan, up 19% year-on-year, and the gross profit margin was 59.34%. Currently, the company's waste incineration production capacity is 34,200 tons/day, and the domestic waste storage volume in 2023 is 11.2 million tons, an increase of 26% over the previous year. 2) In 2023, the company's equipment manufacturing and service revenue was 2,917 billion yuan, up 56% year-on-year, with a gross profit margin of 34.9%. The company added major equipment orders in 2023, including a total equipment sales contract amount of about RMB 478 million for environmentally friendly power generation projects, and a total sales contract amount of about RMB 3,067 billion for new materials and equipment. There are sufficient orders in progress.
New Energy Group's business is developing smoothly. The installation of equipment for Carman's 40,000 ton high ice nickel project in Indonesia has begun. The 40,000-ton Indonesian high-ice nickel project has obtained a project filing notice and an overseas investment certificate. The equipment for the Wenzhou lithium battery new material project has begun to be installed, and a new site for the second phase of the project has been acquired. Weiming Shengqing Company introduced Battle Investment in Grimmie to complete capital increase and share expansion. The new energy business is progressing smoothly.
Risk warning: Project progress falls short of expectations, sharp fluctuations in commodity prices, etc.