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高能环境(603588):收入大幅增长 期待资源化业绩加速释放

High energy environment (603588): Significant increase in revenue expected to accelerate the release of resource-based performance

國盛證券 ·  Aug 23, 2024 16:00

2024H1 revenue increased significantly, and net profit to mother declined slightly. The company achieved revenue of 7.55 billion yuan in 2024H1, +68.9% year-on-year, and net profit of 0.42 billion yuan over the same period, with a sharp increase in revenue, mainly due to the increase in sales revenue of Jiangxi Xinke and Jingyuan High Energy, and a decline in profits, mainly due to the increase in Jiangxi Xinke's costs. Furthermore, due to Jinchang High Energy and Jiangxi Xinke still not fully meeting expectations, effective production capacity was insufficient, so the increase in operating costs was higher than the growth rate of operating income. By business, the total revenue of 2024H1's solid waste and hazardous waste resource utilization segment was 5.68 billion yuan, +129.0%; the total revenue of the environmental operation service sector was 0.88 billion yuan, +9.1% year over year; and environmental engineering revenue was 0.99 billion yuan, -16.8% year over year.

Management was steady, and cash flow improved markedly. The company's 2024H1 gross margin was 14.3% (-7.6pct year on year) and the net profit margin was 6.1% (year-on-year -5.9pct). The main reason was that the production capacity of Jinchang High Energy and Jiangxi Xinke projects was still climbing, the gross margin of the solid waste and hazardous waste resource utilization sector fell 2.9 pct year on year, and the gross margin of the environmental engineering sector fell 13.5 pct year on year. 2024H1, the company's sales expense ratio is 0.6% (YoY -1.0pct), management expense ratio 3.3% (YoY -1.3pct), financial expense ratio 2.8% (YoY -1.1 pct), total three fees 6.7% (YoY -3.4pct), with excellent cost control ability. The net operating cash flow was 0.11 billion yuan, or +108.1% year-on-year, mainly due to the negative cash flow caused by Jiangxi Xinke's large-scale preparation in the same period last year. As Jiangxi Xinke's entire resource project was put into operation during the reporting period, the net cash flow from operating activities changed from negative to positive.

As the production capacity of projects in the resource sector climbs and the operation stabilizes, performance is expected to be released at an accelerated pace. 1) Jiangxi Xinke: In the first half of 2024, after nearly a year of trial operation and technical upgrading, Jiangxi Xinke was fully put into operation, successfully achieved deep processing and utilization of resource-based initial processing products, built a closed loop in the recycling industry chain containing copper and other rare metals, and sales product revenue increased dramatically year-on-year after gradual increase in production capacity; 2) Chongqing Yaohui: After nearly half a year of technical reform and upgrading, it completed technical reform and upgrading in February this year to further improve its ability to handle high impurities; 3) Jinchang High Energy: After nearly half a year of technical reform and upgrading, it was gradually put into production in April. More can be achieved in half a year Metal recycling; 4) Jingyuan High Energy, High Energy Pengfu, and High Energy: As a resource project with mature operation, it actively responded to adverse factors such as intense market competition and rising procurement costs, and overall operation was normal during the reporting period.

Environmental operation services are developing steadily and profitability is improving, supporting continued growth in performance. The company currently has 13 domestic waste incineration power generation projects, with a total daily treatment capacity of 11,000 tons/day; 7 solid waste hazardous waste harmless disposal projects, with a total hazardous waste disposal license volume of 0.162 million tons/year, and medical waste disposal licenses of 22 tons/day. During the reporting period, the company's domestic waste incineration power generation project strengthened internal management, actively developed various channels such as heating and steam supply on the basis of smooth operation, fully exploited project operating resources, reduced costs and increased efficiency, and achieved good results. In the first half of 2024, the environmental protection operation service sector achieved a gross profit margin of 47.1%, an increase of 5.6 percentage points over the previous year.

Investment advice: The company is a leading enterprise in the field of solid waste disposal. It has achieved a front-end integrated full-industry chain layout in the field of solid waste and hazardous waste resource utilization. As the production capacity of resource projects climbs and stabilizes operation, the performance is expected to grow rapidly. We expect the company to achieve net profit of 0.87/1.12/1.33 billion yuan in 2024/2025/2026, corresponding to PE 8.1/6.3/5.3x, and maintain a “buy” rating.

Risk warning: Policy falls short of expectations, risk of raw materials fluctuation, project progress falls short of expectations, etc.

The translation is provided by third-party software.


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