Core views

In the first three quarters of 2024, the company achieved operating income of 2.795 billion yuan, a year-on-year increase of 3.08%; net profit to mother was 0.648 billion yuan, a year-on-year decrease of 2.19%. The company's revenue scale increased year-on-year, mainly due to the continuous increase in the capacity utilization rate of waste incineration projects. In terms of the period expense ratio, 2024Q3 company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.01%, 7.22%, 3.65%, and 9.27%, respectively, with year-on-year changes of -0.07, -1.56, +0.09, and -1.33 percentage points. Recently, the company continued to win bids for comprehensive domestic waste treatment service projects in central Guangzhou, indicating the sustainability of the company's core business and providing a guarantee for the company to continue to pay dividends in the future. Considering the company's dividend promise and steady growth in operating project revenue, we expect the company's dividend scale to increase steadily to ensure steady income for investors. We expect the company's net profit to be 0.782 billion yuan, 0.955 billion yuan, and 1.05 billion yuan respectively from 2024 to 2026, corresponding to EPS of 1.04 yuan/share, 1.27 yuan/share, and 1.40 yuan/share, respectively.

occurrences

The company released its report for the third quarter of 2024

In the first three quarters of 2024, the company achieved operating income of 2.795 billion yuan, a year-on-year increase of 3.08%; net profit of 0.648 billion yuan, a year-on-year decrease of 2.19%; net profit after deducting 6.1.6 billion yuan, a year-on-year decrease of 0.40%; a single-quarter net profit of 0.226 billion yuan, an increase of 8.13%; achieved a weighted return on net assets of 6.52%, a year-on-year decrease of 1.41 percentage points; achieved basic earnings per share of 0.73 yuan/share, year-on-year Decreased by 17.05%.

Brief review

Revenue scale maintained steady growth, and overall expense ratio improved during the period

In the first three quarters of 2024, the company achieved operating income of 2.795 billion yuan, a year-on-year increase of 3.08%; net profit to mother was 0.648 billion yuan, a year-on-year decrease of 2.19%. The company's revenue scale increased year-on-year, mainly due to the continuous increase in the capacity utilization rate of waste incineration projects. In terms of the period expense ratio, 2024Q3 company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.01%, 7.22%, 3.65%, and 9.27%, respectively, with year-on-year changes of -0.07, -1.56, +0.09, and -1.33 percentage points. In the first three quarters of 2024, the company's financial expenses were 2.5.9 billion yuan, a year-on-year decrease of 9.83%. In terms of cash flow, in the first three quarters of 2024, net cash flows from the company's operating activities, investment activities, and financing activities were $13.77, -3.97, and 279 million yuan, respectively, with year-on-year changes of -7.08%, -77.14%, and 124.44%.

The company's investment cash flow expenditure decreased year-on-year, mainly due to a decrease in cash payments to purchase long-term assets after entering a stable operation period; the year-on-year increase in funding cash flow was mainly due to the receipt of capital raised from the IPO during the current period.

The second phase of the project continues to win bids to ensure the company's ability to continue to pay dividends. Recently, the company issued the winning instructions for the comprehensive domestic waste treatment service project in central Guangzhou. The budget amount for this procurement project is 2.636 billion yuan, and the service period is 2024 to 2027. The services include domestic waste incineration treatment services in central Guangzhou and biochemical treatment services for food waste, animal carcasses, and feces in central Guangzhou. The project procurement is a re-tender procurement for the Guangzhou Waste Incineration Power Plant Phase II project and biomass treatment project service contracts signed between Guangzhou and the company. The company's continued bid for the project shows the sustainability of the company's core business and provides a guarantee for the company's continued dividend payments in the future. Considering the company's dividend promise and steady growth in operating project revenue, we expect the company's dividend scale to increase steadily to ensure steady income for investors. We expect the company's net profit to be 0.782 billion yuan, 0.955 billion yuan, and 1.05 billion yuan respectively from 2024 to 2026, corresponding to EPS of 1.04 yuan/share, 1.27 yuan/share, and 1.40 yuan/share, respectively.