已形成4 万吨/日的垃圾焚烧运营规模。2023 年公司项目运营业务收入占比首次超过60%，毛利率稳定在40%的较高水平（剔除国补后），得益于平均吨垃圾上网电量超过340 度/吨（高出行业平均水平30 度/吨）。随着高毛利的项目运营占比增长，盈利能力逐步提升。经营性现金流增长与资本开支下行叠加，使得2022 年后自由现金流转正并持续修复好转，股息率拥有较大提升空间。Key investment points
Sanfeng Environmental has become a full-industry chain company that operates heavy assets for waste incineration power generation and develops and manufactures core equipment in parallel.
The technical advantages are obvious. As early as 2000, the company introduced and improved the German Martin SITY2000 tilting mechanical furnace. It has the advantages of high combustion efficiency, low investment and operating costs, mature technology, and stable operation, so it has the highest share of incinerator equipment in the domestic market. In addition, the company continues to participate in the preparation of standards for the incinerator industry, and has built the world's largest waste incinerator assembly base (60 units/set), covering the promotion of intelligent incineration technology. After 2021, the company's R&D investment increased, and patent output increased rapidly.
A waste incineration operation scale of 0.04 million tons/day has been formed. In 2023, the company's project operating business accounted for more than 60% of revenue for the first time, and the gross margin stabilized at a high level of 40% (after excluding national subsidies), thanks to an average ton of waste feed-in electricity exceeding 340 °F/ton (30 °C/ton higher than the industry average). As the share of high-margin project operations grows, profitability gradually increases. The increase in operating cash flow combined with the decline in capital expenditure made free cash flow positive and continued to recover and improve after 2022, and there is plenty of room for improvement in dividend ratios.
Going overseas for core equipment is expected to become a new growth point. The equipment sales revenue of 2023 and 24H1 companies doubled year-on-year, and overseas sales contributed to the main increase. Overseas supply contracts signed in 2023 accounted for 60%. The destinations are mainly concentrated in Southeast Asia and South Asia, and incinerator core technology and equipment have a high market share in Thailand, India, Vietnam and other regions. According to incomplete statistics, the total processing scale of the company's overseas equipment service projects exceeds 0.024 million tons/day, and overseas equipment sales prices are significantly higher than domestic equipment sales. We estimate that the company's cumulative equipment sales in the Southeast Asian market may have a future business revenue space of 2.5-5 billion yuan.
Profit forecasting and valuation
In the future, the company's performance will grow with the steady operation of waste incineration projects and the expansion of the scale of equipment going overseas. We estimate that the company's net profit for 2024-2026 will be 1.29/1.447/1.592 billion yuan, and the corresponding EPS will be 0.77/0.86/0.95 yuan. Referring to comparable companies' consistent wind expectations in 2024, the average PE is 14.79 times, the corresponding target price is 11.37 yuan, and the corresponding market value is 19.082 billion yuan. First coverage, giving a “buy” rating.
Risk warning
Drastic macroeconomic changes; policy implementation fell short of expectations; overseas investment and accounts receivable increased; industry competition intensified.
