The net profit deducted from home in 2020 increased by 23.6% compared with the same period last year, maintaining the "buy" rating companies to achieve revenue / return net profit / deduction non-home net profit of 45.12 million yuan in 2020, an increase of 23.7 percent over the same period last year. Homing net profit is basically in line with expectations (650 million yuan), of which the substantial increase in engineering revenue drives the rapid growth of revenue. Changes in the income structure affected the comprehensive gross profit margin fell 1pct to 28.4% year-on-year, the expense rate dropped 2pct to 10.5% year-on-year, jointly promoting the deduction of non-return net interest rate unchanged from the same period last year (13.7%). According to the project construction situation of the company, we reduce the 21-22 year net profit forecast to 761 million yuan (the previous value: 890 million yuan), introduce 23-year return net profit of 1.246 billion yuan, give the company a 21-year 22x target PE, the target price is 14.96 yuan, maintain "buy".
Project revenue increased sharply, driving revenue growth of 23.7% year on year in 2020. 1) solid waste disposal: 2045 million yuan / yoy+14%, gross profit margin increased 2pct to 37.2% year on year, including the new Taiyuan and Zhangzhou phase II waste incineration projects (total capacity 2550tpd), the annual waste input increased by 6% to 7.04 million tons. The landfill / transit volume of 5.97 million tons was decreased due to the outage of Laogang Phase IV and Mengcheng landfill, the technical transformation of Yangpu transfer project, and the implementation of garbage sorting in Shanghai. 2) sewage treatment: revenue 402 million yuan / yoy-3%, bid transformation water price increase and depreciation amortization reduction after transfer of subsidiaries jointly driven gross profit margin from + 7pct to 61% 3) contracting and design planning: the centralized construction of waste incineration projects has brought a substantial increase in project revenue, with year-on-year revenue of + 50% to 1.64 billion yuan and gross profit margin of-0.8pct to 13.9%.
The waste incineration project under construction is progressing steadily, and hazardous waste treatment and soil remediation go hand in hand by the end of 2020. By the end of 2020, the company's waste incineration capacity is 30,000 tons / day (excluding commissioned operation), of which 17,000 tons / day has been put into operation. According to the project construction progress announced in the company's annual report, we estimate that the waste incineration capacity is expected to be about 10,000 tons / day in 2021. In terms of project expansion, in 2020, the company added a new hazardous waste project in Songjiang District (the scale of the first phase is 20,000 tons / year), undertaking a total of 24 contaminated sites and environmental restoration business, and signing 260 new technical service contracts, laying a solid foundation for the company's transformation, upgrading and sustainable development.
The rigid demand attribute of waste incineration remains unchanged and the "buy" rating is maintained.
Since 2020, the subsidy policy for waste incineration power generation has been introduced intensively, and the principle of receipt and compensation has been clearly adhered to. The stock items have been included in the subsidy list one by one, and the speed of subsidy distribution has been accelerated. We believe that the rigid demand attribute of municipal solid waste incineration remains unchanged. Combined with the construction of the company's projects under construction, we reduce the operating income of waste incineration, and then reduce the 2021 EPS to 761 million yuan in 2022 (former value: 8.90 / 1.294 billion yuan). The introduction of 2023 return net profit is 1.246 billion yuan, corresponding to 0.68 EPS 0.88 pound 1.11 yuan in 2021-2023. With reference to the company's 21-year Wind consensus expectation of PE average 16x, and considering the company's high quality as a solid waste leader in Shanghai, the company is given a 21-year 22x target PE with a target price of 14.96 yuan (previous value: 16.10 yuan) to maintain a "buy" rating.
Risk hint: the risk of electricity price reduction of garbage generation, the project schedule is not up to expectation, and the project operation risk.
