Core ideas:
Shanghai City Investment is the only environmental protection listing platform, which accumulates to create excellent blue chips. As the leader of solid waste and sewage operation in the background of state-owned assets in Shanghai, the company has experienced the introduction of overseas strategic investors and the injection of high-quality assets of Shanghai City Investment. At present, it has become the only environmental protection listing platform of Shanghai City Investment Department. The incineration capacity increased from 1500 tons / day at the beginning of 2004 to 38650 tons / day in 2020. In 2020, revenue reached 4.512 billion yuan, an increase of 23.7 percent over the same period last year, deducting 618 million yuan in non-return net profit, an increase of 23.6 percent over the same period last year. The continuous production and landing of projects under construction will drive the performance to maintain rapid growth.
The national burning business leader, the production capacity double increases the yard operation era. The company has a capacity of 26800 tons per day in transportation and incineration, and its operation scale ranks first among domestic listed companies. The company's project layout takes Shanghai as the center and expands to the whole country. The planned production capacity under construction outside Shanghai accounts for more than 80%. At present, the production capacity under construction is 11850 tons / day, which is expected to be put into production in the next two years. Waste incineration from "incremental" to "stock", the operation era is approaching, the company as a solid waste leader in Shanghai, a significant geographical advantage, the existing project ton disposal fees and tons of online electricity are industry-leading, strong operating capacity.
Enter the kitchen waste, hazardous waste, "2-4" development layout solid waste whole industry chain. (1) Kitchen waste: the company is deeply involved in the production capacity construction of Shanghai waste sorting terminal and entered the field of wet waste disposal. Songjiang District wet waste resource treatment project has been officially put into operation; (2) Medical waste: through the establishment of Shanghai's first hazardous waste research center and the acquisition of Shanghai Yongcheng and Jiayuan Environmental Protection in Nanchong, new Songjiang project (the first phase of 20,000 tons / year) accelerates the expansion of hazardous waste field and overtakes around the corner. (3) soil remediation: undertake a total of 24 contaminated sites and environmental remediation operations to expand on a large scale.
The two-year doubling of incineration capacity led to an increase in performance, giving it a "buy" rating. It is expected that the EPS of the company from 2021 to 2023 is 0.69,0.78,0.90 yuan respectively, and the corresponding PE is 16.77,14.79,12.82 times according to the latest closing price. The incineration capacity of the company has doubled in two years, and the construction layout of kitchen waste and hazardous waste capacity extends the solid waste industry chain. With reference to the comparable valuation of peer companies, we give 2021 20 times PE, corresponding to 13.72 yuan / share fair value, given a "buy" rating.
Risk tips. The progress of incineration capacity construction is not as expected; the progress of new business development is not as expected.
