Main points of investment
Haichuang announced that the company's revenue was 6.6 billion yuan, up 29.0% from the same period last year; pre-tax profit was 8.05 billion yuan, up 8.6% from the same period last year; net profit attributable to equity shareholders was 7.62 billion yuan, up 8.9% from the same period last year; net profit attributable to shareholders (excluding profits attributable to associated companies) was 1.23 billion yuan, up 24.6%. Basic earnings per share is 4.22 yuan; HK $0.70 per share is proposed.
The solid waste has returned to high growth, and the management quality of the waste disposal sector has improved. The epidemic affected the reception of solid waste in the first half of the year, and the negative effect of the epidemic gradually dissipated in the second half of the year. The revenue of H2 solid waste plate increased by 65% compared with the same period last year. The growth rate of construction income of waste disposal plate slowed down, but operating income maintained a high growth rate of 143%.
The price of solid and hazardous waste disposal returns to rationality. In 2020, the reception of solid waste and hazardous waste was 106 and 430000 tons respectively, an increase of 195 per cent and 41 per cent over the same period last year. According to the company's guidelines, the receiving capacity of solid waste and hazardous waste in 2021 is 186 and 1.14 million tons respectively, an increase of 75% and 164% respectively over the same period last year. We expect that in the next three years, Haichuang solid and hazardous waste reception will maintain a compound annual growth rate of 50% and 100%, respectively. Solid and dangerous waste plate gross profit margin of 66.8%, a decline in 6.6pct, cement kiln cooperation still has excellent profitability.
The operational capacity of garbage disposal has been continuously strengthened. The amount of garbage disposal was 2.31 million tons, an increase of 123.6 percent over the same period last year, and the amount of electricity per ton of Internet was 346 kilowatt-hours, an increase of 27 kilowatts over the same period last year. According to the company's guidelines, the amount of garbage coming into the plant in 2021 will reach 6.07 million tons, an increase of 114.5 percent over the same period last year.
The project acquisition capacity is strong, and the business of solid waste and waste power generation continues to expand. At present, Haichuang has signed a total of 8.95 million tons of solid waste and 13.01 million tons of garbage power generation, forming a project planning with a total disposal capacity of 1.88 million tons per year for fly ash washing project, dry distillation project and sludge disposal project.
Our point of view: Haichuang Reserve has a large number of hazardous waste and garbage power generation projects, gradually promote cooperation with China Building Materials and Mengxi, actively explore diversified development, get rid of over-reliance on cement kilns, multi-business blossom, and the main environmental protection industry is growing at a high speed. We expect the compound profit growth rate of the main environmental protection industry to exceed 50% in the next three years.
The spin-off listing also contributed positively to the valuation, maintaining the "buy" rating with a target price of HK $46.7.
Risk hint: project construction is not as expected; environmental supervision has declined; Anhui Conch Cement's profit has dropped sharply.