Maintain the "overweight" rating. The company's 2020 revenue of 6.605 billion yuan increased by 28.99%, and the return net profit of 7.618 billion yuan increased by 8.89% in line with expectations. There may be several new bases in the hazardous solid waste sector to significantly contribute to the performance, and the operating income of the waste incineration business is expected to continue to release, but considering the gross profit margin during the expansion period of the hazardous solid waste business market or a short-term slight pullback, the base of the waste incineration business is relatively high, and the cement joint venture income remains relatively stable, so the company's 2021-2023 return net profit forecast is 81.36 (- 3.28,89.64 (- 5.31). Rmb98.90 billion (new forecast), the target price will be raised to HK $45.60 in accordance with the forecast profit growth rate of 6.8 per cent during the base period, corresponding to PE8.99,8.16,7.39 times, maintaining the "overweight" rating.
Hazardous solid waste business has maintained a momentum of rapid development, and there may be new areas in 2021. In 2021, the total revenue of the dangerous solid waste business reached 1.15 billion yuan, with an increase of 55.81%, maintaining a strong growth momentum, mainly related to the release of production capacity in prosperous areas such as Chongqing. In 2020, the company's gross profit margin for hazardous fixed waste disposal fell by about 66.8% compared with the same period last year, or on the one hand, it came from volume dilution in low gross margin areas and the company's strategy to occupy the market. Guangdong, Hunan and other markets are expected to expand in 2021, and fly ash business in Wuhu and other places is expected to grow rapidly, supporting the strong development momentum of the plate.
Garbage incineration plate operation period began to gradually cash in. The operating income of the waste incineration sector reached 4.799 billion yuan in 2020, of which the income during the construction period was 4.09 billion yuan, an increase of 23.12% over the same period last year; and the operating income was 709 million yuan, an increase of 88.19% over the same period last year. In 2020, the company has completed the disposal capacity of 5.41 million tons, and under the background of rich reserve projects, we estimate that the production capacity may be increased by 3 million tons in 2021, which will provide strong support for the further growth of income during the construction period and the business period in the future.
Energy-saving equipment may have room for further development. Under the current trend of carbon neutralization, the cement industry may also face the trend of further equipment emission reduction and transformation. The company's traditional energy-saving equipment business has remained stable in the past two years, but with the gradual clarity of the energy saving and emission reduction policy route of the cement industry, or there is room for further development of the business itself.
Risk hint: environmental regulation is not as expected; cement demand is falling off the cliff.