The company is a leading enterprise in the domestic environmental protection industry, and solid waste has entered the performance release period. The company's water treatment capacity reaches 3047 million tons per day, of which the operating capacity is 1365.40 million tons per day, including 586.54 million tons of water supply per day, 778.86 million tons of sewage per day, and 13.82 million tons of annual domestic waste treatment capacity. Is the leading enterprise in the domestic environmental protection industry, the company's solid waste plate has experienced many years of development, and gradually entered the performance release period, before 2023, the company has a number of projects into the operation period, the company's whole industry chain urban and rural solid waste disposal integration service layout has been completed.
The business of water supply and sewage has developed steadily. The company's water supply and sewage is the foundation, the operation ability is outstanding.
Different from market expectations, there is still much room for improvement in the actual sewage treatment rate during the 14th five-year Plan period, and the company's sewage volume and price will rise in the future, bringing about an increase in performance; the company's water supply will grow steadily in the future, and gross profit margins will gradually repair the decline brought about by the epidemic, while derivative services brought about by water supply can continue to provide profits.
REITs Catalysis Company valuation repair. The successful issuance of the company's REITs shows that the company's underlying assets are excellent. Through the analysis of the company's two projects in Hefei and Shenzhen, the Shenzhen project premium is 20%, and the Hefei project discount is-8%. The discount is mainly caused by the epidemic and other factors. In the forecast for the future, the revenue, cost and price adjustment mechanism are relatively conservative, the company's project still has room for improvement, at the same time, the company has more than 300 waterworks, which can be used as the stock project of REITs, which can improve the valuation of the company as a whole.
For the first time, it was given a "strong push" rating, with a target price of 3.96 yuan in 2022. We estimate that the company's net profit from 2021 to 2023 is 20.86,26.36 and 3.078 billion yuan, and the EPS is 0.28,0.36 and 0.42 yuan, with a growth rate of 41.9%, 26.4% and 16.7%, corresponding to PE in 12-9-8. The company's product gross margin rises and the new product is put into production, the growth is more certain, using comparable company valuation method, select representative water, solid waste enterprises for comparison, and because the company is the industry leader, a large number of high-quality reserve projects, should enjoy a certain valuation premium, give the company 11 times PE, 2022 target price 3.96 yuan, the first coverage, given the "strong push" rating.
Risk hints: increased competition and a sharp decline in subsidies in the solid waste sector due to policy; decline in profits in the sewage and water supply sector due to policy and other factors; and the project production schedule is not as expected.