The company's 1H21 revenue / return net profit increased by 2.6% to 510 million / 69.53 million yuan compared with the same period last year, corresponding to 2Q21 revenue / return net profit of 310 million / 43.688 million yuan (year-on-year + 0.2% Universe 27.2%). The operation service business pushed up the 1H21 performance and moved south to create a new growth point, but due to the epidemic situation in Jiangsu and the flood in Henan, the company's EPC business in the two provinces was temporarily hindered. We lowered our profit forecast. It is estimated that the EPS in 2021-23 will be 0.83 shock 1.19 yuan. With reference to the comparable company's 21-year Wind consensus forecast, the average PE is 12.3x, optimistic about the coordinated development of the company and Yangtze River environmental protection, and giving the company a 21-year goal PE16x. Corresponding to the target price of 13.24 yuan (previous value: 14.88 yuan), maintain the "buy" rating.
1H21's high-margin operating services business is the main source of revenue, or the revenue of 1H21, a key company to improve profits, is 510 million yuan. According to the type of business, the revenue of environmental protection EPC/ operating services / technical product sales / comprehensive environmental management services and other businesses is 1.9 billion yuan and 2.4 billion yuan respectively. Among them, the operating services business 1H21 accounts for 47% of the total revenue, and the operating services business has a gross profit margin of 44.3% in 2020, the highest 20-year gross profit of the company's four main businesses. We speculate that the company's 1H21 homing net profit increased significantly by 21.1% year-on-year when revenue increased by only 2.6% compared with the same period last year, mainly due to the adjustment of income structure. The operating services business with high gross margin has become the main source of 1H21 revenue. In addition, the company's 1H21 financial expenses decreased by 3.26 million yuan, or 10.64%, compared with the same period last year, which also made a certain contribution to the improvement of homecoming net profit in the same period.
The strategy of "serving the protection of the Yangtze River" has been steadily promoted, with initial results.
In the first half of 2021, the company strives to open up the southern market and has set up Jiangsu / Zhejiang / Shenzhen branch.
In April 2021, the PPP project of Dongyang sewage treatment Plant in Zhejiang Province, which was invested by the company, was successfully put into operation. The effluent quality of the project was improved from Class A to Zhejiang landmark, and the capacity was expanded from 119000 tons / day to 139,000 tons / day, and the goal was successfully achieved without stopping production, not increasing land occupation and ensuring that the effluent reached the standard. Zhejiang Province is an important area for the company to carry out "Yangtze River Protection" business, and the completion of this project is of great significance to the follow-up business development. In June, 2021, the consortium of the company and Yangtze River Environmental Protection Group won the bid for the PPP project of livestock and poultry manure resource treatment and utilization in Guanyun County, which is the first livestock and poultry manure resource PPP project in the Yangtze River Delta region, which has demonstration significance for organic waste treatment.
Lower the profit forecast, but continue to be optimistic about the company and Yangtze River Environmental Protection Co., Ltd. steady growth in operational services business to improve performance, "strategic southward shift" initial results. Due to the impact of the epidemic in Jiangsu and the flood in Henan, the company's EPC business in the two provinces has been temporarily hindered. We downgrade our profit forecast and expect the company's 21-23 net profit to be RMB 1.67 million (previous value:
The corresponding EPS is 1.873, 2.03 and 1.19, respectively. Comparable company's 21-year Wind unanimously expects the average PE to be 12.3x, and we continue to be optimistic about the coordinated development of China Holdings and Yangtze River environmental protection, giving the company a 21-year target PE 16x with a target price of 13.24 yuan, maintaining a "buy" rating.
Risk tips: the newly signed order is not as expected, the existing environmental protection EPC business is not as expected, and so on.