New energy sanitation continues to advance, and Yutong Heavy Industries is expected to benefit
In February 2023, eight departments including the Ministry of Industry and Information Technology promoted a comprehensive electrification pilot project for vehicles in the public sector. The goal was to reach 80% of the new energy penetration rate in the pioneering zone. Policies continue to increase, and Yutong Heavy Industries is expected to benefit. In 2022, the company achieved operating income/net profit attributable to the mother of the mother/net profit of 35.8/386/290 million yuan, compared to -4.6/-1.9/ +16.3% compared to -4.6/-1.9/ +16.3%. The net profit returned to the mother was 11.2% higher than Huatai's expectations (347 million yuan). 1Q23 achieved revenue/net profit of 627/029 million yuan, a year-on-year decrease of 15.2/65.5%. According to market conditions in sanitation services and construction machinery, we lowered our sales volume and gross margin forecast. We expect net profit of 391/4.45/503 million yuan for 23-25 (previous value: 4.27/483/100 million yuan), corresponding to EPS 0.72/0.82/0.92 yuan. Referring to the company's Wind in '23, they agreed to expect an average PE value of 13.5x. Considering the obvious advantages of the company's new energy sanitation vehicles and mining vehicles, the company was given a target PE of 16.2x in '23, with a corresponding target price of 11.66 yuan (previous value of 10.05 yuan, based on 15.7x PE in '22) to maintain the “increase in holdings” rating.
Yutong New Energy Sanitation Vehicles account for 29% of the market, and the policy target is 80% of the new energy penetration rate. According to China Automobile's data terminal retail data, China's sanitation vehicles will be insured by 82,000 vehicles (yoy -20%) in 2022, including 4,877 new energy vehicles (yoy 20%); Yutong Heavy Industries will insure 3,931 sanitation vehicles (YOY -12%), with a market share of 29%, ranking first in the industry. The company has taken advantage of “chassis+top” differentiated competition and supply chain collaboration. Sales of new energy sanitation vehicles have increased significantly. We are optimistic about Yutong Heavy Industries' performance in the new sanitation energy wave.
The annualized amount of sanitation service projects in operation was +8% year on year, mining vehicle revenue was +123% year on year, and the company's sanitation service revenue in 2022 was 7.0 billion yuan, +16% year on year. In order to strengthen accounts receivable risk management and control, the company voluntarily withdrew from some projects with poor payback. The annualized amount of active projects at the end of 2022 was 820 million yuan, +8% over the same period last year. The company's mining vehicle business is developing rapidly. It is already operating in more than 100 mining areas (including trial operation), and achieved revenue of 670 million yuan in 2022, a sharp increase of 123% over the previous year. Affected by industry demand, the company's basic construction machinery business declined to a certain extent, but its main products, such as new energy rotary drilling, compaction, and bridge inspection vehicles, all maintained strong competitiveness.
2023 revenue plan +16% year on year, showing confidence in development
Excluding the impact of non-recurring profit and loss/equity incentive expenses of 99611/31.02 million yuan, the company's 2022 equity incentive level performance was 321 million yuan, completing the performance assessment targets of the 2021 and 2022 equity incentive plans. The company's 2023 revenue plan is 4.148 billion yuan, and the cost and expense plan is 3.731 billion yuan. The revenue plan is +16% year on year, showing confidence in development.
Risk warning: Sanitation equipment sales fell short of expectations, competition in the sanitation services market intensified, and mining vehicle sales fell short of expectations.