Event: according to the company's semi-annual report for 2023, 2023H1 achieved operating income of 1.54 billion yuan, an increase of 5.12% over the same period last year, and net profit of 351 million yuan, up 4.95% over the same period last year, deducting 345 million yuan of non-parent net profit, an increase of 8.86% over the same period last year, and basic earnings per share was 0.82 yuan per share, an increase of 5.13% over the same period last year. 2023Q2 achieved an operating income of 675 million yuan, a decrease of 16.15% over the same period last year, and a net profit of 187 million yuan, an increase of 13.07% over the same period last year.
Waste incineration power generation is running steadily, and food and kitchen projects are growing steadily. According to the company announcement, the Jiangling Wangneng 750t project in 2023H1 waste incineration was officially put into operation; a total of 23300 tons of domestic waste incineration power generation projects were invested and built in 9 provinces, including 20 power plants in operation, a trial operation project of 21600 tons, and a project under construction of 1000 tons. The relevant subsidiaries of 2023H1 Company have accumulated 1.428 billion kilowatt-hours of electricity, 1.277 billion kilowatt-hours of electricity, 0.55 yuan per kilowatt-hour average electricity price per kilowatt-hour (excluding tax), 1.707 billion kilowatt-hours of settled electricity and 4.6426 million tons of garbage storage. 2023H1 handled 357300 tons of kitchen waste, an increase of 19.38 percent over 299300 tons in the same period last year; a total of 12000 tons of grease was extracted, an increase of 23.71 percent over 9700 tons in the same period last year; in addition, Suzhou Food Kitchen Phase II 400 tons, Bengbu Restaurant expansion 100 tons, Huzhou Restaurant II 300 tons officially put into operation. As of 2023H1, the company has invested and built kitchen waste projects in 6 provinces, including Zhejiang, Anhui, Henan, Shandong, Jiangsu and Hubei, totaling 3320 tons, of which 2650 tons have been completed and put into operation in 15 phases, 2 projects are under construction, and 2 projects are planned to be built. The trial operation and construction projects of the company are sufficient, and as the projects are put into production one after another, it will provide a strong guarantee for the performance of the company.
Actively develop domestic and foreign garbage markets, based on waste incineration continue to extend the industrial chain. 2023H1 actively develops domestic and foreign garbage markets, tracking 12 new projects and 5 M & A projects at home and abroad (including 1 plastic granulation project), while actively following up 4 related small-scale waste incineration projects in Shaanxi, Yunnan and Sichuan. In addition, the company is based on the existing waste incineration power generation projects, extend the industrial chain, expand slag, fly ash, plastic resources and other collaborative disposal projects to increase collaborative benefits.
The resource recycling plate continues to make efforts, and is expected to create a second growth curve. In order to cope with the impact of rising raw material prices, 2023H1 adopts the production mode of less self-production and multi-generation processing in its lithium recycling business. Lixin New Materials Company produces a total of 925.33 gold tons of cobalt, nickel and lithium. In February 2023, Zhejiang Wangnengcheng Mining Technology Co., Ltd., a wholly owned subsidiary of the company, signed a "Memorandum of Cooperation" with Anhui Xunying New Energy Group Co., Ltd., committed to building a recycling system for waste batteries of new energy vehicles between the two sides. deepen the cooperation of power battery recycling industry. At the same time, the company actively distributes recycled rubber, and the acquired Nantong Huili (the company holds a total 90% stake in Nantong Huili) the first phase of 30,000 tons of butyl recycled rubber production line is officially in operation. the second phase of the production line containing butyl recycled rubber, tire recycled rubber and vulcanized rubber powder is under construction. 2023H1 Nantong Huili has resumed the normal contacts of many high-quality brand customers, such as Thailand Huafeng, Shanghai cbc (Export), Vietnam Racecycle, Indonesia Construction University, Thailand China Strategic, Cambodia Racing Wheel, Hangzhou Youke, Changshu Sumitomo, Hunan Sumitomo and so on. With the further release of follow-up production capacity, the company's performance is expected to usher in new growth.
Investment advice and valuation: the company's main waste disposal business is growing steadily, while actively arranging resource recycling business to provide protection for future performance growth. According to the actual operating situation of the company, we adjust the company's profit forecast. It is estimated that the income from 2023 to 2025 will be 3.903 billion yuan, 4.556 billion yuan and 5.315 billion yuan respectively, with a growth rate of 16.5%, 16.7% and 16.7%, respectively. The net profit of returning home is 807 million yuan, 902 million yuan and 1.005 billion yuan, respectively, with growth rates of 11.7%, 11.8% and 11.4%, respectively. The corresponding PE is 8.41X, 7.52X and 6.75X respectively, maintaining the "buy" investment rating.
Risk tips: the project is not advancing as expected; the risk of electricity price reduction; metal price fluctuations; policy promotion is not as expected; lithium battery recycling market is not as expected.