The quality of revenue in the biomass sector continued to improve: during the period, the company's revenue from comprehensive utilization of biomass decreased by 8.8 per cent to HK $290 million, of which revenue from construction services continued to decline by 53 per cent to HK $330 million, while revenue from operating services increased by 4 per cent, thanks to an increase in online electricity, an increase in domestic waste disposal and an increase in steam production. The proportion of operating service income in the total income of the biomass sector has further increased to 88% from 78% last year, and the quality of income continues to improve. However, due to the rise in raw material prices and the decline in quality, the gross profit margin of the sector has declined. During the period, the company has initially established an independent collection and storage system, and continues to reduce costs and increase efficiency, and the gross profit margin of the biomass sector will be improved in the future.
Recovery of hazardous waste plate is expected: revenue from hazardous waste disposal sector increased by 79 per cent to HK $990 million, mainly due to a 94 per cent increase in disposal capacity, but due to the fierce market, the unit price of landfill and incineration fell by 40 per cent and 10 per cent to 1656 yuan and 2189 yuan per tonne, respectively. Offset part of the increase. Affected by the epidemic, the demand for hazardous solid waste is weak, and the unit price of treatment has declined, and the gross profit margin of this sector has also declined. With the restrictions on the disposal of hazardous wastes in different places and the improvement of the epidemic situation, the demand will return to the normal level. based on the large number of projects on hand and the transformation of the company from harmless to resource in the future, we are still optimistic about the hazardous waste sector of the company.
The environmental remediation and new energy business led the company to transform to integrated energy: during the period, the company's revenue from the environmental restoration sector decreased by 47%, resulting in a lack of new projects to support growth due to reduced demand from the government and enterprises affected by the epidemic. Revenue from photovoltaic and wind power sectors decreased by 9%, mainly due to weak wind resources during the period and the impact of the epidemic that led to equipment that could not be maintained. During the period, the company successfully expanded the Hong Kong Dachang line photovoltaic project, Xuzhou Fengxian county-wide photovoltaic project and Guanyun roof photovoltaic project, with a total installed capacity of 43.6MW.
The company's environmental restoration business has a high degree of coordination with the existing business, and has technical and market advantages, a total of 15 municipal solid waste landfill restoration projects have been signed. It is believed that with the gradual improvement of the epidemic in the second half of the year, these two businesses will lead the company to transform into an integrated energy service provider.
Financing channels were further broadened: during the period, the company successfully issued the first issue of sustainable medium-term bills in 2022, which is the first green and rural revitalization sustainable medium-term bills issued by the country's first overseas issuer, with a scale of 700 million yuan and a basic term of three years. The coupon is 3.35% in the first three years. The company continues to expand financing channels and optimize the proportion of financing at home and abroad, and financing costs are further reduced to 3.45%, down 0.29ppt from the same period last year.
Adjust the target price to HK $2.30 and maintain the buy rating: as the epidemic alleviates and the company's operating income share continues to rise, the company's future gross profit margin will return to normal and gradually increase. As the leader of the environmental protection industry, the company has rich carbon assets, which will achieve the economic benefits of carbon emission reduction in the future carbon market transactions, and bring new profit growth points for the company. We adjusted the company's homing net profit for the next three years to HK $680 million, HK $930 million and HK $1.25 billion respectively. Based on the 7 times PE valuation in 2022, we adjusted our target price for the next 12 months to HK $2.30 to maintain our buy rating.
Risk factors: lower-than-expected construction, influence of subsidy policy, fluctuation of raw material prices