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中国光大绿色环保(01257.HK):向运营转型

China Everbright Green Environmental Protection (01257.HK): Transformation to Operation

興業證券 ·  Aug 11, 2022 00:00  · Researches

Event: the company disclosed its results for the first half of 2022: revenue fell 2.3% year-on-year to HK $4.22 billion; gross profit dropped 26.2% to HK $980 million, with a gross profit margin of 23.1%; operating profit fell 32.1% to HK $830 million, with an operating profit margin of 19.7%; and net profit from home fell by 47.0% to HK $370 million. Pay an interim dividend of 3.6 Hong Kong cents per share, with a dividend yield of 20.0%.

Our comments are as follows:

Revenue in the first half fell 2.3 per cent year-on-year to HK $4.22 billion, mainly due to a sharp drop in construction services revenue to HK $710 million, while operating services revenue rose 9.9 per cent to HK $3.32 billion.

Comprehensive utilization of biomass plate:

Operating services revenue rose 4.0 per cent year-on-year to HK $2.53 billion, online electricity increased 3.4 per cent year-on-year to 299.2 megawatts, and steam supply rose 10.7 per cent to 1.172 million tons.

The epidemic led to poor logistics and rising raw material collection prices, and profitability was under pressure. EBITDA fell 23.6% year-on-year to HK $870 million, EBITDA rate fell 5.8ppt to 28.5%, and net profit fell 28.5% to HK $430 million.

In order to resist the upstream fluctuation risk, the company extends upstream, establishes an independent storage system, optimizes operating costs, and promotes the transformation of the heating market to high value-added utilization.

Solid and dangerous waste plate:

The amount of disposal increased by 94.2% compared with the same period last year, and the amount of harmless disposal / utilization of resources was respectively 20.7 million tons. In the first half of the year, the epidemic affected the start-up of waste production enterprises, with insufficient production and poor logistics, and the average unit prices of landfill and incineration decreased by about 40% and 10% to 1656 yuan and 2189 yuan, respectively.

The EBITDA rate fell 11.4ppt to 36.7% year-on-year, and the net interest rate fell 19.5ppt to 9.7% year-on-year.

The company has improved the "big market, big customer service" mechanism, established a regional overall planning mechanism, and integrated market resources.

Our view:

We estimate that the company's annual return net profit in 22-23-24 will be HK $860 million, respectively, with a year-on-year growth rate of-36.3%, 20.9% and 12.2% respectively. The share price on August 11 (HK $1.70) corresponds to the expected PE of 5.0x in 2022, focusing on the transformation of its light assets and the continued improvement in cash flow. We expect the free cash flow to be positive during the year, covering for the first time and giving prudent overweight rating.

Risk tips: the transformation business development is not as expected, the raw material price is rising, and the epidemic situation is repeated.

The translation is provided by third-party software.


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