\u3000\u3000 Wangneng Environment Co.Ltd(002034) (002034)
The scale expansion of China’s high-quality solid waste disposal targets has led to steady improvement in performance: the company’s main business is waste incineration power generation and comprehensive utilization of solid waste resources. The company is rooted in Zhejiang Province and adopts the strategy of “point to area” to expand the national market. By the first half of 2021, the total production capacity of the company’s projects in operation has reached 24130 tons / day, and the projects under construction and preparation have reached 3810 tons / day. With the improvement of the project production progress in the past two years, the company’s performance has achieved steady growth. The operating revenue of 2019 / 2020 / 2021q3 has increased by 35.69%, 45% and 106.41% respectively year-on-year; The net profit attributable to the parent company increased by 34.32%, 23.89% and 27.92% respectively year-on-year. The performance growth in 2021 is mainly due to the commissioning of the company’s Qingtian, Luyi and Shantou phase III projects. As a pure operating enterprise in the waste incineration power generation industry, the company’s performance growth is stable. In the future, the continuous commissioning of trial operation and projects under construction is expected to further contribute to the company’s performance.
The active layout of lithium battery recycling business is expected to open the second growth space for the company: the company announced that it plans to acquire Lixin new materials, which is mainly engaged in lithium-ion battery recycling. With the rapid development of new energy vehicle industry, the consumption demand of lithium battery has increased significantly, and the recycling industry has broad prospects. According to the scrap time, the power lithium battery is about to usher in the scrap peak. We predict that a total of 1.811 million tons of waste lithium iron phosphate batteries will be generated from 2022 to 2026, with a recovery income of 41.24 billion yuan; 924000 tons of waste ternary batteries were generated, and the recovery income was 63.26 billion yuan. Lixin new material is building a lithium battery recycling production line. According to the announcement of the company, the estimated production capacity after completion is 3150 tons of cobalt sulfate, 1350 tons of cobalt chloride, 1305 tons of cobalt hydroxide, 2561 tons of nickel sulfate and 1458 tons of lithium carbonate. The production line will be completed and put into operation in the first quarter of 2022. According to the current price of precious metals, it is expected to contribute about 800 million yuan of revenue increment to the company this year, breaking the growth constraints of the slowdown in the growth of waste incineration power generation industry.
The waste incineration power generation industry tends to be saturated, and the short-term growth of the company is still guaranteed. During the 14th Five Year Plan period, the waste incineration power generation capacity tends to be saturated. By the end of 2020, the national waste incineration power generation processing capacity has exceeded 600000 tons / day. According to the 14th five year plan, it is planned to increase to 800000 tons / day by the end of 2025. Since 2020, the bid winning scale of new waste incineration power generation projects has declined, and the waste incineration power generation industry has gradually entered a stable period. From the perspective of the scale of projects in hand, the company’s main business performance is still supported in the short term. As of 2021h1, the company still has 2950 T / D waste incineration power generation and 860 T / D kitchen disposal projects under construction and preparation. Superimposed with the expected new orders in the future, it can still support the steady growth of performance in the next 2-3 years. In the long run, as the market tends to be saturated, M & A integration may become the main expansion mode of leading companies.
The whole industrial chain of the group’s solid waste is covered, and the synergy is expected to appear: Wangneng Environment Co.Ltd(002034) the parent company meixinda group has formed a complete industrial chain with environmental protection solid waste as the main body. In addition to waste incineration power generation and kitchen disposal in the listing platform, it also includes agricultural waste disposal, hazardous waste disposal, sanitation, renewable resources and cogeneration, and agricultural waste disposal, Baiomas, a subsidiary of the group, is a leading enterprise in China for the treatment of dead livestock and poultry; The company in the hazardous waste disposal sector mainly takes the collaborative disposal of cement kilns as the starting point, and has built hazardous waste treatment centers in Zhejiang, Anhui, Sichuan and other places. At the middle and front end of the industrial chain, Zhihui environment, a subsidiary of the group, mainly arranges business segments such as environmental sanitation integration, solid waste classification and recycling, and fully cooperates with downstream business segments such as waste incineration power generation and kitchen. At the same time, the group has a long-standing layout in the field of recycling. Its Huzhou meixinda Recycling Industry Development Co., Ltd. is mainly engaged in the recycling of scrap vehicles and electronic waste resources and the remanufacturing of auto parts. At the same time, it has also arranged the dismantling and cascade utilization of waste batteries, which is expected to have a synergistic effect with the company’s new business lithium battery recycling business.
Investment suggestion: the company is the target of high-quality solid waste disposal in China, and actively layout the lithium-ion battery recycling business. With the rapid development of new energy vehicle industry and the rise of upstream precious metal raw material prices, the lithium battery recycling business has broad prospects, which is expected to break the growth constraints of the company’s waste incineration power generation business and build the second growth curve of the company. We estimate that the company’s operating revenue from 2021 to 2023 will be 3.28 billion, 4.4 billion and 5.55 billion respectively, with growth rates of 93.2%, 34.1% and 26.3% respectively; The net profits were 646 million, 847 million and 1045 million respectively, with growth rates of 23.7%, 31.1% and 23.5% respectively, corresponding to 11.8, 9.0 and 7.3 times of PE valuation from 2021 to 2023; The investment rating of Buy-A is given, and the six-month target price is 24.0 yuan.
Risk warning: the project commissioning progress is less than expected, the price of precious metals fluctuates, the electricity price of waste incineration power generation is reduced, the promotion of new energy vehicles is less than expected, and the calculation is less than the expected risk.
