\u3000\u3 Guocheng Mining Co.Ltd(000688) 296 Zhejiang Heda Technology Co.Ltd(688296) )
Event: on February 27, 2022, the company announced the performance express of 2021: in 2021, the company realized an operating revenue of 500 million yuan, a year-on-year increase of 38.44%; The net profit attributable to the parent company was 100 million yuan, a year-on-year increase of 37.75%; The net profit attributable to the parent company after non deduction was 86.08 million yuan, a year-on-year increase of 19.83%; The performance is in line with market expectations.
In the context of the intelligent transformation of China's water pipe network during the 14th Five Year Plan period, the digitization process of the water industry has accelerated: from the performance of mainstream intelligent water meter companies exceeding expectations in 2019 to the full swing and high performance of the water information industry in 2021, in the process of tracking the intelligent transformation of water pipe network, we have paid attention to the intelligent water meter companies in the industry from bottom to top The phenomenon of expanding product categories and investment in water informatization (smart water company) has been observed that the water company has a strong demand for intelligent transformation; On December 14, 2021, at the central economic work conference, the general secretary of Xi Jinping pointed out that during the 14th Five Year Plan period, pipeline reconstruction and construction must be taken as an important infrastructure project; This also means that the logic of top-down China's pipe network transformation is clear. Under the background of national digital reform and water conservation and energy conservation, the digital transformation of the water industry has accelerated, benefiting from the development of the water information market and the competitive advantages of the company's products, the business scale has maintained rapid growth, and the annual operating revenue has achieved rapid growth.
In 2019, the three-year action plan for improving the quality and efficiency of urban sewage treatment (20192021), jointly issued by the Ministry of housing and urban rural development and other three ministries and commissions, focused on "accelerating the completion of the shortcomings of urban sewage collection and treatment facilities, and realizing the full coverage, collection and treatment of sewage pipe network as soon as possible". During the 13th Five Year Plan period, China's sewage treatment infrastructure construction has made great progress. By the end of the 13th Five Year Plan period, the national urban sewage treatment rate has reached more than 95%. However, the pipe network has always been a short board in China's sewage treatment, and problems such as insufficient coverage, leakage, passenger and water crowding the pipe network, wrong connection and mixed connection, overflow and so on are common, This is also the main reason why China's sewage treatment rate is high, but the sewage collection and treatment rate is still relatively low, and black and smelly water bodies occur frequently. China's water supply network reform focuses on water informatization and intelligence; The reconstruction of drainage end focuses on the construction of drainage pipeline. Since 2019, from the high performance of intelligent water meter industry and water information companies to the end of 2021, the central economic work conference emphasized the construction of drainage pipe network, and China's intelligent water has officially moved from intelligent water supply to intelligent water supply and drainage. In 2019, China's urban water supply penetration rate reached 98.78%, while the township water supply penetration rate was 80.50%. Therefore, for the construction of water supply network, more focus is on intelligent and information construction, while the construction of drainage network focuses on pipeline laying.
Profit forecast and investment rating: Based on the fact that the company is the leader of water informatization and several benchmark projects of water supply and drainage informatization have been implemented, we adjusted the EPS from 1.11/1.58/2.32 yuan to 0.96/1.37/1.98 yuan from 2021 to 2023, corresponding to 42 / 29 / 20 times of PE, maintaining the "buy" rating.
Risk warning: the risk of national fiscal policy tightening beyond expectations; The risk that the intelligent transformation process of China's water pipe network is less than expected; The risk of non recovery of the company's accounts receivable, etc.
