\u3000\u3 Shengda Resources Co.Ltd(000603) 588 Beijing Geoenviron Engineering & Technology Inc(603588) )
Deep cultivation of large solid wastes and diversified business layout. The company’s business scope covers three fields: environmental remediation engineering, urban domestic waste disposal, industrial solid waste and hazardous waste treatment. By investing in new projects and acquiring mature projects, the company realized the rapid layout of the industry. In the first half of 2021, the revenue from operation services exceeded the revenue from engineering construction for the first time, the proportion of operating assets increased, and the cash flow was good.
Technology leads and the repair business strives for progress while maintaining stability. The company is one of the leading enterprises in the field of soil remediation in China, and the remediation technology basically covers all kinds of technical paths. In the past two years, competition in the industry has intensified and short-term pressure has been imposed. The company has taken the initiative to slow down the investment in the remediation sector and paid attention to the project quality and payment collection ability. The newly obtained soil remediation projects are of good quality and the profitability is at a high level in the industry.
Increase the layout of hazardous waste recycling and help the rapid growth of performance. At present, the effective capacity of China’s hazardous waste market is insufficient, and the market gap is still large. With the tightening of policies and supervision, the superimposed industry is highly market-oriented, the backward production capacity will be eliminated, and the industry concentration will continue to increase. Affected by factors such as qualification barriers and technical barriers, extension M & A is an important expansion way. The company focuses on hazardous waste metal resource recovery business and speeds up the layout of hazardous waste industry. As of the first half of 2021, the hazardous waste transportation capacity is 535500 tons / year and the reserve capacity is nearly 1 million tons / year. With the gradual release of capacity, the growth sustainability can be expected.
Garbage incineration power generation is advancing steadily and contributing abundant cash flow. From 2020 to 2021, the company’s projects will be put into operation. By the end of 2021, there were 12 projects in operation and 2 projects under construction. At present, the total capacity in operation is 9500 tons / day and the capacity under construction is 1600 tons / day. The overall operation of the project is sustained and stable, providing sufficient cash flow for the company’s business expansion.
Investment suggestion: the EPS of the company is expected to be 0.70/0.90/1.02 yuan / share in 21, 22 and 23 years respectively, and the corresponding closing price PE on March 8, 2022 is 24 / 19 / 17 times respectively. Considering that the company accelerates the layout of hazardous waste recycling, the project reserves are rich, the operation capacity is improved, and the industry prosperity is high; At the same time, the soil remediation business has sufficient orders and strong ability to get orders, and the high growth space can be expected. Through relative valuation and absolute valuation, the reasonable valuation range of the company is 17.99-20.98 yuan / share, corresponding to 20-23 times of PE in 2022. Give the company 22 times PE in 2022, target price of 19.79 yuan, first coverage, and “prudent recommendation” rating.
Risk tips: industry policy risks; Industry competition intensifies; Price fluctuation of raw materials and products.
