Beijing Geoenviron Engineering & Technology Inc(603588) (603588)
Event: Recently, Beijing Geoenviron Engineering & Technology Inc(603588) announced the acquisition of 51% equity of Jinchang xinshengyuan metal materials Co., Ltd. and 51% equity of Jinchang sine wave Environmental Protection Technology Co., Ltd.
This acquisition is in line with the company’s core strategy of vigorously developing comprehensive utilization of resources. The target company’s products nickel oxide and battery grade nickel sulfate have wide downstream uses and broad market space. It will form an industrial coordinated development with the company’s existing nickel containing hazardous waste disposal plate, which is an extension of the company’s industrial chain of comprehensive utilization of metal hazardous waste resources. After the acquisition, the company’s metal resource disposal capacity is enhanced, which is conducive to the long-term development of the company’s main business in the future.
Profit forecast and investment suggestions. The revenue and gross profit of the company’s solid and hazardous waste resource utilization sector continued to increase, accounting for an increasing proportion of the company’s total revenue and gross profit. 2021h1 company’s solid waste and hazardous waste recycling sector, as the company’s strategic key sector, achieved a revenue of 1.1 billion yuan, a year-on-year increase of 219.34%; The gross profit margin was 18.85%, with a year-on-year increase of 6.39 percentage points. There is a large market space for metal recycling. The company cuts into nickel recycling products and extends the layout of upstream new energy materials, which is expected to open the valuation space and provide a new source for the company’s performance growth. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 737 million, RMB 986 million and RMB 1309 million respectively, and EPS will be RMB 0.91, RMB 1.21 and RMB 1.61 respectively. Based on the closing price of RMB 17.57 on December 31, the corresponding PE will be 19.31, 14.52 and 10.91 times respectively, giving the company a “recommended” investment rating.
Risk statement The company’s performance does not meet expectations, the risk of raw material price fluctuation, vicious market competition, systemic risk in the secondary market outside China, and the risk of epidemic deterioration beyond expectations outside China.
