Key recommendations focus on: Miracle Automation Engineering Co.Ltd(002009) \ , Grandblue Environment Co.Ltd(600323) , China water, Jiangxi Hongcheng Environment Co.Ltd(600461) , Henan Bccy Environmental Energy Co.Ltd(300614) , Fujian Longma Environmental Sanitation Equipment Co.Ltd(603686) , China Resourcesand Environment Co.Ltd(600217)
Suggestions for attention: Wangneng Environment Co.Ltd(002034) , Chongqing Sanfeng Environment Group Corp.Ltd(601827) , China Tianying Inc(000035) , conch entrepreneurship, Jiangxi Jovo Energy Co.Ltd(605090) , Beijing Capital Eco-Environment Protection Group Co.Ltd(600008)
Latest view: what does rebound push? 1) Growing renewable resources. [ Miracle Automation Engineering Co.Ltd(002009) ] (battery recycling), pe20 times in 2022, the processing scale doubled continuously from 2020 to 2021, and expanded three times from 2022 to 2024; [ Beijing Geoenviron Engineering & Technology Inc(603588) ] (recycling of hazardous waste). It is considered to increase pe20 times in 2022, increase by 30% for five years from 2016 to 2021 + sustainable in the future, and the operating profit accounts for 60% +. 2) Hong Kong stock valuation repair, asset precipitation. [Everbright environment] (solid waste leader) in 2021, the net profit attributable to the parent company was HK $6.804 billion, an increase of 13.1% at the same time, the dividend ratio remained 30% +, the annual dividend was HK $0.34, and the dividend rate was 6.91%; Corresponding to PE4 in 2022 2X, pb0 58； [China water] (a scarce national water supply leader) fy2022’s net profit attributable to the parent company was HK $2.035 billion, an increase of 20.3%, fy2021’s net cash flow was HK $2.6 billion +, the net cash ratio was 1.57, the endogenous cash flow matched the capital expenditure, the dividend ratio was 29%, the annual dividend was HK $0.31, and the dividend rate was 3.87%; Corresponding to fy2023pe5 7 times, PB1 15。 (calculated according to the closing price on March 18, 2022)
The implementation of the 2021 national economic and social development plan and the issuance of the 2022 draft plan. The draft mentioned that we should actively and steadily promote double carbon. Improve the “1 + n” policy system of carbon peak and carbon neutralization, implement the “ten actions of carbon peak”, and manage the second performance cycle of the national carbon emission trading market.
The national development and Reform Commission issued the key tasks for the development of new urbanization and urban-rural integration in 2022. The document proposes to promote green and low-carbon development. We will improve the centralized treatment facilities for hazardous waste and medical waste and the comprehensive utilization system for bulk solid waste. We will accelerate the filling of the gap in urban sewage treatment capacity, and carry out the repair and renewal of old and damaged sewage, rainwater and sewage combined pipe networks that are prone to ponding and waterlogging.
Carbon neutral builds the investment framework of environmental protection industry from the front end, middle end and back end, and is bullish on the long-term rise of EU carbon price and CCER in the short term. 1) Front end energy substitution: adjust the energy structure and pay attention to the demand for environmental sanitation new energy equipment and renewable energy substitution. 2) Middle end energy conservation and emission reduction: promote industrial transformation and pay attention to energy conservation management & Application of emission reduction equipment. 3) Back end recycling: promote the recycling of renewable resources such as waste classification, waste household appliances / cars and hazardous waste recycling. 4) Environmental consultation: the improvement of environmental management promotes the expansion of the demand for environmental consultation. 5) Carbon trading: encourage the development of CCER projects such as renewable energy, methane utilization and forestry carbon sequestration. The development of China’s carbon market is similar to that of the EU. It already has the prototype of total amount control & market regulation mechanism. At present, the transaction scale and covering industries have large room to improve, and the carbon price is far lower than overseas. The tightening of total amount drives the carbon price to rise for a long time. The carbon market releases the demand of CCER, and the approval policy is expected to restart. We expect the price of CCER supply to rise in the near future.
Steady growth + new tools + new fields, comprehensively recommend low-carbon environmental protection assets: 1) environmental asset value + Growth Logic 2.0: a) steady growth + new tools + new fields, from single dimension to combination. ① Policy +: double carbon macro policy, strengthening and increasing infrastructure investment; ② Mode +: REITs improves the return on assets and opens the growth ceiling; ③ Space +: the second growth curve. B) The value of cash flow driven by marketization is further highlighted: policy tools such as CCER green power, waste incineration bidding and marketization of water price enhance the certainty of return and improve cash flow. 2) Under the new logic, the valuation anchor has been significantly improved: undervalued + low position + growth, improved model and cash flow, and improved valuation. 3) Suggestions: a) steady growth / high dividend / REITs: waste incineration [ Dynagreen Environmental Protection Group Co.Ltd(601330) ], water + pipe network [ Beijing Capital Eco-Environment Protection Group Co.Ltd(600008) ] [ Jiangxi Hongcheng Environment Co.Ltd(600461) ], water supply price increase + direct drinking water [China water]. B) new track: 1. Renewable resources: the most economical carbon premium + resource price increase: hazardous waste recycling [ Beijing Geoenviron Engineering & Technology Inc(603588) ], Baijiu liquor tank recycling [ Road Environment Technology Co.Ltd(688156) ], power battery reuse [ Miracle Automation Engineering Co.Ltd(002009) ], recycled plastics [ Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) ]; ② Hydrogen energy: [ Jiangxi Jovo Energy Co.Ltd(605090) ]; ③ High matte: [ Zhejiang Weiming Environment Protection Co.Ltd(603568) ].
Latest research: the depth of battery recycling: battery recycling 2.0-15 years high boom, long slope and thick snow, highlighting the value of renewable resources to escort the development of new energy Zhejiang Weiming Environment Protection Co.Ltd(603568) depth: the main business of solid waste is growing & leading in profits, and developing new energy together with Qingshan Yutong Heavy Industries Co.Ltd(600817) : the first repurchase of shares reserves employee stock ownership, and the leading advantage of electric sanitation equipment is solidified; Everbright environment: Comments on the performance announcement in 2021: the operation of incineration leading enterprises is growing rapidly, and the improvement of cash flow is expected.
Risk tip: the policy promotion is less than expected, the interest rate rises more than expected, and the fiscal expenditure is lower than expected.
