\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 15 Eit Environmental Development Group Co.Ltd(300815) )
Earnings declined in 2021. The company achieved a revenue of 4.83 billion yuan in 2021, an increase of 12.0% over the same period of the previous year, and a net profit attributable to the parent company of 470 million yuan in 2021, a decrease of 25.1% over the same period of the previous year; Among them, the revenue in the fourth quarter of 2021 was 1.26 billion yuan, a year-on-year increase of 8.6%, and the net profit attributable to the parent company in the fourth quarter of 2021 was 50 million yuan, a year-on-year decrease of 52.1%. The main reasons for the decline in performance in 2021 include ① the cancellation of covid-19 epidemic policy in 2021, and ② the release of new orders is less than expected.
Compared with 2019, the gross and net profit margins have increased, and the expense rate during the period has decreased year-on-year. The gross profit margins of the company in 2019, 2020 and 2021 were 21.6%, 29.7% and 22.7% respectively, and the net profit margins were 9.5%, 16.0% and 10.8% respectively. Due to the preferential policies of covid-19 epidemic in 2020, the gross profit margin and net profit margin of the company increased significantly compared with 2019. The preferential policies of covid-19 epidemic in 2021 have been completely cancelled, and the gross profit margin and net profit margin of the company have returned to the normal level, and compared with that in 2019 The net interest rate increased by 1.1 and 1.3pct respectively; In 2021, the rates of sales, management and financial expenses of the company were 0.9%, 6.9% and 1.0% respectively, with a year-on-year decrease of 0.1, 0.1 and 0.1pct respectively, and the expenses were properly controlled; In addition, the net cash flow from operating activities of the company in 2021 was 620 million yuan, with a year-on-year increase of 18.8%. In recent years, the operating cash flow has continued to improve.
With the promotion of environmental sanitation marketization, the company actively develops the market. The continuous improvement of sanitation marketization rate drives the large-scale marketization of sanitation. We expect that the operation market space of China's traditional sanitation services will exceed 230 billion / year in 2024, and the leader will benefit from the trend of sanitation integration, bringing new increment to greening conservation and waste classification. The total amount of environmental sanitation contracts newly signed by the company in 2021 was 3.68 billion yuan. As of December 31, 2021, the total amount of environmental service contracts in hand was 36.73 billion yuan, and the amount of contracts to be executed was 27.06 billion yuan. Looking forward to the release of future performance.
Experience, management and capital create strength and strong market-oriented competitiveness. ① Eit Environmental Development Group Co.Ltd(300815) has been rooted in the industry for 23 years, and has gained a place in the early stage of the environmental sanitation marketization wave. It has polished its strong operation and management ability. Under intensive cultivation, the gross profit margin, roe and other profit indicators of the environmental sanitation business are higher than those of other competitors. In recent years, the per capita income has increased steadily, and the leading informatization level has helped the refined operation; ② With high brand reputation and strong market competitiveness, the number of orders has always maintained a leading position in the industry, providing momentum for the rapid growth of performance. ③ It is proposed to grant 2.768 million restricted shares to 92 incentive objects. The target growth rate of operating income of the restricted shares granted for the first time shall not be less than 20% / 40% / 60% respectively, corresponding to the compound growth rate of 17% from 2021 to 2023, highlighting development confidence and improving the long-term incentive mechanism.
Investment advice. The market-oriented reform of the sanitation industry promotes the development of the industry, which belongs to a track with high prosperity and light assets Eit Environmental Development Group Co.Ltd(300815) as one of the leaders, it has been deeply engaged in the industry for many years, has strong management and operation ability (gross profit margin, roe and other profit indicators are ahead of the industry), has high brand reputation, and has the ability to get orders in the forefront of the industry. In addition, with the intelligent and integrated development of sanitation, the company's management and capital advantages are expected to gradually appear and continuously improve its market share. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 640, 790 and 950 million yuan, and the EPS will be 230, 2.9 and 3.4 yuan / share, corresponding to pe10.00 yuan 3 / 8.3 / 7.0x, maintain the "buy" rating.
Risk tips: the marketization of sanitation is less than expected, and the competition of sanitation services is intensified.
