\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 827 Chongqing Sanfeng Environment Group Corp.Ltd(601827) )
The annual report issued by the parent company was RMB 1.971 billion, with a year-on-year increase of RMB 1.61 billion and a net profit of RMB 1.698 billion in 2021; In 2021q4, the net profit attributable to the parent company was 143 million yuan, a year-on-year increase of 32.86%; It is proposed to distribute a cash dividend of 0.222 yuan per share (including tax). Operating indicators maintained high growth, and equipment sales recovered rapidly after the epidemic. In 2021, the company’s wholly-owned and holding projects completed a total waste treatment capacity of 107439 million tons, a year-on-year increase of + 26.30%, realized a power generation capacity of 4.195 billion kwh, a year-on-year increase of + 29.56%, and an on grid power of 3.68 billion kwh, a year-on-year increase of + 29.12%; In addition, the inclusion of multiple projects in the list of renewable energy power generation subsidy projects also brings additional revenue increment, which jointly drives the project operation sector to achieve an operating revenue of 3.208 billion yuan in 2021, a year-on-year increase of + 44.38%, and the gross profit margin decreased by 6.4 PCT to 48.1% year-on-year under the influence of changes in accounting policies. After the epidemic, the company’s equipment sales business recovered rapidly. In 2021, 20 supply contracts for incinerators and complete sets of equipment were signed. The operating revenue of the sector was 462 million yuan, a year-on-year increase of + 48.59%, and the gross profit margin decreased slightly by 0.5 PCT to 26.1%.
In 2021, the scale of production capacity put into operation will be greatly increased and the market development will be steadily promoted. The company guaranteed the quality and rushed the construction period. In 2021, 10 projects such as Chifeng project (phase I) and Lu’an project (phase II) were put into operation, with an additional processing capacity of 10500 tons / day. By 2021, the company had put into operation 34 waste incineration power generation projects (including joint-stock projects), with a processing scale of 41600 tons / day. In addition, by the end of 2021, the company had 17 waste incineration power generation projects under construction and preparation (including joint-stock projects), with a total design treatment scale of 14500 tons / day. In 2021, the company won three new waste incineration projects (treatment scale of 1700 tons / day), and achieved breakthroughs in the fields of sanitation (Chongqing), kitchen (Meizhou and Korla), medical waste disposal (Hechuan), etc.
Operating projects are gradually included in the subsidy list, and the principle of prudent subsidy treatment is expected to bring performance flexibility. The company’s measurement of operating income is more prudent. Previously, the income of projects not included in the subsidy catalogue of batch 1-7 of renewable energy was recognized according to the local coal benchmark on grid price. Based on the principle of prudence, we assume that in the future, the income of the company’s new projects will be recognized according to the local coal benchmark on grid price. Therefore, once the new projects are included in the renewable energy subsidy list and the income is recognized according to the subsidized price, the income and performance level of the company will be significantly improved.
Maintain the “buy” rating: the company has many projects put into operation in 21 years, and the smooth ramp up of production capacity will ensure the sustained growth of performance in 22 / 23 years. We raise the company’s profit forecast for 22-23 years and add a new 24-year profit forecast. It is expected that the company’s net profit attributable to the parent company in 22-24 years will be RMB 1.41615851711 billion (14% / 20% / new), and the corresponding EPS in 22-24 years will be RMB 0.84/0.94/1.02 respectively, The current share price corresponds to 9 / 8 / 8 times of PE in 22-24 years. The company’s waste incineration projects continue to grow, and the prudent subsidy treatment principle will bring new subsidies in the future or due to the inclusion of the project in the subsidy list, so as to improve the performance flexibility and maintain the “buy” rating.
Risk warning: the project construction and industrial policies are not as expected, and the local payment capacity is limited; The fierce market competition makes the business development less than expected.
