\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 14 Henan Bccy Environmental Energy Co.Ltd(300614) )
Key investment points
Event: the company released its annual report for 2021, realizing a revenue of 499 million yuan, a decrease of 3.74% at the same time; The net profit attributable to the parent company was 109 million yuan, with a decrease of 12.7%; It is proposed to pay a cash dividend of 0.68 yuan (including tax) for every 10 shares, with a corresponding dividend rate of 0.14%.
The subsidies are carefully confirmed and the profitability is stable after restoration. In 2021, the company’s gross profit margin reached 41.03%, down 4.21 PCT at the same time. Biogas utilization is the main business of the company, accounting for 93.97% of the revenue. The decline of the company’s operating income and gross profit margin is mainly due to the change of accounting and bookkeeping methods. For the projects put into production but not included in the subsidy catalogue, the national subsidy income is not recognized in the current period. In 2021, the subsidy amount not included by the company reached 253394 million yuan. After adding back the subsidy income, the actual operating income reached 525 million yuan, a slight increase of 1.14% year-on-year, the gross profit margin was 46.10%, an increase of 0.87 PCT, and the profitability was stable.
The installed capacity of biogas power generation reached 188.01mw, with a year-on-year increase of 9.79%. By the end of 2021, the company had put into operation 94 biogas power generation projects in Henan, Anhui, Hubei, Zhejiang, Guangdong and other provinces (municipalities and autonomous regions directly under the central government), with a grid connected installed capacity of 188.01mw, an increase of 9.79% over 171.25mw at the end of 2020. The growth rate of the company’s operating revenue was lower than that of the installed capacity, mainly due to 1) merger and acquisition of three companies subordinate to Veolia, with a total scale of 19.806mw. In 2021, it was only consolidated in the fourth quarter, The annual consolidated contribution increment will be realized in 2022; 2) Some stock projects have been written off due to the reduction of biogas resource supply and the weakening of project profits.
Net operating cash flow decreased by 13.29% to 122 million yuan. 1) In 2021, the net cash flow from operating activities of the company was 122 million yuan, with a decrease of 13.29%; 2) The net cash flow from investing activities was – 258 million yuan, a decrease of 88.29% over the same period; 3) The net cash flow from financing activities was 248 million yuan, an increase of 161549%.
The emission reduction effect of landfill gas power generation is significant, and the carbon trading profit is 102% ~ 339%. After the launch of the national carbon market, the demand of CCER is released, and the short-term scarcity price is bullish. The carbon reduction of kwh electricity generated by landfill gas is 000578tco2. We expect that the income of kwh electricity will increase by 0.17/0.35/0.58 yuan under the carbon price of 30 / 60 / 100 yuan, and the profit elasticity will reach 101.77% / 203.54% / 339.23%. The company has a mature carbon asset development team, which benefits the most from carbon trading flexibility.
The industry penetration is low, the space is large, and the company has rich experience & leading technology, internal extension and external expansion to promote capacity expansion. The penetration rate of landfill gas power generation is only 12%, which needs to be improved. The disposal of organic waste opens the blue ocean market of biogas utilization. Driven by policy & emission reduction, compared with Europe, China’s installed capacity of biogas power generation is expected to be 50 times in 10 years. 1) large scale: 94 biogas power generation projects, with a grid connected installed capacity of 188.01mw; 2) Excellent technology: the investment per ton is lower than that in the same industry, and the gas gathering rate and power generation efficiency are high; 3) Strong profitability: the gross profit margin is higher than the average of peers, and 150t / D small projects can be profitable; 4) Extensive expansion: horizontally expand the utilization of kitchen, breeding manure and rural biogas, and open up new markets.
Profit forecast and investment rating: considering the change of the company’s subsidy accounting method, the pace of taking orders for new projects and the maturity of stock projects, we reduced the company’s net profit attributable to the parent company from 234 / 302 million yuan to 132 / 165 million yuan in 20222023. It is estimated that the net profit attributable to the parent company in 2024 will be 207 million yuan, corresponding to 39 / 31 / 25 times PE, maintaining the “buy” rating.
Risk tip: the landfill gas is insufficient, the subsidy policy changes, and the market competition intensifies
