\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 158 Chongqing Water Group Co.Ltd(601158) )
Event: Chongqing Water Group Co.Ltd(601158) released the annual report and achieved an operating revenue of 7.252 billion yuan in 2021, a year-on-year increase of + 14.22%; The net profit attributable to the parent company was 2.078 billion yuan, a year-on-year increase of 17.13%, and the net profit attributable to the parent company after deduction was 1.751 billion yuan, a year-on-year increase of 4.71%; The net cash flow from operating activities was 2.735 billion yuan, a year-on-year increase of + 18.83%. The performance is in line with expectations.
Comments:
The production capacity of the main business increased rapidly, and the water supply and treatment capacity increased steadily, driving the steady growth of revenue and profit. During the reporting period, the company’s main business capacity increased rapidly through self construction and acquisition. By the end of the reporting period, the daily water supply capacity of the company had increased by 581000 m3, reaching 3025500 m3, a year-on-year increase of 23.77%, the daily sewage treatment capacity had increased by 679100 m3, reaching 4248600 m3, a year-on-year increase of 19.02%, and the daily sludge treatment and disposal capacity had reached 1992 million tons. The increase of production capacity drives the growth of water volume. During the reporting period, the company’s tap water settlement volume was 621 million m3, a year-on-year increase of + 9%; Sewage settlement volume was 1.486 billion m3, a year-on-year increase of + 18.9%; The settlement volume of sludge disposal was 541900 tons, a year-on-year increase of + 53.6%.
Market expansion has been made in an all-round way, and the competitiveness has been continuously enhanced. During the reporting period, the company took the initiative and made key breakthroughs in market development. It won the bid for Shaxi sewage treatment plant phase I PPP project, Anning comprehensive water conservancy project infrastructure construction PPP project in Kunming, Yunnan Province, successfully expanded some rural water supply markets in Yubei district and Jiangbei District, established Sichuan Chongqing Gaozhu Water Development Co., Ltd. and Western pipe network company, and participated in the establishment of quality water supply and Eastern pipe network company, Actively serve the construction of Chengdu Chongqing double city economic circle, and expand new business areas such as quality water supply, pipe network operation and maintenance. The company’s water environment industry chain is increasingly improved and its competitiveness is continuously enhanced.
The financial structure is sound, and we will continue to promote connotative growth and large-scale development. The company’s financial structure is sound. Although the asset liability ratio has increased, it is only 43.6% at present; The expense rate is stable during the period, and the financial expense rate is lower than 1% all year round; The operating cash flow is stable, with a perennial level of more than 2 billion and continuous growth. During the “14th five year plan” period, we will continue to promote the main line of connotative growth and large-scale development, and focus on becoming China’s first water environment comprehensive service provider with core competitiveness.
Profit forecast and investment rating: it is predicted that from 2022 to 2024, the net profit attributable to the parent company will be RMB 2.34/25.9/2.79 billion respectively, with a year-on-year growth rate of 12.6%, 10.5% / 8.0% respectively; Based on the closing price on April 2, PE was 13.2 / 11.9 / 11.0 times respectively, and the company was given an overweight rating for the first time. Risk tip: capacity growth is less than expected; Capacity utilization is lower than expected; The increase of water price is less than expected; The growth of sludge business is less than expected; Cost growth exceeded expectations, etc.
