\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 008 Beijing Capital Eco-Environment Protection Group Co.Ltd(600008) )
Investment summary:
Recently, the company released its annual report for 2021. During the reporting period, the company achieved a revenue of 22.2 billion yuan, a year-on-year increase of 15.65%; The net profit attributable to the parent company was 2.29 billion yuan, a year-on-year increase of 55.6%, of which the non net profit deducted was 1.63 billion yuan, a year-on-year increase of 19.5%. In Q4 of 2021, the company achieved a revenue of 7 billion yuan, a year-on-year decrease of 8.4% and a month on month increase of 6.2%; The net profit attributable to the parent company was 370 million yuan, down 31% year-on-year and 23% month on month; Among them, the deduction of non net profit was 410 million yuan, a year-on-year decrease of 20.8% and a month on month decrease of 12.3%. The whole is in line with our expectations.
Ecological + strategic deep cultivation of stock cities has achieved initial results.
During the reporting period, the company added a total of 74 projects, with a contracted scale of 18.9 billion yuan. Among the new projects, 74% come from stock cities. The strategic effect of the company’s deep cultivation of urban diversified business forms and extension of value chain has begun to show, and it is expected to continue to support business development in the future.
The development of asset light mode accelerated.
The pace of asset light market development of the company has been gradually accelerated. During the reporting period, the company added a total of 74 projects, including 51 asset light projects, with a total contracted scale of 12 billion yuan, a significant increase of 122% year-on-year.
The performance of urban water services maintained growth, and the deep ploughing strategy of stock cities supplemented capacity reserves.
In 2021, the company’s revenue from sewage and water treatment reached 505 million yuan and 263 million yuan respectively, with a year-on-year increase of 30.5% and 21% respectively. During the period, the newly put into operation water treatment capacity is about 1.46 million tons / day, which is slower than 1.92 million tons / day in 2020; The water price adjustment of 1 water treatment project and 15 sewage treatment projects was completed, and the average water price of water supply and average sewage treatment fee were increased to varying degrees.
Although the planned capacity of water projects under construction is only 677000 tons / day, which is the lowest in recent years. However, through deep cultivation in stock cities, the company obtained 31 asset light projects and 21 asset heavy projects in the water business during the reporting period, with a total contracted scale of 10.3 billion yuan, which quickly supplemented the project reserves and ensured the sustainable growth of the water sector in the future.
Incineration, sanitation and other sub sectors have accumulated sufficient potential energy for the growth of solid waste business.
During the reporting period, the company achieved a solid waste treatment business revenue of 7.67 billion yuan, a year-on-year increase of 44.68%. The gross profit margin decreased by 5.89pct, mainly due to the implementation of Accounting Standard No. 14 to recognize the revenue and cost of PPP project construction services.
In this year, the new production capacity of waste incineration is 4000 tons / day, and the company plans to put into operation the incineration capacity of 6600 tons / day in 2022; Meanwhile, in 2021, the company newly signed and acquired the incineration capacity of 4400 tons / day. According to the estimation of the disclosed projects, the capacity reserve of this year is still maintained at more than 10000 tons, which continues to provide guarantee for the growth of incineration performance in the future. In addition to incineration, the newly signed environmental sanitation projects of the company generated an additional annual service fee of 127 million yuan, and the newly signed external contract amount of site restoration business reached 110 million yuan.
Strengthen asset management, optimize asset structure and significantly improve profitability.
During the reporting period, the company completed the withdrawal of projects such as Shenzhen water and general innovation, and confirmed the investment income of about 720 million yuan, which is also the reason for the high growth rate of the company’s net profit attributable to the parent in this year. In 2022, the company plans to sell 100% equity of New Zealand solid waste business company for RMB 7.5 billion, so as to continuously optimize the asset quality and reduce the asset liability ratio (the asset liability ratio of the target company exceeds 82%), and the investment income generated from the transaction is about RMB 3.021 billion; The impact on the net profit attributable to the parent company in 2022 is about 2.175 billion yuan.
The company’s roe increased significantly this year, from 5.67% to 8.35%; Non deduction roe increased from 5.27% to 5.96%: both indicators are the highest since 2015 and have continued to improve since 2017.
Investment suggestion: the company’s new strategic transformation has achieved initial results. The “ecological +” strategy of deeply cultivating diversified business forms in the city is expected to continue to provide support for the company’s performance development, and the improvement of asset management and operation will provide guarantee for the company’s long-term and healthy development. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 2.26 billion yuan, 2.8 billion yuan and 3.09 billion yuan respectively, corresponding to EPS of 0.31 yuan, 0.34 yuan and 0.43 yuan, maintaining the target price of 4.48 yuan and continuing to give a “buy” rating.
Risk tip: the policy promotion is not as expected or has changed, and the competition in the water solid waste market has intensified.
