\u3000\u3 China Vanke Co.Ltd(000002) 034 Wangneng Environment Co.Ltd(002034) )
The main incineration industry grew steadily to meet the peak of production, and the rapid growth of kitchen sludge brought new momentum. According to the company’s announcement, in 2021, the company’s waste incineration projects were put into operation with a total of 3200 tons / day, and the kitchen and sludge projects were put into operation with a total of 1318 tons / day. The operation of production capacity supported the steady growth of the company’s performance. In 2019 / 2020 / 2021, the company’s revenue increased by 40%, 45.0% and 93.1% year-on-year respectively, and the net profit attributable to the parent company increased by 37.6%, 23.9% and 23.6% year-on-year respectively. The company has sufficient projects under construction and preparation. With its continuous operation, it is expected to continue to promote performance growth.
The gap of national compensation is expected to be filled, and the restart of CCER accelerates the thickening of the profit space of waste power generation. In 2022, the budget expenditure of government funds at the same level increased significantly. The Department of Finance clearly proposed to vigorously develop renewable energy and actively promote the solution of the funding gap of renewable energy power generation subsidies. It is expected that the national subsidy is expected to accelerate the distribution and further optimize the company’s cash flow. 2022 is expected to be the first year of CCER. According to our calculation, the restart of CCER is expected to increase the net profit of the company’s waste power generation by 2.66% – 4% and bring performance flexibility.
Layout lithium battery recycling in the era of resource recycling and create the second growth curve. The company announced in January 2022 that it planned to acquire 60% of the shares of Zhejiang Lixin New Material Technology Co., Ltd. and lay out the lithium battery recycling industry. With the rapid development of new energy vehicles, the power lithium battery recycling market has broad prospects. We estimate that the power lithium battery recycling market is expected to exceed 100 billion yuan by 2030. The design capacity of Lixin new material battery production line is 3150 tons of cobalt sulfate, 1350 tons of cobalt chloride, 1305 tons of cobalt hydroxide, 2561 tons of nickel sulfate and 1458 tons of lithium carbonate. It is expected to bring more than 1.8 billion annual revenue to the company after all of them are completed. The company opens a new layout in the era of resource recycling, which is expected to create a second growth curve.
Investment suggestion and Valuation: the company’s main business grew steadily, and actively arranged lithium battery recycling business and other renewable resources projects to break the ceiling of the company’s growth. We expect that the company’s revenue from 2021 to 2023 will be 3.279 billion yuan, 3.608 billion yuan and 5.394 billion yuan respectively, with growth rates of 93.1%, 10.0% and 49.5% respectively, and the net profit attributable to the parent company will be 645 million yuan, 890 million yuan and 1.018 billion yuan respectively, with growth rates of 23.6%, 38.0% and 14.3% respectively. Give the company 12-15 times PE valuation in 2022, with a reasonable share price of 24.87-31.08 yuan. It is covered for the first time, and give a buy investment rating.
Risk warning: the project progress is not as expected; Risk of price reduction; Fluctuations in metal prices; Policy promotion is less than expected; The lithium battery recycling market was less than expected.
