\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 461 Jiangxi Hongcheng Environment Co.Ltd(600461) )
Key investment points
Event: in 2021, the company achieved a revenue of 8.174 billion yuan, an increase of 23.83% at the same time; The net profit attributable to the parent company was 820 million yuan, an increase of 23.52% at the same time; Deduct the net profit not attributable to the parent company of 789 million yuan, an increase of 28.25% at the same time; Weighted average roe increased from + 1.14pct to 14.59% year on year; Distribute cash dividends of 5 yuan (including tax) to all shareholders for every 10 shares. In the first quarter of 2022, the company achieved a revenue of 1.809 billion yuan, a decrease of 12.74% over the same period; The net profit attributable to the parent company was 242 million yuan, an increase of 11.73% at the same time; Deduct 240 million yuan of net profit not attributable to the parent company, an increase of 18.18% at the same time; Weighted average roe was + 0.12pct to 4.03% year-on-year.
Outstanding performance, improved structure and profitability. In 2021, the company achieved a revenue of 8.174820 billion yuan, a year-on-year increase of + 23.83% / + 23.52%, and a year-on-year decrease of + 28.25%, slightly exceeding our expectations. In 2022, Q1 company achieved a revenue of 1.809242 billion yuan, a year-on-year increase of - 12.74% / + 11.73%, and deduction of non parent company increased by + 18.18%, which exceeded our expectations. In the first quarter of 2022, the gross profit margin / net profit margin of the company was 25.52% / 14.21% respectively, with a year-on-year increase of 4.10pct/2.49pct, and the gross profit margin / net profit margin increased by 2.49pct/1.31pct compared with 2021. The project is gradually put into operation, the proportion of operation is increased, and the trend of profitability is obvious.
The gross profit of sewage business increased greatly, and the operating gross profit accounted for 63%. 1) Water supply business: in 2021, the revenue / gross profit was 916 / 437 million yuan, a year-on-year increase of + 9.39% / + 8.83%; The gross profit margin was -0.24pct to 47.67% year on year; The company supplied 379 million cubic meters of water, a year-on-year increase of + 8.54%, and the average water price was 2.42 yuan / ton, a year-on-year increase of + 0.79%. 2) Sewage business: in 2021, the revenue / gross profit was 1.640650 billion yuan, with a year-on-year increase of + 48.89% / + 55.02%, and the gross profit margin was + 1.57pct to 39.63%; The company's sewage treatment capacity is 969 million m3, with a year-on-year increase of + 21.75%, and the average water price is 1.69 yuan / ton, with a year-on-year increase of + 22.29%. We expect that the core growth driving force in 2022 will be the simultaneous rise in volume and price brought by the sewage standard raising. 3) Gas business: in 2021, the revenue / gross profit was 2.168541 billion yuan, a year-on-year increase of + 14.46% / + 13.65%, and the gross profit margin was - 0.17pct to 24.97%. 4) Water supply and drainage pipeline project: in 2021, the revenue / gross profit will be 3.334299 billion yuan, with a year-on-year increase of + 25.60% / + 7.72%, and the gross profit margin will be -1.49pct to 8.98%. In 2021, the gross profit of operating business (sewage, water supply and gas sales) accounted for 63%, with an increase of 3PCT. We expect that the proportion of operating profit is expected to continue to rise as the project is gradually put into operation & solid waste consolidation.
Net operating cash flow increased steadily, and free cash flow became positive for the first time. In 2021, the net operating cash flow was 1.381 billion yuan, an increase of 0.66% at the same time. In 2021, the free cash flow of the company was 124 million yuan, which became positive for the first time since 2018. In the first quarter of 2022, the net operating cash flow was 278 million yuan, with a year-on-year increase of 111.04%, maintaining a good trend.
Profit forecast and investment rating: the company's solid waste assets have been successfully injected and consolidated, forming a comprehensive public utility platform covering sewage, water supply, gas and solid waste, creating a new growth pole. The investment space of Nanchang pipe network exceeds 20 billion, and the company is expected to benefit from the active participation of controlling shareholders. We maintain the net profit attributable to the parent company of RMB 1.10/1.28 billion from 2022 to 2023, and predict the net profit attributable to the parent company of RMB 1.44 billion in 2024, corresponding to EPS of RMB 1.05/1.23/1.39 from 2022 to 2024 respectively. The current market value corresponds to 7.4 / 6.3 / 5.6 times of PE in 20222024. The company promises to pay dividends of no less than 50% in 20222023, and the current dividend yield (TTM) is 6.4%, with a margin of safety. Maintain the "buy" rating.
Risk warning: policy risk, market development risk and project progress not meeting expectations
