\u3000\u3 Shengda Resources Co.Ltd(000603) 568 Zhejiang Weiming Environment Protection Co.Ltd(603568) )
Event: Zhejiang Weiming Environment Protection Co.Ltd(603568) released the annual report of 2021: the operating revenue in 2021 was 4.185 billion yuan, a year-on-year increase of 34.00%; The net profit attributable to the parent company was 1.535 billion yuan (excluding 1.488 billion yuan), a year-on-year increase of 22.13% (excluding 21.42%). Diluted EPS is 1.20 yuan / share and weighted roe is 24.91%.
Performance maintained growth and profitability remained outstanding. The compound growth rates of the company’s operating revenue and net profit attributable to the parent company from 2016 to 2021 were 43.28% and 36.12% respectively. As a leading enterprise operating in the whole industrial chain in the field of waste incineration, the company has outstanding profitability. The gross profit margin of the company in 2021 was 47.07%, down 6.87pct year-on-year; The net interest rate was 36.75%, a year-on-year decrease of 3.45pct. It is mainly due to the change of accounting standards. The company has recognized the construction income of PPP projects under construction since 2021. The change of income structure has led to the decline of profit margin, but the company’s profit index is still at the leading level in the industry. This is mainly due to the company’s mastery of equipment manufacturing links, strong ability to control the project cost and rich industrial experience, so as to continuously improve the operation efficiency of the project and maintain a high profit level.
Incineration capacity continued to expand and operation efficiency improved steadily. By the end of 2021, the company has domestic waste incineration power generation projects with a total design scale of about 50700 tons / day (including Shengyun environmental protection, Guoyuan environmental protection, equity participation and entrusted operation projects), of which the total design scale of operation and trial operation projects is about 28400 tons / day, and the scale of projects under construction and preparation is about 22300 tons / day. During the reporting period, each waste incineration operation project completed a total of 6.6445 million tons of domestic waste, a year-on-year increase of 27.98%, and completed 2.101 billion kwh of online power, a year-on-year increase of 32.14%. In 2021, the online power consumption of domestic waste per ton of the company was about 316.20 degrees / ton, which was further increased compared with 306.26 degrees / ton in 2020, demonstrating the continuous improvement of the company’s operation efficiency.
The horizontal and vertical expansion and integration of solid waste business has become a new growth point. With waste incineration as the center, the company has comprehensively expanded to kitchen, sludge and other fields. In 2021, 9 kitchen projects were officially operated, with a design daily treatment scale of more than 1000 tons, a total of 289600 tons of kitchen waste, a year-on-year increase of 51.23%, 8218 tons of by-product oil sales and 67500 tons of sludge, a year-on-year increase of 14.60%. Based on the existing waste incineration and kitchen treatment projects, the company’s front-end cleaning and transportation orders accumulated rapidly. In the whole year of 21, the domestic waste cleaning and transportation volume was 1226300 tons, with a year-on-year increase of 21.92%, and the kitchen waste cleaning and transportation volume was 282700 tons, with a year-on-year increase of 56.19%. It has become a new growth point of horizontal and vertical solid waste integration.
Actively promote the construction of high nickel matte projects and carry out the layout of new material business. In January 2022, the company announced that it would cooperate with merit, a wholly-owned subsidiary of indigo company, to invest in the development and construction of a laterite nickel ore smelting project with an annual output of 40000 tons of high matte nickel containing metals in Indonesia. The downstream of high nickel matte is mainly the cathode material of ternary power battery. The growth of ternary power battery in the future will continue to drive the market demand for nickel. The company is expected to take the project as the starting point to enter the field of new energy, break through the existing business pattern and open a new situation of development.
Investment suggestion: it is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be 1.94/27.0/3.45 billion yuan respectively, the corresponding EPS will be 1.49/2.07/2.65 yuan / share respectively, and the corresponding PE will be 16.1x/11.6x/9.1x respectively. The “recommended” rating will be given for the first coverage.
Risk warning: the risk that the commissioning progress of waste incineration power generation project is less than expected; Risk of construction progress of high matte nickel project; Risks of policy changes; The risk of intensified industry competition.
