\u3000\u3 Shengda Resources Co.Ltd(000603) 588 Beijing Geoenviron Engineering & Technology Inc(603588) )
Event: in 2021, the company achieved a revenue of 7.827 billion yuan, an increase of 14.65% at the same time; The net profit attributable to the parent company was 726 million yuan, an increase of 32.03% at the same time; Deduct 688 million yuan of net profit not attributable to the parent company, an increase of 26.85% at the same time; The weighted average roe decreased from 0.01 PCT to 14.24%; In the first quarter of 2022, the company achieved a revenue of 1.566 billion yuan, an increase of 23.84% at the same time; The net profit attributable to the parent company was 170 million yuan, an increase of 42.85% at the same time; Deduct the net profit not attributable to the parent company of 170 million yuan, an increase of 39.42% at the same time; The weighted average roe increased by 0.56pct to 3.05%.
Excluding the impact of impairment of some subsidiaries, the company’s performance increased significantly in 2021. In 2021, the company achieved a revenue of 7.827 billion yuan, an increase of 14.65% at the same time; The net profit attributable to the parent company was 726 million yuan, an increase of 32.03% at the same time; Deduct 688 million yuan of non return to parent, an increase of 26.85%, in line with our expectations. The company made centralized impairment provision for Guizhou Hongda in 2021, including the goodwill impairment loss of 28 million yuan and some credit impairment losses of Guizhou Hongda. Excluding the impact of impairment losses caused by some subsidiaries, the company’s performance in 2021 was brilliant, with full provision for impairment and light equipment.
In the first quarter of 2022, the high growth trend remained unchanged, and the cash flow performed well. In the first quarter of 2022, the company achieved a revenue of 1.566 billion yuan, an increase of 23.84% at the same time; The net profit attributable to the parent company was 170 million yuan, an increase of 42.85% at the same time; Deduct 170 million yuan of non return to parent, an increase of 39.42%, in line with our expectations. In the first quarter of 2022, the net cash flow from operating activities of the company was 303 million yuan, with a year-on-year increase of 150.41%. The sales collection at the end of 2021 was successfully recovered, and part of the deposit paid in previous years was recovered.
The proportion of operation continued to increase, and the resource-based business increased rapidly. The company’s solid and hazardous waste recycling, solid and hazardous waste harmless and domestic waste treatment are operation businesses. In 2021, the operating revenue / gross profit accounted for 62% / 55%, with a year-on-year increase of 31pct / 11pct respectively. With the continuous high growth of resource-based business, the proportion of operation has increased, the performance has increased steadily, and the profit quality has improved. The resource-based business welcomes the high growth. In 2021, the solid and hazardous waste resource-based business achieved a revenue / gross profit of RMB 3.494477 billion, a year-on-year increase of + 155.70% / + 32.9%; The gross profit margin was -12.62pct to 13.65%, which was mainly due to the large amount of raw materials purchased by the company in the current period and the high unit value, which reduced the gross profit space to a certain extent.
Rapid expansion of resource-based production capacity and improvement of deep resource-based. 1) As of December 31, 2021, the scale of the company’s ongoing resource projects has exceeded 1 million tons / year. The projects under Construction announced include Chongqing Yaohui (100000 t / a), Guizhou project phase I (350000 T / a), Jiangxi Xinke (310000 T / a), Jinchang project (100000 t / a), jiatianhe (30000 T / a medical waste plastic + 40000 t / a medical waste glass), and the resource scale is expanding rapidly. 2) Improve the deep resource layout. Jiangxi Xinke will build a new 100000 ton electrolytic copper and other multi metal deep processing production line to lay out the deep resource layout of copper, tin, lead and other metals and rare and precious metals. Xinshengyuan and sine wave, whose products include high-quality nickel oxide, electronic grade nickel oxide and battery grade cobalt nickel sulfate, realize the entry of new energy material industry chain. At the same time, the front-end scale expansion will gradually improve the layout and be deeply resourced, and the scale and profitability are expected to rise.
Profit forecast and investment rating: we maintain the net profit attributable to the parent company of RMB 1.0/1.31 billion in 20222023 and the net profit attributable to the parent company of RMB 1.7 billion in 2024. Considering the impact of this non-public offering on the total share capital of the company, the corresponding EPS in 20222024 is RMB 0.78/1.02/1.32 respectively, and PE in 20222024 is 18.0/13.8/10.6 times (Valuation Date 2022 / 04 / 28), maintaining the “buy” rating.
Risk tip: the construction of hazardous waste production capacity is less than expected, the utilization rate of production capacity is less than expected, and the competition is intensified
