\u3000\u30 Shenzhen Fountain Corporation(000005) 98 Chengdu Xingrong Environment Co.Ltd(000598) )
In the first quarter of 2022, the company disclosed that its operating revenue was 1.42 billion yuan, a year-on-year increase of 2021.2%; The net profit attributable to the parent company was RMB 353 million, with a year-on-year increase of 18.84%.
Comments:
Q1 company’s revenue and net profit attributable to the parent company increased rapidly. In the first quarter of 2022, the company achieved an operating revenue of 1.442 billion yuan, a year-on-year increase of 19.10%; The net profit attributable to the parent company was RMB 353 million, with a year-on-year increase of 18.84%. The company’s business expansion and the operation of new projects promoted the rapid growth of the company’s revenue and net profit attributable to the parent company.
Q1 the profitability of the company was improved. The gross profit margin of 2022q1 company was 42.75%, with a year-on-year increase of 1.20 percentage points; The net interest rate was 24.82%, an increase of 0.25 percentage points year-on-year. The increase of net profit margin is lower than that of gross profit margin, mainly because the financial expense rate increased by 1.66 percentage points to 3.97%. In 2022q1, the financial expenses of the company were 57.779 million yuan, with a year-on-year increase of 104.70%, mainly because the relevant projects under construction were put into operation, the capitalization of interest stopped, and the interest expenses increased year-on-year.
The company actively expands its business, and the scale advantage is expected to appear. The company continues to expand its business in Sichuan and expand its business outside the province. It has water environmental protection business in 8 provinces: Sichuan, Gansu, Ningxia, Shaanxi, Hainan, Guangdong, Jiangsu and Hebei. At present, the scale of water supply and drainage projects operated, under construction and proposed by the company is more than 8.5 million tons / day, the scale of reclaimed water utilization projects is more than 1 million tons / day, the scale of waste incineration power generation projects is 12300 tons / day, the scale of sludge disposal projects is more than 3000 tons / day, and the scale of landfill leachate treatment projects is 5630 tons / day. The scale of water environmental protection business ranks first in the West and in the forefront of the country, and the scale advantage is expected to appear.
Equity incentive is expected to help the company’s long-term development. On April 8, 2022, the board of directors and the board of supervisors of the company deliberated and approved the relevant proposals of the company’s 2022 restricted stock incentive plan. The company plans to grant 17642300 restricted shares to 565 directors, senior managers and key employees. On April 20, 2022, the state owned assets supervision and Administration Commission of Chengdu agreed in principle with the opinions of the company’s controlling shareholder Chengdu Environmental Investment Group Co., Ltd. on the company’s 2022 restricted stock incentive plan and put it on record. The company’s stock incentive plan has been steadily promoted. Equity incentive is expected to attract and retain excellent talents, fully mobilize the work enthusiasm of the company’s directors, senior managers and core employees, and help the company’s long-term development.
Investment advice: maintain a prudent recommendation rating. It is estimated that the company’s EPS from 2022 to 2023 will be 0.57 yuan and 0.64 yuan respectively, and the corresponding PE will be 8 times and 7 times respectively, maintaining a prudent recommended rating.
Risk warning: policy promotion is not as expected; Macroeconomic development is less than expected; The construction progress of the project is less than expected.
