\u3000\u3 China Vanke Co.Ltd(000002) 034 Wangneng Environment Co.Ltd(002034) )
Event description:
In 2021, the company achieved an operating revenue of 2.968 billion yuan, a year-on-year increase of 74.75%; The net profit attributable to the parent company was 648 million yuan, a year-on-year increase of 24.1%. In the first quarter of 2022, the company achieved an operating revenue of 660 million yuan, a year-on-year increase of 21.12%; The net profit attributable to the parent company was 169 million yuan, a year-on-year increase of 15.12%.
Event comments:
Revenue recognized during the construction period of BOT project & the increase of operation scale drives the high increase of revenue. The revenue growth mainly comes from: ① according to Article 14 of the interpretation of accounting standards for business enterprises, the revenue recognized during the construction period of BOT project is 579 million yuan. The company has newly put into operation 3200 tons / day of domestic waste incineration project and 600 tons / day of trial operation project, driving the significant growth of revenue during the construction period; ② With the rapid growth of operation scale, the operation income of domestic waste increased by 30.45% year-on-year; ③ The kitchen project expanded rapidly, and the operating income of kitchen waste increased by 189.71% year-on-year. The growth rate of net profit is lower than that of revenue, mainly due to the unrecognized profit of the company’s revenue during the construction period.
The operating income of waste incineration has increased rapidly, and the operating capacity has exceeded 22000 tons / day. In 2021, the company will add a total of 3200 tons / day of production capacity. By the end of 2021, the company has put into operation 19 power plants and 32 phase projects, with a total disposal scale of 22.27 million tons / day; One trial operation project with a disposal scale of 600 tons / day; 3 projects under construction, with a disposal scale of 2050 tons; One project is to be built, with a disposal scale of 400 tons / day. With the improvement of operation scale, in 2021, the company realized the operation income of waste incineration project of RMB 2.013 billion, an increase of 30.45% year-on-year.
Kitchen and sludge disposal business expanded rapidly. In 2021, the company added 890 tons / day of kitchen processing capacity, and has completed and put into operation phase 11 kitchen project, with a total of 1720 tons / day. The company handled more than 540000 tons of food waste in the whole year, with a year-on-year increase of 170%; Nearly 12000 tons of swill oil were extracted, with a year-on-year increase of 163%. In 2021, the company achieved a kitchen waste disposal revenue of 256 million yuan, with a year-on-year increase of 189.71%. By the end of 2021, the company still has trial operation and kitchen waste disposal scale under construction, with a capacity of 1000 tons / day. In terms of sludge disposal, the company has put seven sludge harmless disposal projects into operation in 2021, with a disposal scale of 1478 tons / day. In 2021, the company’s sludge disposal revenue was 77.19 million yuan, a year-on-year increase of 50.83%.
Acquisition of Lixin new materials and implementation of battery recycling business. In January 2022, the company acquired 60% equity of Zhejiang Lixin new materials and arranged the power battery recycling business. At the end of March, Zhejiang Lixin has completed the trial operation of phase I power battery cobalt nickel lithium project and officially put into operation in April. At present, the monthly capacity load is more than 80%. After the project is completed, the corresponding nickel cobalt manganese purification capacity is 3000 gold tons / year and lithium carbonate purification capacity is 1000 tons / year.
In terms of profit forecast and investment rating, we believe that the company’s incineration and kitchen projects are expanding rapidly and there are sufficient reserve projects. With the implementation of projects in hand, the operating income is expected to maintain rapid growth; Lixin new material battery recycling business is put into operation, which is expected to open up new growth space. It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 849, 1111 and 1473 million respectively, corresponding to 9 / 7 / 5 times of PE. It will be covered for the first time and rated as “overweight”.
Risk warning: commodity price fluctuation risk; The improvement of capacity utilization rate of battery recycling business is less than expected; New orders are less than expected; The production capacity improvement progress of the project in operation is less than expected; Risk of decline in operating gross profit margin.
