\u3000\u3 Shengda Resources Co.Ltd(000603) 568 Zhejiang Weiming Environment Protection Co.Ltd(603568) )
Key investment points
Event: in 2022q1, the company achieved a revenue of 1.037 billion yuan, an increase of 37.73% at the same time; The net profit attributable to the parent company was 459 million yuan, an increase of 25.08% at the same time; Deduct the net profit not attributable to the parent company of 445 million yuan, an increase of 30.78% at the same time; The weighted average roe decreased by 0.70pct to 5.77%.
Incorporated into Guoyuan & Shengyun 2022q1, the return to parent increased by 25%, and the warehousing volume of domestic waste increased by 48% to 2146800 tons. The growth of 2022q1 company’s revenue and net profit attributable to the parent company is mainly due to the operation of new projects, the acquisition of Guoyuan environmental protection, the consolidation of Shengyun environmental protection, and the recognition of project revenue and costs during the trial operation period according to the new accounting standards. In 2022q1, the gross profit margin was 52.94%, down 5.90pct at the same time, and the net profit attributable to the parent company was 44.30%, down 4.48pct at the same time. 1) Waste disposal scale: in 2022q1, the storage volume of waste is 2233000 tons, an increase of 46.33%, of which the storage volume of domestic waste is 2146800 tons, an increase of 48.07%. 2) Power generation efficiency: in 2022q1, the power generation capacity is 774 million kwh, with a same increase of 37.87%, and the on grid power is 634 million kwh, with a same increase of 37.25%. The power generation capacity per ton is 361 kwh / T, and the on grid power per ton is 295 kWh / T.
Solid waste expansion has achieved fruitful results, with an additional 1000 tons / day of waste incineration in 2022q1. 2022q1, 1) waste incineration: add Pingquan 400 t / D waste incineration project and Yongan 600 t / D waste incineration EPCO project. 2) Kitchen: sign Yongqiang 600t / D kitchen waste disposal project. 3) Equipment, EPC and services: newly added Gucheng County waste treatment equipment and installation project, with a bid winning amount of 121 million yuan. 4) Waste transfer: won the bid for Ouhai District 49 million yuan project. The company has strong competitiveness in the incremental market.
In 2022q1, the net operating cash flow increased by 162.58% year-on-year, and the collection continued to improve. 2022q1, 1) net operating cash flow was 453 million yuan, an increase of 162.58%, mainly due to the increase in cash received from the sale of goods and the provision of labor services; 2) Net investment cash flow was -1.445 billion yuan, a decrease of 232.87%, mainly due to the increase in investment expenditure under construction and the acquisition of Shengyun environmental protection; 3) The net cash flow from financing was 1.359 billion yuan, an increase of 890.50%, mainly due to the increase in loans.
The main business of solid waste is growing & leading in profits, and working with Castle Peak to make a deep layout from high nickel matte to cathode materials. The company’s main business of solid waste is high growth & high profit. At the end of 2021, 28400 tons / day of waste incineration has been put into operation, with 79% growth space. In 2021, the operating gross profit margin was 67%, leading the industry. Benefit from 1) cost side: the equipment is self-produced and has strong cost control ability. The ton investment of the project put into operation by the end of 2020 is 22% lower than the average of the same industry, and the depreciation and amortization during the operation period is low; 2) Revenue side: in 2020 / 2021, the average processing fee of newly won projects was 91 / 95 yuan / ton, 19% / 6% higher than the industry average. From 2016 to 2021, the on grid power consumption per ton increased by 3% to 316 kwh / ton. The project of introducing 40000 tons of nickel per year into the new energy park of Qingshan, Indonesia; 2) It is planned to jointly develop high nickel matte refining, high nickel ternary precursor, high nickel cathode material production and related supporting projects with shengtun and Qingshan, and build an annual output of 200000 tons of high nickel ternary cathode material.
Profit forecast and investment rating: the growth momentum of the main solid waste industry is sufficient, and the layout of new lithium battery materials creates the second growth curve. According to the latest construction progress of the company’s projects, we maintain the parent net profit forecast of RMB 1.938/24.36/3.272 billion from 2022 to 2024, and the current market value corresponds to 16 / 13 / 10 times of PE from 2022 to 2024, maintaining the “buy” rating.
Risk tip: the progress of the project is not as expected, the partner Qingshan’s position closing risk, policy risk and intensified industry competition.
