\u3000\u3 Shengda Resources Co.Ltd(000603) 568 Zhejiang Weiming Environment Protection Co.Ltd(603568) )
Key investment points
Event: the company disclosed the first quarterly report of 2022. In the first quarter of 2022, the company realized an operating revenue of 1.037 billion yuan, a year-on-year increase of 37.73%; The net profit attributable to the parent company was 459 million yuan, a year-on-year increase of 25.08%.
Comments:
The revenue and net profit attributable to the parent company increased rapidly. In the first quarter of 2022, the company achieved an operating revenue of 1.037 billion yuan, a year-on-year increase of 37.73%, mainly due to the operation of new projects, the implementation of accounting standards for Business Enterprises No. 15 and the acquisition of Guoyuan environmental protection and Shengyun environmental protection; The net profit attributable to the parent company was 459 million yuan, a year-on-year increase of 25.08%.
The profitability of the company decreased. In the first quarter of 2022, the gross profit margin of the company was 52.94%, a year-on-year decrease of 6.63 percentage points; The net interest rate was 44.54%, down 4.49 percentage points year-on-year. In the first quarter of 2022, the company implemented the accounting standards for Business Enterprises No. 15 and included the revenue and cost related to trial operation sales into the current profit and loss respectively, resulting in a significant decline in gross profit margin and net profit margin.
The company invests in high nickel matte projects and expands its business scope. In January 2022, the company signed the joint venture agreement on smelting 40000 tons of high matte nickel containing metal (Indonesia) by merit and Weiming laterite nickel mine, invested in the high matte nickel project, with an annual output of 40000 tons of high matte nickel containing metal, located in weda Bay Industrial Park (IWIP) on hamahela Island, Indonesia, with a total investment of no more than 390 million US dollars. High nickel matte smelting technology has something in common with waste incineration technology, and the company is expected to make full use of its own equipment and process reserves.
M & A and integration are expected to help the company gain market share. In January 2022, the company completed the equity change registration of Guoyuan environmental protection and Shengyun environmental protection. After the equity change, the company holds 66% shares of Guoyuan environmental protection and 51% shares of Shengyun environmental protection, becoming the controlling shareholder. The company will promote the construction of M & a object management system and improve the operation of M & A objects, so as to obtain more market share.
The company’s project operation and construction were carried out in an orderly manner. In terms of project operation, in the first quarter, the garbage incineration power generation projects controlled by the company completed a total of 2233000 tons of garbage (including domestic, kitchen, sludge and other garbage, including 2146800 tons of domestic garbage), an increase of 46.33% year-on-year; 634 million kwh of on grid electricity was completed, with a year-on-year increase of 37.23%. In terms of project construction, in the first quarter, phase II of Yuhuan project, Dongyang project, Wuyuan project, Mengyin project, Pan’an project, Anfu project, Ningjin project and Yongfeng project were put into formal operation, and one boiler and one machine of Ningdu project were connected to the grid in January. Chengjiang project, Lulong project and Changli project have obtained the EIA approval and entered the construction stage. Yan’an project has obtained the EIA approval. Pingyang kitchen project was put into formal operation.
Investment suggestion: give recommendation rating. It is estimated that the company’s EPS from 2022 to 2023 will be 1.47 yuan and 1.81 yuan respectively, and the corresponding PE will be 17 times and 14 times respectively, which will be given a recommended rating.
Risk warning: policy promotion is not as expected; Macroeconomic development is less than expected; The construction progress of waste incineration power generation project is less than expected.
