\u3000\u3000 Zhejiang Weiming Environment Protection Co.Ltd(603568) (603568)
The waste incineration industry entered the integration period: in 2021, the number of new projects in the waste incineration industry decreased significantly compared with the period of the 13th five year plan. The scale of new projects added by the company through public bidding throughout the year was 3700 tons / day (800 tons / day for Chongyi project, 1200 tons / day for Changli project, 800 tons / day for Xiangzhou project and 900 tons / day for Longnan project); Relying on the lowest project investment cost in the whole industry and the flexible management mechanism of private enterprises, the company has gained a lot in the field of M & A integration. It has successively participated in the restructuring investment of Shengyun environmental protection department (including five waste incineration projects totaling 4000 tons / day) and capital increase of national environmental protection (including three waste incineration projects totaling 4100 tons / day). The company has gradually accumulated experience in project integration in the stock market, It will help to continue to expand the operation scale and enhance the market share.
Enter the field of new energy and open the growth ceiling: the company announced that it plans to establish a joint venture with merit, a wholly-owned subsidiary of indigo, to jointly develop and build a 40000 ton high matte nickel smelting project in Indonesia, with the company holding 70%. The downstream of high nickel matte is mainly the cathode material of ternary power battery. We believe that ternary power battery will maintain a high growth rate in the long term. At the same time, the gradual transfer of ternary material model from ncm523 to high nickel models such as ncm811 and NCA will greatly boost the demand for nickel. The company is expected to take the 40000 ton high nickel matte project as the starting point and officially enter the new energy field. Assuming that the nickel price is 15000 US dollars / ton and the net profit per ton may reach 31000 yuan, it will bring considerable profit increment to the company and form a double main business development mode with the traditional solid waste treatment.
Release the plan for the new phase of convertible bonds, and staff incentives are in place: the company has issued the plan for the new phase of convertible bonds, the total amount of funds raised does not exceed 1.477 billion yuan, and the project financing is promoted in an orderly manner; In January 2022, the company has completed the purchase of the third phase of employee stock ownership plan, with a total scale of 380 million yuan. The company’s development is deeply bound with the interests of employees.
Considering the commissioning of the high nickel matte project and the newly signed waste incineration project in 2021, we raised the company’s profit forecast for 2023. It is predicted that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.634/20.7/3.096 billion respectively (the previous value is RMB 1.682/20.74/2.354 billion respectively). According to the DCF valuation, we raised the target price to RMB 45.05 to maintain the buy rating.
Risk tips
The integration progress of waste incineration project does not meet expectations;
The high nickel matte project involves overseas investment, the project approval may be uncertain, the overseas epidemic is serious, and the construction progress may be lower than expected;
There is a risk of falling nickel price, which may have a negative impact on the income and profitability of the company’s high matte nickel project;
