Sanfeng Environment(SH:601827) Xin Lang Cai Jing·2025-03-31 00:26Core Viewpoint - The company reported a provision for bad debts of 92.8 million in 2024, impacting profits, while maintaining strong operational performance in waste incineration and actively expanding international business with sufficient overseas orders. The dividend is gradually increasing [1]. Financial Performance - In 2024, the company achieved revenue of 5.991 billion, a year-on-year decline of 0.6%, and a net profit attributable to shareholders of 1.168 billion, a year-on-year increase of 0.2%. The net profit excluding non-recurring items was 1.155 billion, a year-on-year increase of 1.5%. After excluding one-time factors from 2023 and 2024, the revenue growth on a comparable basis was 0.3%, and the net profit growth was 7.1% [3]. - In Q4 2024, the company recorded revenue of 1.473 billion, a quarter-on-quarter increase of 6.3%, but a net profit decline of 54.0% quarter-on-quarter and 12.7% year-on-year [3]. Operational Highlights - The waste incineration business remains robust, with the company maintaining top industry performance. By the end of 2024, the company will have launched a 42,500-ton holding project, increasing waste processing volume by 7% to 15.08 million tons. The sales volume of steam increased by 18% to 940,000 tons, with 630,000 tons/year of new steam sales contracts signed in 2024 [4]. - The company is actively introducing industrial big data and machine learning technologies to enhance operational efficiency through an AI smart incineration system, leading industry transformation [4]. International Business Development - The company has signed nine contracts for the supply of incinerators and complete equipment with a total design capacity of approximately 6,370 tons/day and a total contract value exceeding 800 million [4]. Capital Expenditure and Dividends - In 2024, the company's net cash flow from operating activities was 2.054 billion, a year-on-year decline of 13.4%, primarily due to a decrease in the amount of national subsidies recovered and reduced cash receipts from construction business [4]. - Capital expenditure in 2024 was 563 million, significantly reduced from 1.8 billion in 2023. The cash dividend rate for 2024 was 35.07%, an increase from 33.79% in 2023 [4]. Investment Outlook - The rating is maintained at "Buy." The net profit forecasts for 2025-2027 have been adjusted to 1.22 billion (previously 1.372 billion), 1.274 billion (previously 1.498 billion), and 1.32 billion, respectively, with corresponding EPS of 0.73, 0.76, and 0.79. Given the stable operation of the solid waste business and the decline in capital expenditure, free cash flow is expected to improve, leading to a gradual increase in dividends. The target price for 2025 is set at 10.95, based on a 15x PE ratio [2].