CEVIA(000885) 申万宏源·2024-06-25 03:01Investment Rating - The report maintains a "Buy" rating for the company, with a target market capitalization of 10.2 billion yuan, representing a 40% upside potential [45][62] Core Views - The company's main businesses are environmental protection and highway operations, with the actual controller being the Henan Provincial Department of Finance [3][80] - The company's performance has stabilized after rapid growth, with 2023 revenue reaching 6.522 billion yuan and net profit of 1.075 billion yuan [4] - The company's gross margin has remained around 40%, with a net margin of approximately 18% and period expenses of about 16% [6] - The company's cash flow is expected to improve as capital expenditures and bank borrowings decrease following the full operation of waste incineration projects in 2023 [7] Business Segments Waste Incineration - The company has a stable waste incineration capacity of 28,550 tons/day, with a utilization rate of 99% in 2023 [14] - The company's waste incineration, hazardous waste, and medical waste businesses generated revenues of 2.327 billion yuan, 117 million yuan, and 221 million yuan respectively in 2023 [127] - The company has 29.95 million tons/year of hazardous waste capacity and 16,000 tons/year of medical waste capacity [15] Water Services - The company has 310,000 tons/day of water supply capacity and 370,000 tons/day of wastewater treatment capacity [17] - In 2023, the company's water supply volume increased by 13.92% to 5.31191 million tons, with revenue of 145 million yuan, up 21.8% year-on-year [18] Highways - The highway business contributes approximately 500 million yuan in net profit and 1.2 billion yuan in cash flow annually [19] - The Xupingnan Expressway accounts for about 84% of the highway business revenue, contributing 1.489 billion yuan in revenue and 489 million yuan in net profit in 2023 [20] Engineering - The engineering business accounted for about 15% of the company's gross profit in 2023, with revenue of 1.633 billion yuan and net profit of 144 million yuan [22] - The company is actively expanding into new engineering areas, including new energy and equipment system integration, leveraging synergies with its major shareholder [138] Financial Performance - The company's operating cash flow was 1.502 billion yuan in 2023, with a dividend payout ratio of 15%, which has room for further improvement [7] - The company's debt structure is expected to be optimized, with plans to issue up to 3 billion yuan in bonds and medium-term notes in 2024 [81] Valuation and Forecast - The company's 2024-2026 net profit is forecasted to be 1.138 billion yuan, 1.187 billion yuan, and 1.238 billion yuan, respectively, with a PE ratio of 6.4x, 6.2x, and 5.9x [45][62] - The company's target market capitalization is 10.2 billion yuan, based on a 9x PE ratio for 2024, representing a 40% upside potential [45][62] Industry Comparison - The company's valuation is lower than the industry average, with a 2024E PE of 6.4x compared to the industry average of 9.6x [142] - Key comparable companies include Green Power, Wangneng Environment, and Hanlan Environment, with average 2024E PE ratios of 9.6x [142]