Road Environment(688156) 开源证券·2024-10-28 15:13Investment Rating - The investment rating for the company is adjusted to "Outperform" [1] Core Views - The traditional solid waste business is under pressure, while the biological fermentation business remains stable. The company reported a revenue of 220 million yuan for the first three quarters of 2024, a year-on-year decline of 4.1%, with a net loss attributable to shareholders of 3.44 million yuan. In Q3 2024, revenue was 77 million yuan, down 28.0% year-on-year, with a net loss of 4.95 million yuan. The forecast for revenue from 2024 to 2026 is adjusted to 330 million yuan (-1.5%), 670 million yuan (-0.6%), and 1.02 billion yuan (-0.8%), with year-on-year changes of -5.1%, +99.9%, and +53.6% respectively. The net profit attributable to shareholders is expected to be 3 million yuan (-0.32 million), 7.6 million yuan (-0.35 million), and 11.3 million yuan (-0.5 million), with year-on-year growth rates of 9.8%, 155.3%, and 49.6% respectively. The current stock price corresponds to P/E ratios of 46.2, 18.1, and 12.1 for the respective years [1][2][3] Revenue Analysis - In Q3 2024, the company's revenue decreased by 28.0%. The white wine residue fermentation feed business generated revenue of 63.47 million yuan, down 2.4% year-on-year, with sales of 30,300 tons, a decline of 3.3%. The average product price increased slightly to 2,094.8 yuan/ton. The traditional inorganic solid waste business generated revenue of 11.59 million yuan, down 66.4%, significantly dragging down overall revenue due to insufficient project commencement rates in lake sediment treatment and a lack of new projects. Additionally, the engineering sludge business was affected by the downturn in the construction industry, leading to a decrease in sludge disposal volume [2] Profitability and Cost Analysis - The gross margin for Q3 was 23.7%, a year-on-year decline of 10.6 percentage points, primarily due to the significant drop in revenue from traditional solid waste operations and high fixed cost amortization. The sales expense ratio increased by 8.6 percentage points due to the establishment of a marketing team for the biological fermentation feed business. The management expense ratio rose by 5.6 percentage points due to the increase in new factory office buildings, storage areas, and management personnel. The financial expense ratio increased by 1.6 percentage points due to the rise in working capital loans and the capitalization of previous loan interest expenses. The company reported a loss of 4.95 million yuan in Q3, with asset impairment losses also impacting net profit [3][4]