Grandblue Environment (600323) 信达证券·2025-03-12 08:03Investment Rating - The report assigns a "Buy" rating to the company [2][6]. Core Views - The company is a leading player in the waste incineration industry, backed by the Nanhai District State-owned Assets Supervision and Administration Commission, with a stable profit model and a complete industrial chain [5]. - The company has shown a significant increase in free cash flow and plans to increase dividends by 66.7% in 2024, reflecting confidence in shareholder returns [5]. - The acquisition of Yuefeng Environmental is expected to enhance both the quantity and quality of operations, positioning the company as the largest waste treatment operator among A-share listed companies [5]. - The company's valuation has decreased despite profit growth, indicating potential for valuation recovery [5]. Summary by Sections 1. Company Overview - The company has expanded through acquisitions over 20 years, evolving from a water supply business to a comprehensive environmental service provider, focusing on waste incineration, energy, and water services [13][15]. - The company is strategically positioned for national expansion, with a strong backing from state-owned entities [13][15]. 2. Financial Performance - The company reported a net profit of 1.385 billion yuan in Q3 2024, a year-on-year increase of 18.82% [5]. - Revenue for 2024-2026 is projected to be 132.77 billion, 134.19 billion, and 139.71 billion yuan respectively, with net profits of 1.708 billion, 1.724 billion, and 1.813 billion yuan [5][7]. 3. Business Segments - The waste incineration business is the core, with operational capacity of approximately 31,000 tons/day and a project pipeline that will increase capacity significantly [5][39]. - The water and energy segments provide stable cash flow, with potential for price adjustments benefiting profitability [5][24]. 4. Acquisition of Yuefeng Environmental - The planned acquisition of Yuefeng Environmental for up to 11.3 billion HKD will increase operational capacity to 74,300 tons/day and enhance profitability by an estimated 418 million yuan in 2025 and 433 million yuan in 2026 [5][6]. - The acquisition is expected to create synergies that will reduce financial costs and improve operational efficiency [5][6]. 5. Valuation and Market Potential - The company's current PE ratio is 10.49x, below the industry average of approximately 12x, indicating room for valuation recovery [5][6]. - If the acquisition is successful, the target market capitalization could reach 26.7 billion yuan, representing a 54.3% upside potential [5][6].