BGE(SH:603588) HTSC·2025-03-20 11:04Investment Rating - The report maintains a "Buy" rating for the company with a target price of 7.80 RMB [7][8]. Core Insights - The company reported a revenue of 14.5 billion RMB for 2024, a year-on-year increase of 37.0%, but the net profit attributable to shareholders decreased by 4.5% to 482 million RMB, which was below the forecasted range of 505 to 650 million RMB due to credit impairment and asset impairment losses totaling 155.82 million RMB [1][2]. - The environmental engineering segment faced significant challenges, with a 66.8% year-on-year decline in gross profit, primarily due to intensified competition [1][2]. - The resource recovery segment showed improvement, with a 72.2% year-on-year increase in revenue to 111.37 billion RMB, contributing to a significant improvement in operating cash flow, which reached 760 million RMB [3][4]. Summary by Sections Financial Performance - In 2024, the company's revenue was 14.5 billion RMB, with a net profit of 482 million RMB, reflecting a decrease of 4.5% year-on-year [1][6]. - The environmental engineering business revenue dropped by 34.3% to 1.633 billion RMB, with gross profit declining by 66.8% to 211 million RMB [2][6]. - The resource recovery segment's revenue increased by 72.2% to 111.37 billion RMB, with a gross margin improvement of 0.85 percentage points to 9.14% [3][6]. Future Projections - The forecast for net profit attributable to shareholders for 2025-2027 is 611 million RMB, 763 million RMB, and 962 million RMB, respectively, with corresponding EPS of 0.40, 0.50, and 0.63 RMB [4][6]. - The report anticipates a significant reduction in engineering revenue for 2025 and 2026 by 68.9% and 75.2%, respectively, leading to a downward adjustment in net profit estimates by 18.2% and 23.0% [1][4]. Valuation - The target price of 7.80 RMB is based on a 19.5x PE ratio for 2025, reflecting an increase from the previous target of 6.82 RMB based on a 14x PE [4][8]. - The report suggests that the long-term contraction of the engineering segment may not be detrimental, as it could lead to improved cash flow and reduced credit impairment risks [4][6].