Sanfeng Environment(601827) HTSC·2025-04-01 06:15Investment Rating - The report maintains a "Buy" rating for the company with a target price of 11.10 RMB [6]. Core Insights - The company achieved a revenue of 5.991 billion RMB in 2024, a year-on-year decrease of 0.59%, and a net profit attributable to shareholders of 1.168 billion RMB, an increase of 0.20% year-on-year, which was 7% lower than expectations due to reduced engineering construction revenue and increased credit impairment [1][2]. - The company expects rapid growth in heating capacity in 2025, with significant advantages in core waste incineration equipment, and anticipates over 800 million RMB in new overseas equipment contracts in 2024, indicating that international expansion will drive performance growth [1][2]. Summary by Sections Financial Performance - In Q4 2024, the company reported revenue of 1.473 billion RMB, a year-on-year decrease of 0.98% and a quarter-on-quarter increase of 6.30%, with a net profit of 158 million RMB, down 12.73% year-on-year and 54.01% quarter-on-quarter [1]. - The operating cash flow for 2024 was 2.054 billion RMB, a decrease of 13.42% year-on-year, while capital expenditure was 563 million RMB, down 68.72% year-on-year, resulting in a strong free cash flow of 1.491 billion RMB, an increase of 161% [3]. Growth Projections - The company forecasts revenues of 6.227 billion RMB in 2025, representing a growth of 3.95% year-on-year, and net profit of 1.219 billion RMB, a growth of 4.35% year-on-year [5]. - The expected EPS for 2025 is 0.73 RMB, with projected PE ratios of 15.2 times for 2025 based on strong overseas orders and robust free cash flow [4][5]. Market Position - The company signed nine contracts for incinerators and complete equipment supply in 2024, with a total design capacity of approximately 6,370 tons per day, primarily targeting international markets along the Belt and Road Initiative, with contracts exceeding 800 million RMB [2].