HONGCHENG WATERWORKS(SH:600461) Xinda Securities·2025-04-15 07:26Investment Rating - The investment rating for Hongcheng Environment (600461.SH) is "Buy" [1] Core Views - The company's main business in water services has contributed to incremental performance, with a net profit of 1.19 billion yuan in 2024, representing a year-on-year increase of 9.89% [1] - The company has shown a strong ability to generate free cash flow, with a net cash flow from operating activities of 1.974 billion yuan, up 14.19% year-on-year [4] - The company is focusing on promoting direct drinking water and an integrated factory-network model, which is expected to inject new growth momentum [5] Financial Performance Summary - In 2024, the company achieved total revenue of 8.227 billion yuan, a year-on-year increase of 2.22%, and a net profit attributable to shareholders of 1.19 billion yuan, up 9.89% [1] - The company’s water supply business generated revenue of 991 million yuan, with a gross margin of 51%, an increase of 6.77 percentage points year-on-year [4] - The wastewater treatment segment reported revenue of 2.5 billion yuan, with a gross margin of 42.3%, reflecting a year-on-year increase of 0.77 percentage points [4] - The company’s management expenses decreased by 3% to 353 million yuan, while financial expenses dropped by 21% to 208 million yuan [4] - The company plans to distribute a cash dividend of 596 million yuan, representing a payout ratio of 50.07% [4] Future Earnings Forecast - The company is projected to achieve revenues of 8.552 billion yuan, 8.858 billion yuan, and 9.274 billion yuan for the years 2025, 2026, and 2027, respectively [5] - The net profit attributable to shareholders is expected to be 1.232 billion yuan, 1.287 billion yuan, and 1.311 billion yuan for the same years [5] - The projected P/E ratios for 2025, 2026, and 2027 are 10.25x, 9.82x, and 9.64x, respectively [5]