HONGCHENG WATERWORKS(SH:600461) Xinda Securities·2025-04-15 08:23Investment 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 continuous improvement in free cash flow [1] - In 2024, the company achieved operating 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% year-on-year [1][2] - The report highlights significant cost reduction and efficiency improvement, leading to stable profitability [4][5] Financial Performance Summary - In 2024, the company reported a net cash flow from operating activities of 1.974 billion yuan, an increase of 14.19% year-on-year [4] - The company plans to distribute a cash dividend of 596 million yuan, with a dividend payout ratio of 50.07%, resulting in a dividend yield of 4.66% based on the stock price as of April 14 [4] - Revenue from the water supply segment reached 999 million yuan, with a gross margin of 51%, reflecting a 6.77 percentage point increase year-on-year due to cost reductions [4] - The wastewater segment generated 2.5 billion yuan in revenue, with a gross margin of 42.3%, up 0.77 percentage points year-on-year [4] - The company forecasts revenues of 8.552 billion yuan, 8.858 billion yuan, and 9.274 billion yuan for 2025, 2026, and 2027 respectively, with net profits of 1.232 billion yuan, 1.287 billion yuan, and 1.311 billion yuan for the same years [5][6] Business Segment Analysis - The water supply business saw a 5% increase in sales volume, totaling 416 million tons [4] - The gas sales segment reported a slight decline in revenue to 1.988 billion yuan, with a gross margin of 9.72% [4] - The solid waste business achieved revenue of 778 million yuan, reflecting a year-on-year growth of 1.44% [4] - The wastewater environmental engineering segment experienced significant growth, with revenue increasing by 39.6% to 1.039 billion yuan [4] Future Outlook - The company is focusing on promoting direct drinking water and aims to expand its user base in 2025 [5] - The "factory-network integration" operational model is expected to inject new growth momentum into the company [5]