BGE(SH:603588) GF SECURITIES·2024-05-08 03:02Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 9.64 CNY per share based on a 15x PE ratio for 2024 [22][51][62]. Core Views - The company reported a revenue of 10.58 billion CNY in 2023, a year-on-year increase of 20.6%, while the net profit attributable to shareholders was 505 million CNY, down 27.1% year-on-year due to low capacity utilization and declines in metal prices [5][18]. - The hazardous waste resource recovery revenue grew significantly by 59.5% in 2023, accounting for 61.1% of total revenue, although the gross margin decreased to 8.3% due to ongoing capacity ramp-up and market competition [5][33]. - The company has a strong governance structure and has launched an employee stock incentive plan, aiming to enhance management efficiency and align employee interests with company performance [5][49][61]. Summary by Sections Revenue Growth and Profitability - The company experienced steady revenue growth, with 2023 revenue at 10.58 billion CNY, up 20.6% year-on-year, while net profit fell to 505 million CNY, a decrease of 27.1% due to low capacity utilization and price declines in metals like palladium [5][18][28]. - The gross margin for 2023 was 18.2%, down 5.3 percentage points year-on-year, and the net profit margin was 4.8%, down 3.1 percentage points [5][29]. Hazardous Waste Resource Recovery - The hazardous waste resource recovery segment saw revenue increase to 6.468 billion CNY, representing a 59.5% year-on-year growth, but the gross margin fell to 8.3% due to ongoing capacity ramp-up and competitive pressures [5][33]. - The company has fully launched its XinKe project, which is expected to significantly enhance production capacity in the coming years [5][44]. Governance and Management Efficiency - The company has implemented a stock incentive plan for 752 employees, granting a total of 26.93 million shares, which is 1.75% of the total share capital, with performance targets set for net profit over the next few years [5][49]. - The management team has shown strong integration and trust, which is expected to support project execution and operational efficiency [5][61].