瀚蓝环境20240617

Key Takeaways Industry Overview 1. Solid Waste Sector Performance: The solid waste sector, particularly garbage incineration, has seen strong stock performance since early 2024. Companies like光大环境, 绿色动力环保, 黑暗环境, and 三方环境 have seen gains of 48%, 28%, 16%, and 16% respectively. [1] 2. Valuation and Future Outlook: Despite the recent rally, the sector's P/E ratios remain relatively low, with companies like 光大环境 and 绿色动力环保 trading at around 5x, and 汉南环境和 三方环境 at around 10x. The average在建 and 筹建 projects as a percentage of total installed capacity has dropped to below 15%, indicating a significant reduction in future capital expenditures and a potential for strong free cash flow and dividend growth. [1] 3. Sector Outlook: The solid waste sector is expected to follow a similar growth trajectory as the water sector, with companies benefiting from improved free cash flow and dividend increases, potentially leading to a revaluation of valuations towards the levels seen in water sector leaders like 重庆水务. [1] Hanlan Environment 1. Company Background: Hanlan Environment, previously known as 南海发展, is a public utility environmental service provider under the Nansha state-owned assets. It primarily focuses on garbage incineration and gas-water synergy development. [2] 2. Business Expansion: Hanlan has expanded its business through acquisitions and integrations, including the acquisition of 创冠环保, projects in Harbin, Daqing, and Mudanjiang, and entry into the hazardous waste and sanitation sectors. [3] 3. Financial Performance: In 2023, Hanlan achieved a net profit of 1.43 billion yuan, a 25.2% increase year-on-year, with revenue growing 8% excluding engineering construction income. [3] 4. Business Segments: - Solid Waste: Revenue decreased by 6.5% in 2023, but net profit increased by 10% to nearly 1 billion yuan. The operating profit margin reached 45%. [5] - Energy: Revenue was 4.06 billion yuan in 2023, accounting for about 33% of total revenue, with a net profit of 157 million yuan, a significant improvement from a loss in the previous year. [12] - Water: Revenue from water supply and wastewater treatment was stable, with some growth in wastewater treatment revenue due to new projects and expansion. [13] 5. Cash Flow and Dividends: Hanlan achieved a significant improvement in cash flow in 2023, with an operating cash flow of 2.48 billion yuan and a free cash flow surplus. The company has increased its dividend payout significantly and has plans for further increases in the future. [16-19] Conclusion Hanlan Environment is expected to benefit from the strong performance of the solid waste sector, with its diversified business segments and strong financial performance. The company's focus on improving cash flow and dividends makes it an attractive investment opportunity.