Jinwu Financial News | According to the Sino-Thai International Development Report, after recent research, the bank believes that the operating performance of Yuefeng Environmental Protection (01381) continues to grow, but exchange rate and interest rate factors will still drag down profits. The bank expects the company's garbage disposal volume and electricity sales volume to increase by 14.7% and 16.1% year-on-year to 16.05 million tons and 5.26 million megawatt-hours respectively in 2023, and also expects to increase 5.4% and 6.0% year-on-year to 16.91 million tons and 5.58 million megawatt-hours, respectively, in 2024.
The bank mentioned that in the first half of 2023, the company was affected by fluctuations in the RMB exchange rate and rising interest rates on Hong Kong dollars. 1H23 profit after tax and shareholders' net profit fell 18.2% and 21.2% year-on-year to HK$640 million and HK$610 million respectively. After deducting the effects of exchange rates and interest rates, profit after tax fell only 1.6% year over year. The bank believes that these two adverse factors will still affect 2H23's profit.
After measuring the above favorable (operating) and negative (exchange rate and interest rate) factors, the bank lowered its net profit forecast for the full year 2023-25 by 14.2%, 10.6%, and 7.1%, respectively, and adjusted the target price from HK$5.10 to HK$4.50 accordingly, corresponding 8.5 times the target price-earnings ratio for 2024 and 18.7% room for growth, maintaining the “increase” rating.