Jinwu Financial News | According to Societe Generale Securities Research, the 23-year results of Conch Environmental Protection (00587) showed revenue +8.8% year-on-year to 1.88 billion yuan, and net profit to mother 19.6% year-on-year to 260 million yuan. Looking at H2 alone, revenue was +5.8% year-on-year to 910 million yuan, and net profit to mother was -19.4% year-on-year to 64.11 million yuan. For the first time since listing, the proposed dividend is HK$0.03 per share, with a dividend payout ratio of 21% for the whole year. Cash flow was strong, and net operating cash flow increased 16.2% year over year to $630 million.
According to the bank, competitive pressure in the hazardous waste market continues to increase, the unit price of industrial hazardous waste disposal continues to decline, and the accrued impairment of accounts receivable slightly exceeded expectations. Net profit due to mother for the whole year fell 19.6% year on year to 260 million yuan, lower than expected. Annual industrial solid waste disposal/general industrial hazardous waste disposal/sludge disposal/fly ash disposal/comprehensive resource utilization business revenue accounted for 30%/56%/4%/5%/5%/5%, respectively, and gross profit accounted for 32%/59%/3%/3%/3%, respectively.
The bank said that industrial production is recovering slowly, leading traditional harmless disposal companies have lost money for 2 consecutive years, and Conch Environmental Protection's steady cash flow advantage is evident, and high profit margins can still be guaranteed during the economic pressure phase. The company is promoting the implementation of a prepayment mechanism to continue to improve cash flow quality; at the same time, it is also actively exploring new growth momentum, including medical waste disposal, alternative fuel business, fly ash, sludge disposal, and environmental protection equipment manufacturing.
The bank expects the company's revenue for 24/25/26 to be 21.33/25.45/3.173 billion yuan respectively, +13.4%/+19.3%/+24.7% year-on-year, and net profit to mother of 275/3.43/475 million yuan, respectively, +4.0%/+24.7%/+38.8% year-on-year. The profit increase mainly comes from the continuous construction and operation of hazardous waste projects to maintain the “buy” rating.