A-share subscription | Yongxing Shares (601033.SH) opens for subscription, focusing on garbage incineration power generation + biomass treatment business.

On January 9th, Yongxing Stock (601033.SH) began its initial public offering with an issue price of 16.20 yuan per share and a maximum subscription of 45,000 shares. The price-to-earnings ratio is 21.76 times. It is listed on the Shanghai Stock Exchange, with CITIC Securities as its sponsor and Guotai Junan Securities as its joint lead underwriter. According to the prospectus, Yongxing Stock has always focused on waste incineration and power generation, gradually expanding its biomass treatment business. Yongxing Stock is an environmental protection company invested by Guangzhou Environmental Investment Group, which is controlled by the Guangzhou Municipal Government. It is the sole investor and operator of waste incineration and power generation projects in Guangzhou. During the reporting period, Yongxing Stock's main product was electricity, and its main services included waste incineration treatment services and biomass treatment services. As of the date of signing the IPO prospectus (December 29, 2023), the company operated 14 waste incineration and power generation projects and 4 biomass treatment projects. The waste incineration and power generation projects had a capacity of 32,090 tons/day, and the biomass treatment projects had a capacity of 2,590 tons/day. The company conducted waste incineration and power generation business through projects such as Likeng Plant 1, Likeng Plant 2, and Fushan Power Plant. The company conducted biomass treatment business through projects such as Huadu Biomass Project and Conghua Catering Project. Waste incineration and power generation is a capital and technology-intensive industry, which requires high investment and technological capabilities from investors. Based on the scale of urban waste treatment nationwide, as of the end of 2021, the company's designed waste incineration capacity (including trial operation) was 32,100 tons/day. According to data from the National Bureau of Statistics, the national average daily waste incineration capacity was 719,500 tons/day during the same period, giving the company a market share of 4.46%. Due to the regional concentration characteristic of the waste incineration and power generation industry, the industry concentration nationwide is relatively low, and the company's market share is among the top in the industry. In terms of customers, due to the nature of the industry, the company's operating income mainly comes from waste incineration and power generation services and electricity sales to local government departments and state-owned power grid companies. The company has a high customer concentration. During the reporting period, the top five customers accounted for 90.30%, 86.13%, 85.50%, and 87.17% of the company's revenue respectively. After deducting the issuance expenses, the funds raised by the company will be used for the following projects: In terms of finance, as of June 30,2023, the company achieved operating revenues of 1.843 billion yuan, 2.536 billion yuan, 3.293 billion yuan, and 1.766 billion yuan in 2020, 2021, 2022, and 2023 respectively. During the period, the company achieved a net profit of 346 million yuan, 678 million yuan, 716 million yuan, and 464 million yuan respectively. According to Yongxing Stock's prospectus, there is a risk that the performance of new projects may not meet expectations. As of the date of signing the IPO prospectus, the designed capacity of the Fushan Power Plant Phase II and Shaodong Municipal Solid Waste Incineration and Power Generation PPP project is a total of 5,050 tons/day. It has been put into operation and has a large increase in production capacity, which requires high demands on the company's liquidity, project construction and operation management capabilities, as well as future business layout and market expansion capabilities. If the new projects cannot receive sufficient financial and manpower support and effective operation management, the performance of the new projects may face the risk of not meeting expectations.