Group 1 - Core viewpoint: The company plans to issue up to 800 million shares, representing a maximum of 11.52% of the expanded share capital, with potential dilution being limited due to steady operational growth and financial optimization [1][2] - The company has achieved positive free cash flow since 2024, with projected cash flow of 4.62 billion and 2.262 billion for 2025H1, indicating ongoing financial improvement [1] - The dividend policy remains stable, with a proposed interim dividend of 15 Hong Kong cents per share for 2025H1, reflecting a payout ratio of 42%, which is an increase of 7 percentage points year-on-year [2] Group 2 - The issuance of shares is expected to facilitate the company's A+H listing, optimizing capital structure and enhancing financing channels [2] - The company’s A-share issuance price is expected to be no less than 1x price-to-book ratio, which is higher than the current Hong Kong stock valuation of 0.6, potentially providing a long-term valuation anchor [2] - The company maintains profit forecasts for 2025-2027 at 3.589 billion, 3.810 billion, and 4.055 billion Hong Kong dollars, with corresponding price-to-earnings ratios of 8, 8, and 7, indicating a stable operational outlook [3]

Group 1 - The board has approved a preliminary proposal to issue RMB shares for listing on the Shenzhen Stock Exchange, with the funds aimed at developing the main business and supplementing general working capital, reinforcing the company's absolute leading position in the industry [1] - The company maintains a "buy" rating, with projected net profits for 2025-2027 at 4.048, 4.182, and 4.288 billion HKD, corresponding to EPS of 0.66, 0.68, and 0.70 HKD [1] - The total share capital is 6.143 billion shares, with a proposed issuance of no more than 800 million shares, accounting for 11.52% of the post-issue share capital, and an overallotment option of up to 15% of the proposed issuance [1] Group 2 - The company received 2.064 billion RMB in national subsidies from July 1 to August 31, 2025, exceeding expectations and significantly improving operating cash flow [2] - The company’s DPS for the first half of 2025 is 0.15 HKD, a year-on-year increase of 7%, with a dividend payout ratio of 41.76%, up from 35% in the first half of 2024 [2] - The improvement in free cash flow and the initiation of the A-share listing are optimistic signals for accelerating value reassessment in the future [2]

Company Situation - The company plans to issue no more than 80,000 shares on the Shenzhen Stock Exchange, which accounts for no more than 11.52% of the post-issue share capital (excluding the exercise of the over-allotment option), with an over-allotment option of up to 15% of the issuance amount [1] - The raised funds are initially intended for the development of the main business and to supplement general working capital [1] Comments - Given the higher valuation of environmental protection in the A-share market, the company's return to A-shares is expected to enhance its valuation and open up subsequent financing channels [1] - The upper limit of the share issuance corresponds to a pre-issue share ratio of 13.0% and a post-issue share ratio of 11.5% (both excluding over-allotment) [1] - Current A-share companies focused on waste-to-energy have a projected 2025E price-to-earnings ratio of 11 times or more, with price-to-book ratios above 1, some exceeding 2; in contrast, similar companies in the Hong Kong market have 2025E price-to-earnings ratios of only 6-7 times and price-to-book ratios of 0.2-0.5 times, indicating a significant A/H discount [1] - The company, as a leading player in waste-to-energy capacity, is expected to benefit from returning to A-shares, which may help improve its valuation level and facilitate future financing [1] Cash Flow and Dividend Outlook - The company is expected to see accelerated cash flow collection and solid dividends, indicating long-term investment value [2] - In the first half of 2025, the company's operating cash flow increased by 37.9% year-on-year to 2.97 billion HKD, benefiting from the expansion of non-electricity businesses, reduced capital expenditures, and improved management efficiency [2] - With the overall acceleration of renewable energy subsidy recovery in the second half of the year, cash flow performance is anticipated to continue improving [2] - The company aims to maintain stable operating cash flow while optimizing its debt structure and supporting moderate dividend increases [2] Profit Forecast and Valuation - The company maintains an outperform rating and profit forecasts of 4.27 billion HKD and 4.41 billion HKD for 2025 and 2026, respectively [2] - The current stock price corresponds to price-to-earnings ratios of 7.1 times and 6.9 times for 2025 and 2026, respectively, with a target price of 5.20 HKD, implying an upside potential of 5% [2] - The current stock price (as of November 14) corresponds to dividend yields of 5.2% and 5.4% for 2025E and 2026E, respectively, which remains attractive in the current low interest rate environment [2]

Core Viewpoint - The company, Guangda Environment, plans to issue A-shares and list on the Shenzhen Stock Exchange to enhance its financing channels and support long-term growth, amidst favorable policy conditions for companies in the Guangdong-Hong Kong-Macao Greater Bay Area [1] Group 1: A-Share Issuance and Market Strategy - Guangda Environment intends to issue up to 800 million A-shares, representing no more than 11.52% of the expanded share capital post-issuance, to raise funds primarily for business development and general working capital [1] - The company aims to establish a dual-platform layout (A+H) to provide diversified financing options, as A-share valuations and liquidity are generally better than those of H-shares [1] - The company has seen a positive trend in free cash flow since 2024, with capital expenditures decreasing and dividends increasing, supporting its strategy to return to the A-share market [1] Group 2: Financial Performance and Growth Prospects - In 2024, Guangda Environment's free cash flow turned positive, with a net operating cash flow of 8.91 billion RMB, and a year-on-year increase of 4.3 billion RMB [2] - The company plans to maintain controlled capital expenditures, with a projected reduction to 4 billion RMB in 2025, while also expecting a significant increase in dividend potential, with a projected payout ratio of 98% [2] - The company received 2.064 billion RMB in national subsidies in July-August 2025, which is expected to accelerate cash flow recovery and support dividend payments [2] Group 3: Profit Forecast and Investment Rating - The company maintains profit forecasts for 2025-2027 at 3.576 billion, 3.874 billion, and 4.036 billion HKD respectively, with a current price-to-book ratio of 0.59x and a price-to-earnings ratio of 8.5x for 2025 [3] - The company continues to be rated as a "Buy" based on its improving cash flow and dividend logic [3]

Core Viewpoint - The company plans to list on the A-share market to expand its business and optimize its capital structure, with significant cash flow improvement expected starting in 2024 due to accelerated subsidy recovery and cost reduction measures [1][2]. Group 1: A-Share Listing and Fundraising - The company intends to issue up to 800 million shares, representing no more than 11.52% of the post-issue share capital, and list on the Shenzhen Stock Exchange. The raised funds will be used for business development and general working capital [1]. Group 2: Cash Flow Improvement - The company is projected to achieve a free cash flow of approximately 4 billion yuan in 2024, marking its first positive cash flow since 2003. By the first half of 2025, operational and financial income is expected to account for 87% of main revenue, a 10 percentage point increase year-on-year [2]. Group 3: Cost Reduction and Profitability - The environmental energy segment is expected to contribute 2.567 billion HKD (+12%) to group profit in the first half of 2025, driven by cost reduction measures and improved core operational metrics. The water segment is projected to contribute 409 million HKD (-4%), while the green environmental segment is expected to see a significant profit increase of 30% [3]. Group 4: Profit Forecast and Valuation - The company maintains profit forecasts of 3.337 billion, 3.564 billion, and 3.831 billion HKD for 2025-2027, with year-on-year growth rates of -1%, 7%, and 7% respectively. The current stock price corresponds to P/E ratios of 9.1x, 8.5x, and 7.9x, with a maintained "buy" rating [4].

Summary of the Conference Call for Guangda Environment Industry Overview - The conference call primarily discusses the waste-to-energy sector, specifically focusing on Guangda Environment's performance and outlook within this industry [2][3][5]. Key Points and Arguments 1. **Improvement in Waste-to-Energy Sector**: The waste-to-energy sector has shown significant improvements in quality and efficiency, with a decrease in the proportion of income from the "surge" end. Revenue from external electricity fees and heating has increased, indicating a potential upward revision in operating cash flow in the long term [2][3][5]. 2. **Operating Cash Flow Projections**: For 2024, the total operating cash flow for the sector is expected to approach 16 billion RMB. Without volume increases, improvements from national subsidies and efficiency enhancements could raise this figure by over 20% to around 20 billion RMB [2][5]. 3. **Dividend Capacity**: The potential dividend capacity for Guangda Environment could exceed 120%, significantly higher than the industry average dividend rate of approximately 40%. This indicates substantial room for dividend increases [2][3][5]. 4. **Valuation Metrics**: Guangda Environment's valuation on the Hong Kong stock market is currently at 0.6 times the price-to-book ratio, with a static dividend yield of about 5%. Improvements in national subsidies and operational cash flow levels could lead to an increase in valuation [2][6]. 5. **A-Share Issuance**: The company plans to issue up to 800 million RMB shares, representing 11.52% of the expanded total share capital. The funds raised will support core business development and working capital without negatively impacting cash flow value [2][8]. 6. **Free Cash Flow Status**: In 2024, the company is expected to achieve positive free cash flow for the first time, reaching 4 billion RMB, a significant increase from the previous year. This growth is attributed to reduced capital expenditures and accelerated national subsidy reimbursements [2][9]. 7. **Impact of National Subsidies**: By the third quarter of 2025, national subsidy reimbursements are expected to accelerate significantly, providing strong support for the company's operating cash flow [2][10]. 8. **Capital Expenditure Trends**: Future capital expenditures are projected to remain at a low level of around 4 to 5 billion RMB over the next two years, supporting the upward trend in operating cash flow [2][11]. 9. **Dividend Capability Post-Issue**: Even with a potential 12% increase in share capital, the company's dividend capability is expected to remain stable or improve, supported by free cash flow in the coming years [2][12]. 10. **Expansion into Heating Business**: Guangda Environment is actively expanding its heating business, with expectations to achieve over 7 million tons of heating volume in 2025, a year-on-year increase of over 30% [2][3][13]. 11. **International Market Strategy**: The company adopts a cautious approach to overseas expansion, ensuring capital expenditures remain controllable and requiring a minimum internal rate of return (IRR) of 10% for projects [2][15]. 12. **Prospects in Uzbekistan and Indonesia**: Projects in Uzbekistan and Indonesia are expected to yield favorable returns, with the Uzbekistan project anticipated to have an IRR of around 11% and the Indonesian market offering significant revenue potential due to higher waste heat values [2][16]. 13. **Future Performance Outlook**: The company aims for growth through internal efficiency improvements and overseas expansion, with a projected net profit of 3.576 billion HKD for the full year 2025, corresponding to a PE ratio of 8.5 times and a PB ratio of 0.6 times [2][17]. 14. **Valuation Comparison**: Guangda Environment's valuation is currently at a critical revaluation stage, with potential for further reflection of its true value as cash flow and dividend capabilities improve [2][18]. Other Important Insights - The company emphasizes the importance of governance, project selection standards, and the gradual release of overseas market potential as key factors for future growth [2][4]. - The focus on enhancing the profit margin per ton of waste through the transition to a B-end heating model indicates a strategic shift that could significantly impact profitability [2][14].

Investment Rating - The report maintains a rating of "Buy" for the company [3] Core Views - The company plans to issue up to 800 million shares, representing no more than 11.52% of the post-issue share capital, and will list on the Shenzhen Stock Exchange [1][6] - The company is expected to achieve positive cash flow starting in 2024, with projected free cash flow of approximately 4 billion RMB, marking the first positive cash flow since 2003 [6] - The company is focusing on cost reduction and efficiency improvements, with a significant increase in dividends and expectations for value reassessment due to the upcoming share issuance [6] Financial Data and Valuation - Revenue projections for the company show a decline from 32,495 million HKD in 2023 to 29,397 million HKD in 2025E, with a year-on-year growth rate of -14%, -7%, and -3% respectively [2][10] - Operating profit is expected to decrease from 10,473 million HKD in 2023 to 8,138 million HKD in 2025E, with corresponding year-on-year growth rates of -1%, -17%, and -7% [2][10] - Net profit is projected to decline from 4,429 million HKD in 2023 to 3,337 million HKD in 2025E, with year-on-year growth rates of -4%, -24%, and -1% [2][10] - The company’s price-to-earnings (P/E) ratio is forecasted to be 9.1x in 2025, decreasing to 7.9x by 2027 [2][10] Shareholder Information - The major shareholder is China Everbright Group Co., Ltd., holding a 43.08% stake in the company [3] Market Performance - The company's stock price has shown an absolute performance increase of 46% over the past 12 months [5]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The company plans to issue shares in the A-share market, which is expected to enhance its valuation. The issuance will involve up to 800 million shares, potentially diluting EPS by 11.5%, but the high return from overseas projects may offset this short-term dilution [7] - The company has received national subsidy funds of 2.064 billion HKD, which is expected to improve cash flow and reduce impairment risks. The company has also increased its interim dividend to 0.15 HKD per share, reflecting its commitment to shareholder returns [7] - The forecasted net profit for 2025-2027 is 3.53 billion, 3.70 billion, and 3.92 billion HKD respectively, with corresponding P/E ratios of 8.57, 8.18, and 7.72. The expected dividend yield for the same period is 4.9%, 5.1%, and 5.4%, indicating a low valuation and high dividend value [7] Summary by Sections Market Performance - Closing price as of November 14, 2025, is 4.93 HKD with a market capitalization of 30,284.87 million HKD [3] Financial Forecasts and Valuation - Revenue projections for 2025 are 29,185.72 million HKD, with a year-on-year decline of 3.5%. Net profit for 2025 is estimated at 3,532.57 million HKD, reflecting a growth of 4.6% [6] - The company’s P/E ratio is projected to be 8.57 for 2025, indicating a relatively low valuation compared to its earnings potential [6] Cash Flow Analysis - The net cash flow from operating activities is expected to be 7.56 million HKD in 2025, with capital expenditures of -3.27 million HKD [9]

Investment Rating - The report maintains a "Positive" outlook on the public utilities and environmental protection sectors [3] Core Insights - The report highlights a significant increase in electricity production in October, with total generation reaching 800.2 billion kWh, a year-on-year growth of 7.9% [4][11] - Hydropower and thermal power contributed the most to the increase in electricity generation, while wind power saw a decline of 11.9% compared to the previous year [4][10] - Natural gas prices showed mixed trends globally, with stable prices in Asia and fluctuations in Europe and North America [22][40] Summary by Sections 1. Electricity Production - In October, thermal power generation was 513.8 billion kWh, up 7.3% year-on-year, while hydropower generation reached 135.1 billion kWh, up 28.2% [4][11] - The total increase in electricity generation for October was approximately 58.6 billion kWh, with thermal power contributing 35 billion kWh and hydropower contributing 29.7 billion kWh [10][11] - The Three Gorges Reservoir achieved its water storage target of 175 meters, supporting future hydropower generation [10] 2. Natural Gas Market - As of November 14, the Henry Hub spot price in the U.S. was $3.49/mmBtu, a weekly decrease of 7.32% [22] - The TTF spot price in Europe was €30.80/MWh, showing a slight weekly change of 0.81% [22] - Northeast Asia's LNG spot price remained stable at $11.10/mmBtu, with domestic supply being sufficient [22][40] 3. Investment Recommendations - For hydropower, the report recommends companies like Guotou Power, Chuan Investment Energy, and Huaneng Hydropower due to favorable autumn water conditions [20] - In the green energy sector, companies such as Xintian Green Energy and Longyuan Power are suggested for their stable returns and high utilization hours [20] - For nuclear power, the report highlights China Nuclear Power and China General Nuclear Power as key players due to ongoing approvals for new units [20] - In the thermal power sector, companies like Guodian Power and Inner Mongolia Huadian are recommended due to decreasing fuel costs [20] - The report also suggests focusing on integrated natural gas companies like Kunlun Energy and New Hope Energy for their potential recovery in profitability [42][43]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is initiating the "Back to A" process to diversify its financing channels, which will support long-term development. The company plans to issue up to 800 million shares in RMB and list them on the Shenzhen Stock Exchange, aiming to enhance its H+A dual-platform layout [7][8] - The company has shown a significant improvement in free cash flow, which turned positive in 2024, and has increased its dividend payout ratio to 42% [7][8] - The report highlights the company's strategic focus on rational capital expenditure and careful expansion into overseas high-quality projects, ensuring sustainable growth [7][8] Financial Summary - Total revenue (in million HKD) is projected to decline from 32,495 in 2023 to 28,089 in 2027, with a year-on-year decrease of 13.92% in 2023 and a gradual decline thereafter [1] - Net profit attributable to the parent company (in million HKD) is forecasted to decrease from 4,429 in 2023 to 4,036 in 2027, with a notable drop of 23.75% in 2024, followed by a recovery in subsequent years [1] - The earnings per share (EPS) is expected to rise from 0.72 in 2023 to 0.66 in 2027, reflecting a gradual improvement in profitability [1] Capital Expenditure and Cash Flow - The company has controlled capital expenditure, with a projected decrease to 40 billion RMB in 2025, while free cash flow is expected to exceed 10 billion HKD [7][8] - The report indicates that the company received government subsidies of 2.064 billion RMB in July-August 2025, which is significantly higher than the previous year's amount [7][8] Valuation Metrics - The current price-to-earnings (P/E) ratio is 8.5x for 2025, with a price-to-book (P/B) ratio of 0.59x, indicating potential undervaluation compared to industry peers [1][7] - The report suggests that the company's A-share valuation is likely to be higher than its H-share valuation, with historical premiums observed in similar companies [7][8]