Core Viewpoint - The company operates as an employee stock ownership platform for Conch Group, with key assets in Conch Cement and waste incineration, projecting a net profit of 2.02 billion yuan for 2024, primarily driven by Conch Cement's investment returns and waste incineration profits [1][2]. Group 1: Company Structure and Ownership - The company is structured with no controlling shareholder, with major stakes held by Anhui Haichuang (10.98%), Conch Group (5.39%), and Conch Cement (4.99%) [1]. - The core assets include an 18% stake in Conch Cement and waste incineration assets [1]. Group 2: Financial Performance - The projected net profit for 2024 is 2.02 billion yuan, with Conch Cement contributing 1.316 billion yuan (65%) and waste incineration contributing 660 million yuan (33%) [1]. - The company anticipates a steady increase in operating cash flow to 2 billion yuan in 2024, with potential further growth if national subsidies exceed 500 million yuan annually [2]. Group 3: Waste Incineration Operations - The company leads the industry in waste incineration capacity, with operational capacity of 48,100 tons/day and a utilization rate of 105% expected in 2024 [1]. - The waste incineration segment is projected to achieve a profit of 722 million yuan if national subsidies are included, enhancing overall profitability [1]. Group 4: Future Projections - The company expects net profits to reach 2.093 billion yuan in 2025, 2.117 billion yuan in 2026, and 2.136 billion yuan in 2027, alongside significant improvements in free cash flow [3]. - A conservative valuation of the company is estimated at 15.4 billion yuan, indicating a potential upside of 22% from the current market value [3].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][8] Core Views - The company is expected to see a turning point in profits and cash flow, with potential for increased dividends [2][8] - The company’s core assets include an 18% stake in Conch Cement and waste incineration assets, with significant contributions to net profit from these segments [7][31] - The report highlights the company's strong operational metrics in waste incineration and a significant reduction in capital expenditures (Capex), leading to improved free cash flow [7][42] Financial Data and Profit Forecast - Revenue projections for the company show a decline from 8,015 million in 2023 to 6,128 million in 2025E, with a projected net profit of 2,093 million in 2025E [6][8] - The company anticipates free cash flow to improve significantly, reaching 15 billion in 2025, 21 billion in 2026, and 21 billion in 2027, contingent on government subsidies [8][42] - The report estimates a conservative valuation of 154 billion for the company, indicating a 22% upside from the current market capitalization [8] Waste Incineration Business - The company leads the industry in waste incineration capacity, with operational capacity of 48,100 tons/day and a utilization rate of 105% in 2024 [7][43] - The waste incineration segment is expected to generate stable cash flows, with a projected operating profit of 7.22 billion if government subsidies are accounted for [7][54] Conch Cement Assets - The company is projected to receive 500 million in cash dividends from its stake in Conch Cement, with a potential revaluation of these equity assets [7][66] - The report notes that Conch Cement's profitability is expected to stabilize due to industry self-discipline and declining energy costs [7][64] Dividend Potential - The company plans to double its dividend to 660 million in 2024, with a dividend payout ratio increasing from 13% to 33% [56] - The report emphasizes the market's underestimation of the company's dividend potential, driven by improved cash flow and reduced capital expenditures [10][11]

Financial Performance - The company reported a significant increase in revenue, achieving a total of 1.2 billion RMB for the fiscal year, representing a 15% year-over-year growth[3]. - The company reported a revenue of RMB 6,270.74 million for 2024, a decrease of 21.76% compared to RMB 8,015.21 million in 2023[29]. - The pre-tax profit for 2024 was RMB 2,249.67 million, down from RMB 2,872.10 million in 2023, reflecting a decline of 21.66%[10]. - The net profit attributable to equity shareholders for 2024 was RMB 2,019.56 million, a decrease of 18.00% from RMB 2,463.71 million in 2023[10]. - Revenue from waste disposal was RMB 4,878.83 million, a decrease of 20.75% year-on-year, primarily due to a reduction in construction projects[59]. - Revenue from energy-saving equipment dropped by 42.72% to RMB 817.83 million, attributed to a decrease in orders[59]. - Revenue from new energy business surged by 176.68% to RMB 289.66 million, driven by active market expansion[59]. - The gross profit margin for waste disposal increased to 37.63%, up 8.95 percentage points from the previous year[63]. - Other net income decreased by 49.76% to RMB 208.32 million, mainly due to reduced government subsidies and interest income[65]. - Administrative expenses rose by 14.93% to RMB 703.59 million, primarily due to increased employee compensation from more operational companies[66]. - Financial expenses decreased by 2.77% to RMB 707.78 million, influenced by lower bank loan interest rates[67]. - The gross margin for energy-saving equipment increased by 7.56 percentage points year-on-year to 26.17%, primarily due to lower gross margins from overseas business orders in the same period last year[68]. - The gross margin for new building materials decreased by 17.47 percentage points year-on-year to -5.68%, mainly due to market impacts leading to lower selling prices and inventory provisions[68]. Operational Highlights - User data indicates a 20% increase in active users, reaching 5 million by the end of the reporting period[3]. - New product launches are expected to contribute an additional 200 million RMB in revenue, with a focus on eco-friendly technologies[3]. - The company has signed contracts for 131 projects across 23 provinces, including 101 waste-to-energy projects[30]. - The company launched a 15MW/30.562MWh energy storage project, which is now operational, aimed at cost reduction and efficiency improvement[23]. - The company processed approximately 15.8 million tons of municipal solid waste, representing a year-on-year increase of 15%[31]. - The company generated approximately 5.12 billion kWh of electricity from waste, also reflecting a 15% year-on-year growth[31]. - The average electricity generation per ton of waste was approximately 326 kWh[31]. - The company sold approximately 377,000 tons of steam, which is an increase of 32,000 tons year-on-year[31]. - The company sold around 488,000 green power certificates during the reporting period[31]. - The company has 14 waste-to-energy projects that have been connected to the grid as of the end of the reporting period[31]. - The company has multiple waste-to-energy projects under construction, with capacities ranging from 11,000 tons per year (300 tons per day) to 49,000 tons per year (1,350 tons per day) scheduled for completion between 2024 and 2026[39]. - The company has several projects in the approval stage, including a 18,000 tons per year (500 tons per day) project in Shanxi Hunyuan[39]. - The company has a total of 1,729,000 tons per year (48,100 tons per day) of waste processing capacity from its operational projects[38]. - The company is actively expanding its waste processing capabilities with new projects in various provinces, including Yunnan, Guizhou, and Hebei, with capacities ranging from 11,000 to 22,000 tons per year[37][38]. Strategic Initiatives - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to 1.32 billion RMB[3]. - The company plans to expand its market presence in Southeast Asia, targeting a 25% market share by 2025[3]. - A strategic acquisition of a local competitor is anticipated to enhance operational efficiency and increase market penetration[3]. - Research and development investments are set to increase by 30%, focusing on innovative materials and sustainable practices[3]. - The company is implementing new strategies to enhance customer engagement, which is expected to improve retention rates by 15%[3]. - The company aims to enhance its market presence through strategic expansions and new technology developments in waste disposal and energy recovery[39]. - The company is focused on increasing its operational efficiency and sustainability through the development of new waste-to-energy technologies and processes[39]. Corporate Governance - The board of directors emphasized the importance of corporate governance and sustainability in future business strategies[3]. - The board of directors has confirmed compliance with the corporate governance code and has been actively improving governance structures to enhance accountability and transparency[92]. - The board consists of a diverse group of members, ensuring independent oversight and representation of shareholder interests[102]. - The board has adopted a diversity policy since December 3, 2013, and revised it on December 13, 2018, to enhance company performance through diverse board member composition[133]. - The board has a diverse range of expertise, enhancing its operational effectiveness[113]. - The company has established a clear process for the appointment and re-election of directors, ensuring compliance with governance standards[119]. - The Audit Committee reviewed the independence of external auditors and considered their appointment for the annual audit services[127]. - The company has adopted a director nomination policy that includes selection criteria and processes for appointing directors[130]. Employee and Talent Management - The total number of employees as of December 31, 2024, is 6,607, an increase from 6,225 employees as of December 31, 2023, representing a growth of approximately 6.1%[90]. - The total employee compensation, including directors' remuneration, amounted to RMB 855.3 million for the reporting period, compared to RMB 702.5 million in 2023, reflecting an increase of about 21.8%[90]. - The company emphasizes the importance of a competitive compensation level and comprehensive welfare guarantees to enhance employee satisfaction and productivity[90]. - The company has adopted a diversified talent development strategy, focusing on internal training, school-enterprise exchanges, and social recruitment to optimize human resource structure[90]. - The number of employees with a bachelor's degree rose from 1,476 in 2023 to 1,690 in 2024, marking an increase of about 14.5%[197]. - The group is focused on enhancing employee qualifications, with the number of master's degree holders increasing from 80 in 2023 to 83 in 2024, a growth of about 3.8%[197]. Risk Management - The company has established a comprehensive risk management framework to identify and manage significant risks related to its business operations[148]. - During the reporting period, the company focused on monitoring five categories of risks: strategic, market, operational, financial, and legal[149]. - The company conducted self-assessments of its risk management and internal control systems in July and December 2024, with no significant internal control deficiencies reported[149]. - The board confirmed the effectiveness of the risk management and internal control systems, including financial, operational, and compliance monitoring[150]. - The company has implemented a risk management plan for 2024, emphasizing the importance of internal control in key business areas such as asset management and financial reporting[149]. Shareholder Communication and Dividends - The board approved a special dividend of HKD 0.10 per share, totaling approximately HKD 179.20 million, to be paid on November 8, 2024[174]. - As of December 31, 2024, the company's distributable reserves amounted to RMB 703.9 million, a significant increase from RMB 103.0 million on December 31, 2023[174]. - The board proposed a final dividend of HKD 0.30 per share for the year ending December 31, 2024, up from HKD 0.20 per share in 2023[174]. - The company has established multiple communication channels with shareholders to ensure transparency and timely information disclosure[163]. - The board of directors has reviewed the implementation of shareholder communication policies, confirming their effectiveness during the reporting period[165].

Financial Performance - For the fiscal year ending December 31, 2024, the group's revenue was approximately RMB 6,270.74 million, a decrease of 21.76% compared to RMB 8,015.21 million in 2023[4] - The net profit attributable to equity shareholders for the fiscal year was approximately RMB 2,019.56 million, down 18.03% from RMB 2,463.71 million in 2023[4] - The main net profit attributable to equity shareholders, excluding profits from joint ventures, was approximately RMB 703.50 million, a decrease of 12.20% from RMB 801.24 million in 2023[4] - The group's gross profit for the fiscal year was approximately RMB 2,175.42 million, compared to RMB 2,178.71 million in 2023[5] - The operating profit for the fiscal year was approximately RMB 1,641.39 million, down from RMB 1,937.55 million in 2023[5] - The total comprehensive income attributable to equity shareholders for the fiscal year was approximately RMB 1,981.46 million, compared to RMB 2,149.66 million in 2023[7] - The basic earnings per share for the fiscal year was RMB 1.17, down from RMB 1.36 in 2023[5] - The group reported a total comprehensive income of RMB 2,081.01 million for the fiscal year, compared to RMB 2,368.67 million in 2023[7] - The reportable segment's profit before tax for 2024 was RMB 2,249,669,000, compared to RMB 2,872,104,000 in 2023, indicating a decrease of about 21.7%[25] - The company's profit before tax for 2024 is CNY 2,249,669,000, compared to CNY 2,872,104,000 for 2023, indicating a decrease of approximately 21.7%[38] Revenue Breakdown - Revenue from waste disposal projects under BOT arrangements with local government institutions amounted to RMB 2,317,185,000, down from RMB 3,810,860,000 in 2023, representing a decline of about 39.1%[18] - Revenue recognized over time was RMB 5,192,613,000, compared to RMB 6,255,792,000 in 2023, indicating a decrease of approximately 17.0%[19] - The waste disposal segment generated revenue of RMB 3,689,254,000, an increase from RMB 3,239,085,000 in the previous year, reflecting a growth of about 13.9%[18] - The new energy business reported revenue of RMB 289,664,000, significantly up from RMB 104,693,000 in 2023, marking an increase of approximately 176.5%[18] - The company’s total income from customer contracts was RMB 6,056,305,000, down from RMB 7,791,096,000 in 2023, representing a decrease of approximately 22.2%[19] - Revenue from external customers in the port segment was RMB 5,696,661,000 for 2024, down from RMB 7,583,707,000 in 2023, a decline of approximately 24.9%[22] - The logistics services segment reported revenue of RMB 182,353,000 in 2024, compared to RMB 208,660,000 in 2023, reflecting a decrease of about 12.6%[22] - The new materials segment generated revenue of RMB 102,059,000 in 2024, a slight increase from RMB 118,151,000 in 2023, representing a decrease of approximately 13.6%[22] - Revenue from energy-saving equipment dropped significantly by 42.72% year-on-year to RMB 817.83 million, due to a reduction in orders[72] - Revenue from the Chinese mainland accounted for 95.10% of total revenue, totaling RMB 5,963.64 million, down 16.91% year-on-year[74] Dividend and Shareholder Information - The board proposed a final cash dividend of HKD 0.30 per share, with a total annual dividend of HKD 0.40 per share, including a special dividend announced in September 2024[4] - The proposed final dividend per ordinary share is HKD 0.30 for 2024, up from HKD 0.20 in 2023, which is a 50% increase[42] - The total dividend payment for 2024 is approximately HKD 537,612,000, equivalent to about CNY 497,829,000, compared to HKD 361,989,000 (CNY 328,042,000) in 2023, indicating a rise of around 51.6%[42] - The annual general meeting of shareholders is scheduled for June 25, 2025, to discuss the proposed dividend and other matters[106] - The company will temporarily suspend share registration procedures from June 18, 2025, to June 25, 2025, to determine shareholder eligibility for voting at the annual general meeting[107] - A temporary suspension of share registration will also occur from July 7, 2025, to July 11, 2025, to determine eligibility for the final dividend[108] - The company repurchased a total of 17,904,500 shares during the reporting period, with a total cost of HKD 97,025,815[110] Assets and Liabilities - Total assets increased to RMB 76,074,770 thousand in 2024 from RMB 74,012,694 thousand in 2023, representing a growth of approximately 2.8%[11] - Non-current assets rose to RMB 74,510,651 thousand in 2024, compared to RMB 72,338,065 thousand in 2023, indicating an increase of about 3.0%[10] - Current liabilities decreased to RMB 6,251,413 thousand in 2024 from RMB 6,447,685 thousand in 2023, reflecting a decline of approximately 3.0%[11] - Total equity increased to RMB 49,176,632 thousand in 2024, up from RMB 47,752,718 thousand in 2023, marking a growth of around 3.0%[11] - The company's total liabilities increased to RMB 26,898,138 thousand in 2024 from RMB 26,259,976 thousand in 2023, representing a growth of about 2.4%[11] - Total assets as of December 31, 2024, were RMB 82,326,183,000, compared to RMB 80,460,379,000 in 2023, showing an increase of about 2.3%[26] - Total liabilities as of December 31, 2024, were RMB 33,149,551,000, compared to RMB 32,707,661,000 in 2023, indicating an increase of approximately 1.3%[26] Cash Flow and Financing - The net cash generated from operating activities during the reporting period was RMB 2,024.50 million, an increase of RMB 38.74 million year-on-year, mainly due to increased revenue from waste-to-energy projects[86] - The net cash used in investing activities was RMB 2,427.03 million, a decrease of RMB 2,147.35 million year-on-year, primarily due to reduced investment expenditures during the reporting period[87] - The net cash used in financing activities was RMB 423.24 million, an increase of RMB 1,801.41 million year-on-year, mainly due to a decrease in net proceeds from bank loans and the issuance of medium-term notes raising RMB 2.7 billion in 2023[88] - As of December 31, 2024, the group's bank loan balance was RMB 25,515.06 million, an increase of RMB 1,193.86 million compared to the end of the previous year, primarily due to new bank loans added during the reporting period[84] Operational Highlights - The company has signed 131 projects across 23 provinces and municipalities, including 101 waste-to-energy projects[56] - The company aims to enhance project operation quality and has completed price adjustment work for 6 waste disposal projects[57] - The company has achieved significant operational efficiency improvements in its waste disposal business through lean management practices[55] - The company is focusing on green and low-carbon development, aligning with national policies for sustainable economic growth[54] - The company has implemented various business strategies to enhance operational efficiency and reduce costs in the new energy materials sector[55] - The company has established a comprehensive management system for lithium battery recycling and resource utilization[55] - The group received approximately 1,835.7 million tons of municipal waste, representing a year-on-year increase of 15%[58] - The group processed approximately 1,570.8 million tons of municipal waste, also reflecting a year-on-year growth of 15%[58] - The online electricity generation reached approximately 5.12 billion kWh, marking a 15% increase compared to the previous year[58] - The average annual electricity generation per ton was approximately 326 kWh[58] Employee and Compensation - As of December 31, 2024, the total number of employees is 6,607, an increase from 6,225 employees on December 31, 2023, representing a growth of approximately 6.1%[99] - Total employee compensation, including director remuneration, amounted to approximately RMB 855.3 million for the reporting period, up from RMB 702.5 million in 2023, reflecting an increase of about 21.7%[99] Taxation and Compliance - The effective tax rate for the company's subsidiaries in China is 25%, with some qualifying companies benefiting from a reduced rate of 15%[37] - The company has recognized a provision for current tax in China of RMB 119,290,000 for 2024, compared to RMB 224,199,000 in 2023[34] - The company confirmed compliance with corporate governance standards as per the Listing Rules during the reporting period[113] Future Outlook - The company plans to deepen its focus on core business and enhance efficiency in 2025, aiming to improve its core competitiveness and ensure shareholder interests[101] - The company is committed to enhancing its core management advantages in waste-to-energy operations, aiming to improve operational efficiency and cash flow[102] - The new energy materials business will focus on high-end product R&D and market expansion, with an emphasis on optimizing processes and exploring partnerships with battery manufacturers[103] - The port logistics business will integrate internal and external resources to expand quality customer channels and ensure stable growth[104]

Financial Performance - Revenue for the first half of 2024 was RMB 3,134,976, a decrease of 29.35% compared to RMB 4,437,539 in the same period of 2023[24]. - Profit before tax for the first half of 2024 was RMB 1,251,579, down 39.40% from RMB 2,065,336 in the previous year[24]. - Net profit attributable to equity shareholders for the first half of 2024 was RMB 1,175,881, a decline of 35.32% from RMB 1,817,965 in the same period of 2023[24]. - The profit from associates for the first half of 2024 was RMB 701,120, a decrease of 44.76% from RMB 1,269,264 in the same period of 2023[24]. - The net profit from core operations attributable to equity shareholders was RMB 474,761, down 13.48% from RMB 548,701 in the previous year[24]. - The company achieved a revenue of RMB 3.135 billion, representing a year-on-year decline of 29.35%[26]. - The net profit attributable to equity shareholders was RMB 475 million, a year-on-year decrease of 13.48%[26]. - The waste disposal segment generated revenue of RMB 2,560.85 million, a decrease of 24.63% year-on-year, primarily due to a reduction in construction projects[52]. - The energy-saving equipment segment reported revenue of RMB 332.56 million, down 60.80% year-on-year, mainly due to a decrease in overseas orders[53]. - The new energy business achieved revenue of RMB 106.40 million, showing a significant increase of 259.08% year-on-year, driven by proactive market expansion[53]. - The gross profit margin for the waste disposal segment improved to 38.39%, up from 28.58% in the previous year[56]. - The group's gross profit margin for the reporting period was 36.71%, an increase of 10.10 percentage points year-on-year[57]. Assets and Liabilities - Total assets as of June 30, 2024, were RMB 81,902,307, reflecting a 1.79% increase from RMB 80,460,379 at the end of 2023[25]. - Total liabilities increased by 2.11% to RMB 33,397,214 as of June 30, 2024, compared to RMB 32,707,661 at the end of 2023[25]. - The equity attributable to equity shareholders was RMB 47,097,624, up 1.69% from RMB 46,315,519 at the end of 2023[25]. - Cash and cash equivalents at the end of the reporting period were RMB 3,163.42 million, with a net increase of RMB 68.44 million[67]. - The total number of employees increased to 6,386 as of June 30, 2024, compared to 5,814 on June 30, 2023, representing a growth of approximately 9.8%[74]. - Total employee compensation, including directors' remuneration, was approximately RMB 367.3 million for the reporting period, up from RMB 288.14 million in the same period last year, reflecting a year-on-year increase of about 27.5%[74]. - The company's total liabilities were RMB 33,397.21 million, up from RMB 32,707.66 million at the end of the previous year[62]. - The company's net asset value reached RMB 48,505,093 thousand, compared to RMB 47,752,718 thousand, showing an increase of 1.57%[103]. Operational Highlights - The company has signed 131 projects across 23 provinces and municipalities, including 101 waste-to-energy projects[27]. - The waste-to-energy segment received approximately 9.011 million tons of municipal waste, an increase of 19% year-on-year[28]. - The company processed about 7.786 million tons of municipal waste, reflecting an 18% year-on-year growth[28]. - The on-grid electricity generated was approximately 2.53 billion kWh, marking a 17% increase year-on-year[28]. - The average electricity generation per ton was approximately 326 kWh[28]. - The company is actively pursuing price adjustments for waste disposal fees, having completed adjustments for 3 projects[28]. - The company is focusing on enhancing operational efficiency through professional and refined management practices[27]. - The company is committed to green and sustainable development, aligning with China's economic transformation goals[26]. - The company has a total processing capacity of 1,601,000 tons per year (44,550 tons per day) across various projects, with several projects under construction and expected to be operational by 2024[33]. - The company is expanding its market presence with new projects in Vietnam, including Bac Ninh with a capacity of 110,000 tons/year (300 tons/day) expected to be completed by November 2023[33]. Strategic Outlook - The company is focusing on strategic expansion and new product development to enhance future performance[24]. - Management indicated a cautious outlook for the remainder of 2024 due to market conditions and competition[24]. - The company plans to enhance competitiveness in the new energy materials sector by focusing on personnel structure, production costs, and product performance[48]. - The group aims to enhance core competitiveness and promote healthy development across multiple industry sectors in the second half of 2024[46]. - The strategic committee is focused on long-term development strategies and sustainable policies, indicating a commitment to future growth despite current challenges[95]. Shareholder Information - The board has decided not to declare an interim dividend for the six months ended June 30, 2024, consistent with the previous year[75]. - Major shareholders include Conch Union with a 12.04% stake, Anhui Haichuang Group with a 11.27% stake, and Conch Group with a 5.12% stake as of June 30, 2024[76]. - The company aims to maintain shareholder interests through its share repurchase strategy[85]. - The company repurchased a total of 17,904,500 shares during the reporting period, at a total cost of HKD 97,025,815[85]. - The company approved a final dividend of HKD 0.20 per share, totaling approximately RMB 327,265,000, compared to RMB 670,269,000 for the previous year, indicating a decrease of about 51.1%[152]. - The board of directors announced a meeting on September 4, 2024, to discuss the declaration and payment of a special dividend to shareholders[180].

Financial Performance - For the six months ended June 30, 2024, the group's revenue was approximately RMB 3,134.98 million, a decrease of 29.35% compared to the same period last year[2]. - The net profit attributable to equity shareholders for the same period was approximately RMB 1,175.88 million, down 35.32% year-on-year; the net profit from core operations was approximately RMB 474.76 million, a decrease of 13.48%[2]. - Basic earnings per share for the period were RMB 0.67[2]. - The group's operating profit for the six months was RMB 904.24 million, compared to RMB 1,152.79 million in the previous year, reflecting a significant decline[4]. - The total comprehensive income for the period was RMB 1,242.51 million, down from RMB 1,721.01 million in the same period last year[6]. - The company's total liabilities increased to RMB 26,806,222 thousand as of June 30, 2024, compared to RMB 26,259,976 thousand as of March 31, 2024, indicating a rise of about 2.1%[10]. - The company reported a profit before tax of CNY 2,065,336,000 for the six months ended June 30, 2023, with significant contributions from various segments[20]. - The group's profit before tax was RMB 1,251.58 million, a decrease of 39.40% year-on-year, mainly affected by the reduced profit from the joint venture company[62]. Revenue Breakdown - The total revenue from customer contracts for the six months ended June 30, 2024, was RMB 3,134,976 thousand, compared to RMB 4,437,539 thousand for the same period in 2023, representing a decrease of approximately 29.4%[14]. - Revenue from waste disposal services was RMB 2,560,851 thousand for the six months ended June 30, 2024, down from RMB 3,397,526 thousand in the same period of 2023, indicating a decline of about 24.7%[14]. - Revenue from energy-saving equipment was RMB 332,561 thousand for the six months ended June 30, 2024, down from RMB 848,406 thousand in the same period of 2023, reflecting a decrease of approximately 60.8%[14]. - Revenue from waste disposal construction services for the six months ended June 30, 2024, was CNY 602,635,000, while for the same period in 2023, it was CNY 1,700,135,000, representing a decrease of approximately 64.6%[18]. - Revenue from waste disposal operational services increased to CNY 1,851,284,000 for the six months ended June 30, 2024, compared to CNY 1,585,166,000 in 2023, reflecting an increase of about 16.8%[18]. - Waste disposal revenue was RMB 2,560.85 million, down 24.63% year-on-year, primarily due to a reduction in construction projects[63][64]. - New energy business revenue increased significantly by 259.08% to RMB 106.40 million, driven by active market expansion[64]. Asset and Liability Management - The group's total assets as of June 30, 2024, were RMB 73,668.16 million, compared to RMB 72,338.07 million as of December 31, 2023[7]. - The total assets decreased to RMB 75,311,315 thousand as of June 30, 2024, from RMB 74,012,694 thousand as of March 31, 2024, showing a decline of about 1.7%[10]. - The company reported a total of RMB 1,798,709 thousand in current liabilities as of June 30, 2024, compared to RMB 1,267,507 thousand as of March 31, 2024, indicating an increase of about 42%[10]. - The company's equity attributable to shareholders increased to RMB 47,097,624 thousand as of June 30, 2024, from RMB 46,315,519 thousand as of March 31, 2024, representing an increase of approximately 1.7%[10]. - The debt-to-asset ratio was 40.78%, an increase of 0.13 percentage points from the end of the previous year[72]. Operational Efficiency and Cost Management - The company continues to focus on operational efficiency and cost management strategies to navigate the challenging market environment[2]. - The gross profit margin for the period was significantly impacted by increased costs, with a gross profit of RMB 1,150.89 million compared to RMB 1,180.80 million last year[4]. - Administrative expenses increased to RMB 307.46 million, up RMB 66 million year-on-year, reflecting a growth of 27.34% primarily due to increased employee compensation and depreciation[70]. - Financial expenses amounted to RMB 353.79 million, a decrease of RMB 2.93 million year-on-year, representing a decline of 0.82% due to the repayment of convertible bonds and lower bank loan interest rates[71]. Market Expansion and Project Development - The company is focusing on expanding its new energy business, which reported a revenue of CNY 31,673,000 for the six months ended June 30, 2023[20]. - The company plans to enhance its operational efficiency and explore new market opportunities in the waste disposal and logistics sectors[19]. - The company has signed 131 projects across 23 provinces and municipalities, including 101 waste-to-energy projects[46]. - The company has multiple projects under application for national approval, indicating ongoing expansion efforts in various regions[49]. - The company is actively pursuing new strategies for market expansion, including the development of new technologies and products[51]. Shareholder and Governance Matters - The company did not declare an interim dividend for the six months ended June 30, 2024[2]. - The board of directors decided not to declare an interim dividend for the six months ending June 30, 2024, compared to no dividend declared for the same period in 2023[91]. - The company aims to maintain shareholder interests through the share repurchase program[95]. - The company confirmed compliance with the standards for securities trading by directors and relevant employees during the reporting period[93]. - The company remains committed to adhering to corporate governance principles as outlined by the Hong Kong Stock Exchange[92].

Investment Rating - The report assigns a "Buy" rating for the company, with a current price of 6.32 HKD and a target value of 10.60 HKD [2]. Core Views - The company is transforming from a shadow stock of "Anhui Conch Cement" to a dual driver of solid waste and cement equity, with expectations of improved cash flow and profitability in the coming years [2]. - The solid waste business is shifting from a "blood-sucking" model to a "blood-generating" model, with a focus on small-scale waste incineration projects [2]. - The profitability of "Anhui Conch Cement" is expected to stabilize, leading to a potential revaluation of the company's equity assets [2]. - The company is projected to achieve significant improvements in free cash flow and dividend income from its investments in joint ventures [2]. Summary by Sections Section 1: Cement Profitability and Solid Waste Investment - The company, as an employee stock ownership platform of the Anhui Conch Group, holds an 18% indirect stake in "Anhui Conch Cement" and focuses on solid waste incineration projects [12]. - The company has experienced fluctuating net profits from 2021 to 2023, with net profits of 69.1, 38.5, and 24.6 billion CNY, respectively, due to high investments in solid waste and declining profits from "Anhui Conch Cement" [2][23]. - Future projections indicate a recovery in free cash flow and stable dividend income from joint ventures, with expected contributions of 5.1, 25.1, and 30.0 billion CNY from 2024 to 2026 [2]. Section 2: Small-Scale Incineration Projects - The company is collaborating with Kawasaki Heavy Industries to develop small-scale waste incineration projects, with operational capacity expected to increase significantly [2]. - The transition from reliance on unstable dividends from "Anhui Conch Cement" to a more stable cash flow from its core business is anticipated to enhance dividend stability [2]. Section 3: Valuation of Cement Equity - The theoretical market value of the company's 18% stake in "Anhui Conch Cement" is estimated at 236 billion HKD, while the company's current market value is only 113 billion HKD [2]. - The report suggests that the profitability of "Anhui Conch Cement" is nearing a bottom, and the company's equity assets are likely to undergo a revaluation [2]. Section 4: Profit Forecast and Investment Recommendations - The company is expected to achieve net profits of 24.4, 26.7, and 28.7 billion CNY from 2024 to 2026, corresponding to PE ratios of 4.3, 3.9, and 3.6 times [2]. - The report concludes with a reasonable value estimate of 9.76 HKD per share, reinforcing the "Buy" rating based on improved cash flow and profitability [2].

Financial Performance - The company reported a significant increase in revenue, achieving a total of RMB 1.2 billion, representing a growth of 15% year-over-year[3]. - The company reported a revenue of RMB 8,015,211,000 for the year ending December 31, 2023, representing a year-over-year decrease of 2.54% from RMB 8,224,356,000 in 2022[18]. - The pre-tax profit for 2023 was RMB 2,872,104,000, down 35.4% compared to RMB 4,439,279,000 in 2022[18]. - The net profit attributable to equity shareholders was RMB 2,463,706,000, a decline of 37.0% from RMB 3,909,927,000 in the previous year[18]. - The company achieved a revenue growth of 1.51% year-over-year, with a focus on improving operational quality and efficiency[25]. - The waste disposal segment generated revenue of RMB 6,155.88 million, a decline of 6.17% year-on-year, attributed to a decrease in ongoing projects[59]. - The energy-saving equipment segment saw a revenue increase of 47.53% to RMB 1,427.83 million, driven by overseas orders[60]. - The new building materials segment reported revenue of RMB 118.15 million, down 7.22% year-on-year due to market impacts[60]. - The port logistics segment achieved revenue of RMB 208.66 million, a decrease of 10.99% due to intensified market competition[60]. - Revenue from mainland China decreased by 7.84% to RMB 7,176.94 million, accounting for 89.54% of total revenue[64]. - Revenue from the Asia-Pacific region (excluding mainland China) increased by 672.72% to RMB 838.27 million, contributing 10.46% to total revenue[64]. - The company reported a revenue of RMB 8,015.21 million, an increase of 1.51% year-on-year[58]. Market Expansion and Strategy - The company is expanding its market presence in Southeast Asia, targeting a 25% market share by 2025[3]. - A strategic acquisition of a local competitor is anticipated to enhance production capacity by 30%[3]. - The company aims to enhance its market expansion and product development in the new energy materials sector, focusing on technological innovation[26]. - The company plans to continue its strategic expansion through both external acquisitions and internal development to enhance business scale and efficiency[25]. - The company is actively expanding its waste source channels and developing steam sales as part of its business strategy[30]. - The company aims to increase its market share in the waste management sector through strategic project development and international expansion[38]. - The company is pursuing mergers and acquisitions of waste-to-energy project companies to enhance operational capabilities[29]. Sustainability and Environmental Commitment - The management emphasized a commitment to sustainability, aiming for a 40% reduction in carbon emissions by 2030[3]. - The company is committed to sustainability and environmental responsibility through its waste disposal initiatives and energy recovery projects[39]. - The company has implemented a dual-driven industry model focusing on "environmental protection + recycling," with 118 projects established nationwide and overseas in the environmental industry[174]. - The company aims to enhance market share in the new energy business by strengthening market system construction and accelerating product certification[174]. Operational Efficiency and Cost Management - The company aims to reduce operational costs by 5% through improved efficiency measures[3]. - The company is focused on maximizing operational efficiency and ensuring timely project completions to safeguard shareholder interests[54]. - The company plans to enhance operational quality in the waste disposal sector through standardized management and exploring new business opportunities[54]. Research and Development - Research and development investments increased by 12%, focusing on innovative building materials technology[3]. - The company is committed to optimizing the lithium battery recycling process and expanding its marketing network to improve market cooperation[174]. Corporate Governance - The company has adopted the Corporate Governance Code as per the Stock Exchange Listing Rules, ensuring compliance with all applicable principles and provisions during the reporting period[93]. - The board consists of a diverse group of members, including three independent non-executive directors, fulfilling the requirement of having at least one with appropriate professional qualifications[101]. - The company has implemented a standard code for securities trading by directors and relevant employees, ensuring compliance with insider trading regulations[95]. - The board has established three board committees: Audit Committee, Remuneration and Nomination Committee, and Strategic, Sustainability, and Risk Management Committee, each with defined responsibilities[119]. - The company will continue to review and enhance its corporate governance practices to align with the Corporate Governance Code[93]. Employee and Shareholder Relations - The total employee compensation for the year was approximately RMB 702.5 million, an increase from RMB 585.3 million in the previous year, with the number of employees rising to 6,225 from 5,551[91]. - The company has established multiple communication channels with shareholders, including announcements on the stock exchange and its website[169]. - The company emphasizes continuous improvement in risk management to enhance operational quality and achieve development goals[146]. Financial Position and Assets - Total assets increased to RMB 80,460,379,000 in 2023, up 6.4% from RMB 75,379,877,000 in 2022[19]. - Total liabilities rose to RMB 32,707,661,000, an increase of 15.7% from RMB 28,207,473,000 in 2022[19]. - Cash and cash equivalents amounted to RMB 3,094.52 million as of December 31, 2023[78]. - The net cash generated from operating activities for the period was RMB 1,985.76 million, an increase of RMB 175.38 million year-on-year, primarily due to the increase in garbage power generation projects[81]. Project Development and Capacity - The company signed 15 new projects during the reporting period, including 8 municipal solid waste disposal projects and 6 lithium battery recycling projects[28]. - The company has a total of 132 signed projects across 25 provinces and municipalities in China and Vietnam, including 103 waste-to-energy projects[28]. - The company has multiple waste disposal projects under construction, with a total processing capacity of 1,523,000 tons per year (42,350 tons per day) across various locations[38]. - New projects include a waste-to-energy facility in Chongqing Liangping with a capacity of 140,000 tons per year (400 tons per day), expected to be completed in January 2024[39]. - The company is expanding its operations internationally, with a project in Vietnam (Bac Ninh) that has a processing capacity of 110,000 tons per year (300 tons per day), scheduled to be operational by November 2023[38]. Risk Management - The company has implemented a comprehensive risk management policy to identify and manage significant risks associated with its business operations[144]. - The board is responsible for evaluating the effectiveness of the company's risk management and internal control systems, ensuring shareholder investment protection[144]. - The company has established a culture of risk awareness and internal control among all employees[146].

Financial Performance - For the fiscal year ending December 31, 2023, the group's revenue was approximately RMB 8,015.21 million, an increase of 1.51% compared to RMB 7,896.32 million in 2022[2]. - The net profit attributable to equity shareholders for the fiscal year was approximately RMB 2,463.71 million, a decrease of 36.04% from RMB 3,852.18 million in 2022[2]. - The profit from continuing operations attributable to equity shareholders was approximately RMB 801.24 million, down 12.47% from RMB 915.39 million in 2022[2]. - The gross profit for the year was RMB 2,178.71 million, compared to RMB 2,228.75 million in the previous year[4]. - The operating profit for the year was RMB 1,937.55 million, down from RMB 2,034.88 million in 2022[4]. - The total comprehensive income for the year was RMB 2,368.67 million, significantly lower than RMB 15,644.98 million in 2022[7]. - Basic earnings per share from continuing operations were RMB 1.36, down from RMB 2.12 in the previous year[6]. - The company reported a significant increase in other income, netting RMB 414.66 million compared to RMB 357.51 million in 2022[4]. - The financial expenses for the year were RMB 727.91 million, an increase from RMB 599.44 million in 2022[4]. - The company reported a pre-tax profit of RMB 2,872,104 thousand, with a significant portion attributed to various business segments[27]. Revenue Breakdown - Revenue from waste disposal services amounted to RMB 6,155,877,000 in 2023, compared to RMB 6,561,015,000 in 2022, indicating a decline of about 6.2%[21]. - The revenue from energy-saving equipment surged to RMB 1,427,830,000 in 2023, up from RMB 967,810,000 in 2022, reflecting a significant increase of approximately 47.5%[18]. - Revenue from new energy business reached RMB 104,693,000 in 2023, a substantial increase from RMB 5,734,000 in 2022, representing a growth of over 1,700%[18]. - The company has engaged in transactions with local government agencies in China, with revenue from these arrangements exceeding 10% of total revenue, amounting to RMB 3,810,860,000 in 2023[21]. - Revenue from external customers reached RMB 7,583,707 thousand, contributing to a total revenue of RMB 8,015,211 thousand[24]. Assets and Liabilities - Non-current assets increased to RMB 72,338,065 thousand in 2023 from RMB 66,016,132 thousand in 2022, representing an increase of approximately 3.9%[8]. - Total assets reported were RMB 80,460,379 thousand, an increase from RMB 75,379,877 thousand in the previous year[30]. - Total liabilities amounted to RMB 32,707,661 thousand, up from RMB 28,207,473 thousand year-over-year[30]. - The company's net asset value stood at RMB 47,752,718 thousand in 2023, compared to RMB 47,172,404 thousand in 2022, reflecting a growth of about 1.2%[11]. - Current liabilities, including bank loans, increased to RMB 1,267,507 thousand in 2023 compared to RMB 690,590 thousand in 2022, marking an increase of approximately 83.4%[11]. Cash Flow and Investments - The net cash generated from operating activities for the year 2023 was RMB 1,985.76 million, an increase of RMB 175.38 million compared to 2022, primarily due to the increase in the garbage power generation projects[119]. - The net cash used in investing activities for the year 2023 was RMB 4,574.38 million, a decrease of RMB 273.86 million compared to 2022, mainly due to reduced capital expenditures on properties, plants, equipment, and intangible assets[120]. - The net cash generated from financing activities for the year 2023 was RMB 1,378.17 million, a decrease of RMB 3,401.75 million compared to 2022, primarily due to the repayment of convertible bonds[120]. - The company signed four independent equity transfer agreements to acquire stakes in four entities engaged in garbage power generation and fly ash disposal projects for a total consideration of RMB 478.69 million[124]. Dividends and Shareholder Returns - The board of directors proposed a final cash dividend of HKD 0.20 per share, reduced from HKD 0.40 per share in 2022[2]. - The company declared a final dividend of HKD 0.20 per share for 2023, totaling approximately RMB 328,042,000, compared to RMB 647,794,000 in 2022[63]. - The company repurchased a total of 3,039,500 shares during the reporting period, at a total cost of HKD 18,731,410[136]. Operational Highlights - The group received approximately 16.037 million tons of municipal waste, representing a year-on-year increase of 32%[85]. - The group processed about 13.71 million tons of municipal waste, reflecting a year-on-year growth of 33%[85]. - The total electricity generated was approximately 4.469 billion kWh, which is a year-on-year increase of 29%[85]. - The group added 15 new machine sets that operated continuously for over 365 days during the reporting period[85]. - The company has established multiple facilities with processing capacities ranging from 110,000 tons to 490,000 tons per year, with the latest facility in Hebei scheduled to be completed in November 2023[60][88]. Future Outlook and Strategy - The company plans to implement a new five-year development plan starting in 2024, focusing on improving quality and efficiency while safeguarding shareholder interests[130]. - The group aims to enhance operational quality in the waste disposal sector through standardized and lean management practices, seeking both external and internal growth opportunities[131]. - In the new energy sector, the company intends to strengthen market system construction and enhance market share in the power battery and energy storage battery consumption markets[132]. - The company is actively pursuing expansion in various provinces, with several projects currently under application for approval[60]. Compliance and Governance - The company confirmed compliance with the corporate governance code as per the listing rules during the reporting period[138]. - The board of directors has adopted a standard for securities trading that meets or exceeds the requirements of the listing rules[139]. - The annual performance for the year ending December 31, 2023, has been reviewed by the audit committee[140].

Financial Performance - Revenue for the first half of 2023 reached RMB 4,437,539,000, representing a 16.03% increase compared to RMB 3,824,351,000 in the same period of 2022[16] - Profit before tax decreased by 22.96% to RMB 2,065,336,000 from RMB 2,680,867,000 year-on-year[16] - Share of profits from associates fell by 32.75% to RMB 1,269,264,000 compared to RMB 1,887,417,000 in the previous year[16] - Net profit attributable to equity shareholders decreased by 25.17% to RMB 1,817,965,000 from RMB 2,429,553,000 year-on-year[16] - Core net profit attributable to equity shareholders increased slightly by 1.21% to RMB 548,701,000 from RMB 542,136,000 in the same period last year[16] - The total comprehensive income for the period was RMB 1,721,006,000, significantly lower than RMB 14,159,000,000 in the same period last year[98] - Basic earnings per share from continuing operations was RMB 1.00, a decrease from RMB 1.33 in the previous year[97] - The company reported a profit of RMB 1,817,965 thousand for the six months ended June 30, 2023, compared to RMB 1,582,672 thousand for the same period in 2022, marking an increase of about 14.87%[103] Assets and Liabilities - As of June 30, 2023, total assets reached RMB 83,931,076 thousand, an increase of 11.34% compared to the end of 2022[17] - Total liabilities amounted to RMB 35,649,170 thousand, reflecting a significant increase of 26.38% year-over-year[17] - The equity attributable to shareholders was RMB 45,773,649 thousand, showing a modest growth of 2.03% from the previous year[17] - The debt-to-asset ratio was 42.47%, an increase of 5.05 percentage points compared to the end of the previous year[56] - The company's current assets reached RMB 14,030.11 million, with current liabilities of RMB 11,230.95 million, resulting in a net current asset value of RMB 2,799.16 million, an increase of RMB 3,789.07 million from the previous year[59] - The total liabilities of the company were RMB 35,649.17 million, representing a 26.38% increase compared to the previous year[57] Cash Flow and Financing - The company reported a net cash inflow from operating activities of RMB 935.99 million, an increase of RMB 69.47 million year-over-year, primarily due to the increased operation of waste-to-energy projects[65] - The financing activities generated a net cash inflow of RMB 5,625.96 million, up RMB 1,230.88 million year-over-year, mainly due to the issuance of medium-term notes[67] - Cash and cash equivalents at the end of the reporting period were RMB 8,407.58 million, up from RMB 5,573.69 million at the end of the previous year[64] - The company’s bank loan balance as of June 30, 2023, was RMB 22,008.07 million, an increase of RMB 3,821.63 million from the previous year[62] Operational Highlights - The company processed approximately 6,576,000 tons of municipal waste, a year-over-year increase of 39%[24] - The total electricity generated from waste incineration was about 2.154 billion kWh, marking a 33% increase year-over-year[24] - The company has successfully signed contracts for two new waste-to-energy projects in Yunnan and Hubei, enhancing its project portfolio[24] - The company has expanded its project footprint to 126 projects across 25 provinces, with a total waste processing capacity of approximately 2,124,400 tons annually[21] - The company is actively pursuing mergers and acquisitions in the waste-to-energy sector to enhance operational efficiency and project scale[24] Revenue Breakdown - Revenue from waste disposal reached RMB 3,397.53 million, up 11.24% year-on-year, primarily due to the commissioning of seven new projects in Anhui, Jilin, and Hebei[46][47] - Revenue from energy-saving equipment increased significantly by 44.09% year-on-year to RMB 848.41 million, driven by an increase in overseas orders[47] - Revenue from new building materials decreased by 14.23% year-on-year to RMB 52.85 million, affected by market conditions[47] - Revenue from port logistics fell by 8.77% year-on-year to RMB 109.12 million, primarily due to a decrease in throughput[47] Corporate Governance - The company confirms compliance with the Corporate Governance Code and has maintained high standards of corporate governance throughout the reporting period[89] - The company has established a diversity policy for the board members to enhance governance and oversight[92] - The company is committed to enhancing its corporate governance structure to improve accountability and transparency[89] Shareholder Information - Major shareholders include Hai Luo Union with a 10.01% stake and BlackRock, Inc. with a 6.70% stake in the company[77] - The company has not granted any stock options under its stock option plan since its listing[75] - The board of directors decided not to declare an interim dividend for the six months ending June 30, 2023[76] Future Outlook - The company plans to enhance internal management and explore external development channels to improve the efficiency of its environmental protection business in the second half of 2023[41] - The company is focusing on the development of lithium battery recycling and new energy materials markets to capture growth opportunities[41] - The company continues to focus on strategic investments in new technologies and materials to drive future growth[106]