Core Viewpoint - The company, Guangda Environment, has officially initiated its "back to A-share" listing process, which is expected to enhance its financing channels and improve its valuation due to higher average valuations in the A-share market compared to the Hong Kong market [1][2]. Summary by Sections Company Announcement - Guangda Environment's board has approved a preliminary proposal to issue RMB shares and list them on the Shenzhen Stock Exchange, contingent on market conditions, shareholder approval, and necessary regulatory approvals [1]. - The initial plan proposes to issue no more than 800 million A-shares, which would account for 11.52% of the company's expanded share capital post-issuance [1]. Market Context - The "back to A-share" listing is expected to further broaden the company's financing channels and optimize its capital structure, as A-share listed companies in the environmental sector generally have higher valuations than their Hong Kong counterparts [2]. - According to Bloomberg data, the average valuation for A-share environmental waste-to-energy companies is projected at 13.4 times PE for 2025, compared to 9.2 times PE for Hong Kong companies, indicating a 46% valuation premium for A-shares [2]. Operational Performance - Guangda Environment has successfully operated 159 waste-to-energy projects with a design capacity exceeding 50 million tons per year, leading to continuous growth in waste processing and electricity generation [2]. - The company has achieved positive free cash flow since 2024, driven by refined operations and increased cash returns from its heating and steam supply business [2]. International Expansion - The company is actively expanding its environmental energy projects in overseas markets, particularly in Central Asia, with two waste-to-energy projects in Uzbekistan, totaling a design capacity of 3,000 tons per day [2][3]. - Future market focus includes Indonesia, Vietnam, and Central Asia to enhance its overseas project reserves [3]. Financial Outlook - The company maintains a "buy" rating with a target price of HKD 5.80, corresponding to a projected PE of 10 times for 2025, and offers an attractive dividend yield of 5.1% for 2026 [3]. - Profit forecasts for the company are projected at HKD 3.57 billion, HKD 3.79 billion, and HKD 3.98 billion for the years 2025, 2026, and 2027, respectively [3].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 5.80, corresponding to a 10x forecast PE for 2025 [1][4][6]. Core Insights - The company has officially initiated the process for a "back to A-share" listing, which is expected to enhance its valuation as A-share environmental companies generally have higher valuations compared to their Hong Kong counterparts [2][3]. - The proposed issuance of up to 800 million A-shares aims to raise funds for business development and working capital, with the new shares representing approximately 11.52% of the expanded share capital post-issuance [2][3]. - The average PE for A-share environmental companies is projected at 13.4x for 2025, compared to 9.2x for Hong Kong-listed companies, indicating a 46% valuation premium for A-shares [3][11]. - The company has achieved positive free cash flow since 2024, driven by operational efficiency and increased cash inflows from its heating and steam supply business [3][4]. - The company is expanding its environmental energy projects in overseas markets, particularly in Central Asia, with two waste-to-energy projects in Uzbekistan [4]. Financial Summary - The company’s revenue for FY 2023 is reported at HKD 32,090 million, with a projected decline to HKD 29,513 million in FY 2025, followed by a slight recovery in subsequent years [10][12]. - Net profit is expected to decrease from HKD 4,429 million in FY 2023 to HKD 3,568 million in FY 2025, with a gradual increase to HKD 3,975 million by FY 2027 [10][12]. - The company’s dividend yield is projected to be 5.1% in 2026, making it an attractive investment option [4][10].

（ 於 香 港 註 冊 成 立 之 有 限 公 司 ） （股份代號：257） 自願性公告 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部份內容 而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 CHINA EVERBRIGHT ENVIRONMENT GROUP LIMITED 中國光大環境（集團）有限公司 本公司已獲信用評級機構聯合資信評估股份有限公司的「AAA」信用評級。 本公司將於適當時候另行作出公告。 本公司不一定會進行建議發行，而實施建議發行須視乎多項事宜而定，包括但不限於市 場狀況。本公司股東及潛在投資者於買賣本公司證券時務請審慎行事。 承董事會命 中國光大環境（集團）有限公司 向中國銀行間市場交易商協會申請註冊及 建議發行多品種債務融資工具 本公告由中國光大環境（集團）有限公司（「本公司」）自願作出。 本公司董事（「董事」）會（「董事會」）宣佈，本公司今天向中國銀行間市場交易商協會 （「交易商協會」）作出申請（「申請」），以註冊總金額不高於人民幣150億元且本公司將於 適當時候分多個批次發行 ...

Core Viewpoint - The company plans to issue up to 800 million RMB shares and list them on the Shenzhen Stock Exchange, which may lead to an 11.52% dilution in EPS for 2026, but the influx of new capital is expected to support new project development and ultimately compensate for this dilution [1][2]. Group 1: Fundraising and EPS Impact - The board has approved a preliminary proposal to issue RMB shares not exceeding 800 million, which represents 11.52% of the post-issue share capital [1]. - The funds raised are intended for the company's core business development and to supplement general working capital, with potential for further EPS growth due to existing capacity yet to be utilized [1]. Group 2: Market Expansion and Dividend Potential - The recent implementation of waste incineration regulations in Indonesia opens new market opportunities for the company, with potential project investments supported by the Indonesian sovereign wealth fund [2]. - The company has room to increase its dividend payout ratio, which currently stands at 41.8%, and could rise to 55%, potentially supporting a market valuation of HKD 33.1 billion by 2025 [2]. Group 3: Valuation and Profit Forecast - The company’s H-share valuation is expected to recover due to improved operating cash flow, while A-shares are likely to trade at a higher valuation due to lower dividend yield requirements [3]. - Profit forecasts for 2025 to 2027 estimate net profits of HKD 3.7 billion, HKD 4.1 billion, and HKD 4.2 billion respectively, with corresponding P/E ratios of 8.1x, 7.4x, and 7.1x [3].

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]

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]