环保高股息策略（二）：被低估的城市公用事业

Investment Rating - The industry investment rating is "Buy" [1] Core Viewpoints - The report emphasizes the stability and growth potential of solid waste and water utility sectors, which are closely linked to urban residents' needs. The compound annual growth rate (CAGR) for national waste treatment, water supply, and sewage treatment from 2011 to 2022 is between 4% and 6% [1][30] - The report highlights that the solid waste sector has seen a significant reduction in capital expenditures (CAPEX), with a compound annual decline of over 20% from 2020 to 2023. The free cash flow to firm (FCFF) for the solid waste sector turned positive for the first time in 2023 [1][41] - The report suggests that the solid waste and water utility sectors are undervalued, with a projected average dividend yield of 3% and a price-to-earnings (PE) ratio of around 10x for 2024 [1][30] Summary by Sections 1. Review of Solid Waste and Water Utilities Over Ten Years - The report reviews the performance of leading solid waste and water utility companies over the past decade, noting that companies like Hanlan Environment and Hongcheng Environment achieved a compound annual growth rate of 20% and 27% in net profit from 2013 to 2023, respectively [30][32] 2. Q2 2024 Performance Review - In H1 2024, the solid waste and water sectors experienced a year-on-year growth of 12% and 6%, respectively. The solid waste sector's operating cash flow improved by 5% year-on-year [41][45] - The report indicates that the solid waste sector's capital expenditures are in a contraction phase, with a net outflow of investment cash flow decreasing by 25% year-on-year in H1 2024 [41][51] 3. Comparison of Dividend Assets - The report compares the solid waste and water utility sectors with traditional dividend assets, highlighting their strong profitability, cash flow, and debt structure. The solid waste sector's dividend payout ratio has been increasing, with leading companies maintaining an average payout ratio of 38% in 2023 [1][30] - The water utility sector maintains a high dividend payout ratio of over 50% [1][30] 4. Recommendations - The report recommends focusing on companies such as Hanlan Environment, Guangda Environment, and Hongcheng Environment, which are expected to benefit from stable growth and improving cash flow [1][30]