环保行业2024年三季报总结：春暖花又开，为梦济沧海

Investment Rating - The industry investment rating is "Buy" [1] Core Viewpoints - The environmental protection sector is experiencing a performance reversal and cash flow improvement, with expectations for continued optimization of financial statements. Revenue for Q1-Q3 2024 reached 262.3 billion CNY, a year-on-year increase of 2.1%, while net profit attributable to shareholders was 25.8 billion CNY, a decrease of 1.8%. Notably, net profit in Q3 increased by 11.6% year-on-year [1][7] - The operating assets as a proportion of total assets increased to 44.5% by Q3 2024, with a slowdown in accounts receivable growth and a decrease in goodwill. The environmental fund allocation ratio reached 0.33% as of Q3 2024, indicating a rebound in holdings since 2021, focusing on dividends and growth [1][18] - The operational segments are showing stable profitability, with significant cash flow improvements. For Q1-Q3 2024, the solid waste and water sectors achieved free cash flows of 3.2 billion CNY and -3.7 billion CNY, respectively, with the solid waste sector turning free cash flow positive for the first time [1][7] Summary by Sections Cash Flow Performance - The environmental sector's operating cash flow net amount for Q1-Q3 2024 was 22.6 billion CNY, a year-on-year increase of 14.5%. The net cash flow ratio improved to 0.88, indicating enhanced cash generation capabilities [1][24] - The sector's free cash flow is expected to turn positive as capital expenditures shrink and operational assets increase [1][7] Focus on Operational Assets and Recycling Resources - The report highlights three main investment themes: operational assets, recycling resources, and sanitation. The solid waste incineration and recycling sectors are performing well, with operational companies showing stable asset management and quality cash flow [1][7][18] - Specific companies such as Guanghua Technology and Zhongjin Environment are noted for their potential growth driven by new business initiatives and order inflows [1][7] Policy and Market Opportunities - Recent policy measures, including debt resolution and mergers and acquisitions, are expected to stimulate investment demand in the environmental sector. The establishment of the China Resource Recycling Group is also anticipated to enhance resource recovery and utilization [1][7][18] - The report suggests focusing on companies with high accounts receivable and bad debt reserves, which are likely to see significant recovery potential [1][7]