Investment Rating - The report assigns an "Outperform the Market" rating to the company, with a target price range of 4.48 to 4.73 HKD, indicating a potential upside of 14% to 20% from the current stock price [7][46][51]. Core Views - The company is recognized as the world's largest waste-to-energy operator, with a significant market presence and a robust project pipeline. The report highlights a decline in capital expenditures, leading to positive free cash flow in 2024H1, which is expected to enhance the company's dividend capacity [46][55][166]. - The report emphasizes the company's operational income growth, which is projected to increase as construction income declines, suggesting a shift towards more sustainable revenue streams [7][46][173]. - The company faces challenges due to complex accounting practices and diversified business operations, which may suppress its valuation in the market [46][123][173]. Financial Performance - The company achieved revenues of 32.09 billion HKD in 2023, with a projected decline to 28.74 billion HKD in 2024, reflecting a year-on-year decrease of 10.4% [47][189]. - The gross profit margin is expected to improve from 41.5% in 2024 to 44.4% by 2026, indicating a positive trend in profitability [47][189]. - The net profit attributable to the parent company is forecasted to be 3.70 billion HKD in 2024, down from 4.43 billion HKD in 2023, but is expected to recover to 4.14 billion HKD by 2026 [47][189]. Business Segments - The company's revenue is primarily derived from three segments: Environmental Energy, Environmental Water, and Green Environmental Services. The Environmental Energy segment contributes the most, accounting for 51% to 66% of total revenue [97][100]. - The Environmental Water segment has shown stable performance, with revenues of 6.73 billion HKD in 2023, expected to decline to 5.70 billion HKD in 2024 [5][179]. - The Green Environmental Services segment has faced profitability challenges, with a significant drop in net profit in recent years, primarily due to market conditions and government subsidy delays [136][137]. Valuation Metrics - The report indicates that the company's current P/E ratio is approximately 5.5, which is significantly lower than the industry average, suggesting that the stock may be undervalued [47][195]. - The absolute valuation method estimates the company's fair value at around 4.73 HKD per share, while the relative valuation method suggests a target price of 4.48 HKD, both indicating potential upside from the current market price [190][195]. Market Position - The company holds a leading position in the waste-to-energy sector, with a total waste processing capacity of 15.89 million tons per day, the highest in the industry [46][116]. - The report notes that the company has a diversified project portfolio across various regions, which enhances its operational resilience [46][68][120].
光大环境：垃圾焚烧行业龙头，自由现金流转正价值有望重估