国补退坡趋势下，关注垃圾焚烧企业供热转型

Investment Rating - The report maintains a "Positive" investment rating for the environmental sector [2]. Core Insights - The report highlights the trend of decreasing national subsidies for waste incineration projects, emphasizing the importance of heat supply transformation for profitability [2][21]. - It notes that the environmental sector underperformed the broader market, with a 2.0% decline in the week leading up to March 28, 2025 [8][10]. - The report suggests that the transition from electricity generation to heat supply in waste incineration can significantly enhance revenue, with potential increases of 110 to 170 RMB per ton of waste processed [22][23]. Market Performance - As of March 28, 2025, the environmental sector index fell by 2.0%, while the Shanghai Composite Index decreased by 0.4% [8][10]. - Specific sub-sectors showed varied performance, with the waste incineration sector slightly increasing by 0.03% [10]. Industry Dynamics - The report discusses recent regulatory developments, including the expansion of the national carbon emissions trading market to cover additional industries, which is expected to include 1,500 new key emission units [36]. - It also mentions the introduction of new regulations in Beijing regarding the development and utilization of renewable energy [36]. Company Focus - The report identifies key companies in the waste incineration sector that are actively exploring heat supply, including Zhongke Environmental Protection, Huanlan Environment, and Wangneng Environment, which are leading in heat supply volume [24][25]. - It emphasizes the financial stability and cash flow improvement of companies engaged in heat supply, particularly those with a higher proportion of heat supply relative to waste processing [21][22]. Investment Recommendations - The report recommends focusing on companies with strong operational assets in the water and waste incineration sectors, highlighting specific companies such as Huanlan Environment, Xingrong Environment, and Hongcheng Environment for investment [42].