GOLDEN SUN SECURITIES·2025-07-07 00:37Investment Rating - The report maintains a "Buy" rating for key companies in the environmental sector, including Huicheng Environmental, Gaoneng Environment, and Hongcheng Environment [4]. Core Insights - The report highlights the comprehensive upgrade of river protection and governance, which is expected to benefit the water treatment industry. The central government has proposed a modern river governance framework aimed at flood prevention, water conservation, ecological restoration, and environmental management by 2035 [1][9]. - The report emphasizes the structural upgrade of the environmental industry driven by policies that enhance water resource management and ecological protection. It suggests focusing on companies with core technologies and national layouts, particularly in the solid waste management sector [1][27]. - The report notes that macroeconomic interest rates are at historical lows, making high-dividend assets and growth-oriented companies attractive. It recommends companies like Gaoneng Environment and Huicheng Environmental, which are positioned to benefit from carbon neutrality initiatives [2][29]. Summary by Sections Investment Views - The report discusses the central government's recent policy on river protection, which aims to create a comprehensive governance system by 2035, enhancing flood prevention and ecological restoration efforts [9][23]. - It also mentions the initiation of a special rectification action in government procurement to eliminate discriminatory practices, which is expected to benefit leading environmental companies [24][27]. Market Performance - The environmental sector has shown strong performance, outperforming the broader market indices. The environmental sector index increased by 1.63%, while the Shanghai Composite Index rose by 1.40% [3][31]. - Specific sub-sectors within the environmental industry, such as energy conservation, have seen significant gains, while others like monitoring and air quality have faced declines [3][31]. Key Companies - Huicheng Environmental is highlighted for its strong growth potential, particularly in hazardous waste management and plastic recycling projects, with expected revenue growth from significant projects [30]. - Gaoneng Environment is noted for its comprehensive environmental service solutions and strong project pipeline, benefiting from regulatory support and increasing demand for hazardous waste treatment [30]. - Hongcheng Environment is recognized for its consistent dividend payouts and robust growth in its core business areas, making it an attractive investment option [30].