Grandblue Environment (SH:600323) HTSC·2025-08-29 09:40Investment Rating - The report maintains a "Buy" rating for the company [6][5]. Core Views - The integration of Yuefeng has shown initial success, contributing positively to the company's performance. The company reported a revenue of 5.763 billion RMB for H1 2025, a year-over-year decrease of 1.05%, while net profit increased by 8.99% to 967 million RMB, aligning with performance forecasts [1][2]. - The "Hanlan Model" is expected to enhance profitability through internal growth and acquisition integration, supporting continuous performance growth [1][2]. - The company has improved cash flow and is gradually completing ongoing projects, which is expected to enhance free cash flow and provide a solid foundation for shareholder returns [1][4]. Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of 5.763 billion RMB, with a net profit of 967 million RMB, and a non-recurring net profit of 912 million RMB [1]. - Q2 2025 saw a revenue of 3.162 billion RMB, a year-over-year increase of 1.73% and a quarter-over-quarter increase of 21.60%, with a net profit of 547 million RMB, reflecting a year-over-year increase of 8.03% and a quarter-over-quarter increase of 30.17% [1][2]. Business Segments - The solid waste treatment business generated a revenue of 2.949 billion RMB, with a net profit of 724 million RMB. The revenue from household waste incineration was 2.126 billion RMB, showing a year-over-year increase of 17.63% [3]. - The company reported a significant increase in electricity generation, up 21.10% year-over-year, and a 41.60% increase in heat supply [2][3]. Cash Flow and Dividends - The operating cash flow for H1 2025 was 1.221 billion RMB, an increase of 29.77% year-over-year, with free cash flow rising to 338 million RMB, an increase of 4.95 million RMB [4]. - The company plans to distribute a mid-term dividend of 0.25 RMB per share, totaling 204 million RMB, reflecting a payout ratio of 21.08% [4]. Valuation and Forecast - The report maintains earnings per share (EPS) forecasts of 2.36, 2.62, and 2.77 RMB for 2025-2027, respectively. The target price is set at 39.18 RMB, based on a price-to-earnings (PE) ratio of 16.6 times for 2025 [5][6].