Xinda Securities·2025-12-13 15:40Investment Rating - The report maintains a "Positive" investment rating for the environmental sector, consistent with the previous rating [2]. Core Insights - The green liquid fuel market, particularly green ammonia and green methanol, is gaining traction due to supportive policies and market demand. The Ministry of Industry and Information Technology, along with other agencies, has emphasized the development of these fuels as part of the clean energy transition [18][19]. - As of the end of 2024, there are 119 green ammonia projects and 165 green methanol projects in China, with respective production capacities of 20.17 million tons/year and 52.57 million tons/year. Most projects are in early stages, indicating potential for capacity release [22][28]. - The report highlights the significant role of green ammonia in the energy system, particularly in coal power plant modifications, with a target of 10% co-firing by 2024 [19]. - The report suggests that the environmental sector will maintain high growth due to increasing demands for energy efficiency and resource recycling, with a focus on water and waste incineration sectors as stable revenue generators [53]. Summary by Sections Market Performance - The environmental sector underperformed the broader market, with a decline of 0.61% as of December 12, 2025, compared to a 0.34% drop in the Shanghai Composite Index [10][13]. Industry Dynamics - Recent policies include a notification from the Ministry of Industry and Information Technology and the People's Bank of China to support green factory construction through green finance [33]. - The ecological environment ministry is seeking public opinion on emergency control standards for water pollution, aiming to enhance environmental emergency response capabilities [35]. Investment Recommendations - The report recommends focusing on companies like Huanlan Environment, Xingrong Environment, and Hongcheng Environment, which are expected to benefit from the ongoing market reforms and stable cash flows [53].