Core Insights - The market is experiencing heightened volatility, leading to increased attention on the stable attributes of dividends, particularly through the cash flow ETF (159399), which attracted over 200 million yuan in investments on the 5th [1] - Nanjing Securities indicates that the growth sector carries significant trading risks, while sectors with strong policy expectations, such as "anti-involution" and "promoting domestic demand," remain relatively undervalued, presenting better long-term investment opportunities [1] - The cash flow ETF (159399) utilizes free cash flow as a stock selection factor, closely tracking the FTSE China A-Share Free Cash Flow Index, excluding financial and real estate sectors, and selecting the top 50 stocks with the highest free cash flow rates [1] Index Characteristics - The cash flow index focuses on large and mid-cap stocks, exhibiting strong defensive attributes and higher dividend yields, which may help mitigate market fluctuations [2] - The cash flow ETF (159399) has consistently distributed dividends for six consecutive months as of the end of August since its launch [2]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's solid waste management business shows steady growth, and the cement segment is experiencing a performance reversal, leading to positive free cash flow [1] - The company has adjusted its net profit forecasts for 2025-2027, reflecting an increase in expected profits due to improved performance in its core waste incineration operations and the indirect holding in Conch Cement [1] Financial Summary - Total revenue for 2023 is projected at 8,033 million, with a decline to 6,271 million in 2024 and further to 6,147 million in 2025, before a slight recovery in subsequent years [1][8] - The net profit attributable to shareholders is expected to decrease from 2,464 million in 2023 to 2,020 million in 2024, but is forecasted to rise to 2,361 million in 2025 [1][8] - The earnings per share (EPS) is projected to be 1.37 in 2023, dropping to 1.13 in 2024, and recovering to 1.32 in 2025 [1][8] - The price-to-earnings (P/E) ratio is expected to be 6.91 in 2023, increasing to 8.43 in 2024, and then decreasing to 7.21 in 2025 [1][8] Business Performance - In the first half of 2025, the company achieved a revenue of 30.86 billion, a slight decline of 1.55% year-on-year, while the net profit attributable to shareholders increased by 9.33% to 12.86 billion [7] - The waste disposal segment reported operational revenue of 21.07 billion, up 7.61%, while construction revenue fell significantly by 54.53% to 2.74 billion [7] - The energy efficiency equipment segment saw a revenue decline of 22.26% to 2.59 billion, while the new energy business experienced a substantial increase of 191.65% to 3.10 billion [7] Cash Flow and Dividends - The company reported a positive free cash flow of 0.4 billion in the first half of 2025, a significant improvement from -8.6 billion in the first half of 2024 [7] - The company anticipates an increase in dividend potential due to improved free cash flow and dividends from Conch Cement [7]

Core Viewpoint - The National Index of Free Cash Flow has shown an upward trend, with significant gains in constituent stocks such as Silver Nonferrous, Jiejia Weichuang, and others, indicating a positive market sentiment towards free cash flow ETFs [1][3]. Group 1: Market Performance - As of September 1, 2025, the National Index of Free Cash Flow increased by 0.40%, with leading stocks including Silver Nonferrous and Jiejia Weichuang [1]. - The Free Cash Flow ETF (159201) has followed the index with a slight upward movement, reflecting strong market interest [1]. - The Free Cash Flow ETF has seen a daily average trading volume of 393 million yuan over the past week, ranking first among comparable funds [1]. Group 2: Fund Inflows and Size - Over the past ten days, the Free Cash Flow ETF has experienced continuous net inflows totaling 618 million yuan, indicating strong investor interest [1]. - The latest share count for the Free Cash Flow ETF reached 4.014 billion, marking a new high since its inception [1]. - The total size of the Free Cash Flow ETF is now 4.478 billion yuan, leading its category [1]. Group 3: Leverage and Returns - The latest financing buy-in amount for the Free Cash Flow ETF reached 12.2954 million yuan, with a financing balance of 44.7191 million yuan [3]. - Since its inception, the Free Cash Flow ETF has achieved a maximum monthly return of 7.00%, with the longest consecutive monthly gains spanning four months and a total increase of 16.68% [3]. - The ETF has a historical six-month profit probability of 100.00%, showcasing its strong performance track record [3]. Group 4: Fees and Tracking Accuracy - The management fee for the Free Cash Flow ETF is 0.15%, and the custody fee is 0.05%, both of which are the lowest among comparable funds [3]. - As of August 29, 2025, the tracking error for the Free Cash Flow ETF over the past month was 0.068%, indicating the highest tracking precision among its peers [3]. Group 5: Top Holdings - As of August 29, 2025, the top ten weighted stocks in the National Index of Free Cash Flow include SAIC Motor, China National Offshore Oil, and Midea Group, collectively accounting for 57.95% of the index [3].

Core Insights - The company achieved a revenue of 1.478 billion yuan in H1 2025, representing a year-on-year growth of 33.07%, and a net profit attributable to shareholders of 400 million yuan, up 49.23% [1] - The growth in revenue and profit is primarily driven by the consolidation of Renhe Environment and contributions from new projects in Liuyang and Pingjiang [1] Revenue Breakdown - Revenue from waste incineration and power generation reached 368 million yuan, a year-on-year increase of 23.77%, accounting for 24.89% of total revenue, with a gross margin of 64.84% [1] - Revenue from waste incineration, power generation, and sludge treatment was 301 million yuan, up 8.51%, making up 20.39% of total revenue, with a gross margin of 70.19% [1] - Revenue from municipal solid waste transfer processing was 338 million yuan, with a gross margin of 52.93% [1] - Other business revenues, including sludge treatment and landfill services, totaled 471 million yuan, accounting for 31.87% of total revenue [1] Operational Metrics - The company processed 1.861 million tons of municipal solid waste in H1 2025, a 10.70% increase year-on-year [1] - The electricity generated was 886 million kWh, up 26.21% year-on-year, with a per-ton electricity generation of 476.27 kWh, an increase of 9.70% [1] - The company also reported a collection of 395,100 tons of kitchen waste and 1.6069 million tons of municipal solid waste transfer [1] Market Expansion - The company maintains a domestic waste incineration capacity of 11,800 tons per day, positioning itself as a leader in Hunan's environmental sector [2] - Internationally, the company is expanding its market presence with projects in Kyrgyzstan, totaling a planned capacity of 7,000 tons per day [2] - The integration of Renhe Environment, which processes 8,000 tons of other waste and 2,000 tons of kitchen waste daily, enhances the company's operational synergy [2] Cash Flow and Dividends - The company reported a net operating cash flow of 724 million yuan in H1 2025, a year-on-year increase of 59.81% [3] - Free cash flow surged by 156.74% to 423 million yuan, indicating strong financial health [3] - The company has committed to a long-term dividend policy with a cash dividend ratio of no less than 50% [3] Profit Forecast - The company's net profit forecasts for 2025-2027 have been adjusted upwards to 769 million, 826 million, and 871 million yuan, respectively, reflecting the benefits from strategic projects and operational efficiencies [3]

Group 1 - The Guozheng Free Cash Flow Index experienced a decline of approximately 0.7%, with constituent stocks showing mixed performance, including gains from Ningbo Huaxiang, Chufeng Power, and Luoyang Molybdenum, while Gree Electric, Zhongyuan Media, and Weichai Heavy Machinery faced losses [1] - The largest free cash flow ETF (159201) followed the index's adjustment, dropping about 0.3%, presenting a low-position layout opportunity [1] - The free cash flow ETF has seen continuous net inflows over the past nine days, totaling 615 million yuan, with the latest share count reaching 4.012 billion and total assets at 4.494 billion yuan, both hitting record highs since inception [1] Group 2 - The free cash flow ETF (159201) closely tracks the Guozheng Free Cash Flow Index, selecting stocks with positive and high free cash flow after liquidity, industry, and ROE stability screening, indicating high quality and strong risk resistance, suitable for long-term investment [2] - The fund management fee is set at an annual rate of 0.15%, and the custody fee at 0.05%, both representing the lowest rates in the market, maximizing benefits for investors [2] Group 3 - Since 2025, policies have repeatedly emphasized the importance of insurance capital as long-term funds, with directives for large state-owned insurance companies to invest 30% of new premiums in A-shares annually [1] - The Ministry of Finance has extended the assessment cycle for state-owned commercial insurance companies, reinforcing the long-term investment intentions of insurance capital [1] - The scale of equity investments by insurance capital is expanding, focusing on high-dividend and "cash cow" assets, with a deepening value investment philosophy [1]

Core Viewpoint - The market is experiencing a revaluation and reallocation of assets in a low interest rate environment, with insurance and wealth management sectors seeking returns from equities, particularly favoring high dividend and high certainty performance companies [2] Market Performance - As of August 29, 2025, the CSI All Index Free Cash Flow Index (932365) decreased by 0.19%, with mixed performance among constituent stocks [1] - Notable gainers included Changsheng Technology (300073) up 7.85%, and Xinyi Silver (000426) up 4.23%, while Gree Electric (000651) led the declines at 5.94% [1] - The CSI All Cash Flow ETF Fund (563830) rose by 0.18%, with a recent price of 1.13 yuan, and a weekly cumulative increase of 2.17% [1] Liquidity and Trading Activity - The CSI All Cash Flow ETF Fund had a turnover rate of 4.75% during trading, with a transaction volume of 857,500 yuan [1] - The average daily trading volume over the past week was 4.70 million yuan [1] Institutional Insights - The current market risk appetite is increasing, with a stronger focus on performance-based pricing logic, recommending attention to companies with strong fundamentals and stable free cash flow [2] Investment Opportunities - The CSI All Cash Flow ETF Fund tracks the CSI Cash Flow Index, which includes companies with abundant free cash flow, indicating strong operational efficiency and risk resilience [3] - Historical performance shows the fund's highest monthly return at 3.87% since inception, with a 100% probability of profit over three months [3] Fund Characteristics - The maximum drawdown for the CSI All Cash Flow ETF Fund since inception is 3.31%, with a relative benchmark drawdown of 0.32% [4] - The fund has a management fee of 0.50% and a custody fee of 0.10% [5] - As of August 28, 2025, the fund's tracking error for the year is 0.147%, closely following the CSI All Index Free Cash Flow Index [6] Top Holdings - The top ten weighted stocks in the CSI All Index Free Cash Flow Index as of July 31, 2025, include China National Offshore Oil (600938) and Gree Electric (000651), collectively accounting for 57.53% of the index [6]

Group 1 - The market is experiencing increased volatility due to intensified funding battles as it rises [1] - "Smart money" has begun to act, with the cash flow ETF (159399) attracting over 200 million yuan in just five days [2] - The cash flow ETF focuses on companies with high free cash flow, excluding financial and real estate sectors, and selects the top 50 stocks for investors [2] Group 2 - The cash flow index emphasizes large and mid-cap stocks with strong defensive attributes and high dividend yields, potentially mitigating market fluctuations [2] - The cash flow ETF has distributed dividends for six consecutive months as of the end of August, making it a favorable asset allocation option for investors [2]

Core Insights - The Guozheng Free Cash Flow Index has increased by 0.14%, with leading stocks including Guokai Hengtai, Dongfang Tower, Ningbo Huaxiang, Zhejiang Agricultural Shares, and China Aluminum [1] - The Free Cash Flow ETF (159201) has risen by 0.45%, with a latest price of 1.12 yuan [1] - The Free Cash Flow ETF has seen a net inflow of 615 million yuan over the past nine days, reaching a total share of 4.012 billion and a total scale of 4.494 billion yuan, both hitting record highs since inception [1] Fund Performance - The Free Cash Flow ETF has recorded a net value increase of 11.55% over the past six months [3] - The ETF's highest single-month return since inception is 3.62%, with the longest consecutive monthly gains being three months and a maximum increase of 9.05% [3] - The average monthly return during rising months is 2.58%, with an 80% monthly profit percentage and a 100% historical six-month holding profit probability [3] Fee Structure and Tracking Accuracy - The management fee for the Free Cash Flow ETF is 0.15%, and the custody fee is 0.05%, both being the lowest among comparable funds [3] - The tracking error for the ETF over the past month is 0.032%, indicating the highest tracking precision among similar funds [3] Index Composition - The Guozheng Free Cash Flow Index reflects the price changes of listed companies with high and stable free cash flow levels in the Shanghai and Shenzhen stock exchanges [4] - As of July 31, 2025, the top ten weighted stocks in the index include SAIC Motor, China National Offshore Oil, Midea Group, Gree Electric Appliances, and others, accounting for 57.66% of the total index weight [4]

Financial Data and Key Metrics Changes - For Q2 2025, total revenue was €2.29 billion, a decline of 9.1% year over year on a reported basis [3] - Q2 EBITDA was €801 million, and operating free cash flow was €423 million [3] - EBITDA decreased by 10.8% in the second quarter, primarily due to a decline in residential revenue [14] - CapEx expenditure for the quarter totaled €378 million, reflecting a notable reduction compared to Q2 2024 [14] - Free cash flow for Q2 2025 amounted to an outflow of €137 million [16] Business Line Data and Key Metrics Changes - Residential service revenue declined by 9.1% year over year, with fixed residential service revenue down 6.2% [12] - Mobile residential service revenue declined by 11.3%, impacted by customer base erosion and competitive pricing pressure [13] - Business Services, excluding construction, declined by 2%, with the majority of the decline driven by construction [13] - Total net losses in fixed services were minimal in 2025 compared to 2024, indicating improved commercial trends [9] Market Data and Key Metrics Changes - The competitive environment in France remains intense, particularly in the budget mobile segment, with aggressive pricing from competitors [35] - The volume of net adds in the French market was low compared to previous years, with a total of approximately 80,000 net adds across all players [48] Company Strategy and Development Direction - The company aims to reduce leverage to four times and has entered into agreements with creditors to extend debt maturities and reduce interest expenses [20] - The focus remains on CapEx discipline, particularly in areas like FTTH and 5G, where prior investment levels will not need to be sustained [14] - The company is actively reviewing its portfolio for potential transactions that make strategic sense [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to improve trends in the coming quarters despite current revenue declines [9] - The restructuring plan aims to reduce the absolute debt of Altice France without impacting operations or employees [28] - Management believes the current political situation in France does not impact business operations or transaction capabilities [30] Other Important Information - The company has started implementing a safeguard plan and expects to close the process by early October 2025 [4] - A technical incident in June affected mobile network service, but the issue was resolved quickly, and impacted customers were compensated with additional mobile data [10][11] Q&A Session Summary Question: Guidance for full year operating cash flow - Management confirmed guidance for growth in EBITDA minus CapEx for 2025, primarily driven by CapEx reduction [25][26] Question: Update on safeguard process and appeals - One appeal has been made by employee representatives, but management remains confident in the October timeline for restructuring [27][28] Question: Competitive environment in mobile and B2B business - The competitive environment remains intense, with pricing pressures affecting both mobile and B2B segments [35][36] Question: Fixed service revenue decline and connection revenue base - Fixed service revenue declined by 6.2% year over year, with connection fees contributing to the decline [42] Question: Net proceeds from the tower transaction - Expected net proceeds from the tower transaction are around €460 million [45] Question: Trends in net adds and churn issues - Management noted that net adds in Q2 were comparable to last year, with improvements in customer retention [48] Question: Sustainability of CapEx reduction - Management indicated that the reduction in CapEx is sustainable due to lower network investment needs and changing data consumption patterns [50][51]

Investment Rating - The report maintains a "Buy" rating for the company, considering the profit growth driven by investment returns and the positive shift in free cash flow [4]. Core Insights - The company's revenue for H1 2025 was 3.086 billion CNY, showing a year-over-year decline of 1.55%, while the net profit attributable to shareholders reached 1.286 billion CNY, reflecting a year-over-year increase of 9.33%, slightly exceeding expectations [4]. - The profit growth is primarily attributed to the increased contributions from joint ventures, particularly from Conch Cement, which contributed 839 million CNY, a year-over-year increase of 19.72% [4]. - The company has confirmed a cash flow turning point, with operating cash flow at 915 million CNY, slightly down year-over-year, but free cash flow turned positive at 366 million CNY, leading to the announcement of an interim dividend of 0.10 HKD per share [4]. Financial Data and Profit Forecast - Revenue projections show a decline from 8,015 million CNY in 2023 to 5,580 million CNY by 2027, with corresponding year-over-year growth rates of 2%, -22%, -2%, -4%, and -5% [3][5]. - Net profit is expected to increase from 2,464 million CNY in 2023 to 2,540 million CNY in 2027, with year-over-year growth rates of -18%, 16%, 4%, and 4% [3][5]. - Earnings per share are projected to rise from 1.37 CNY in 2023 to 1.42 CNY in 2027, with a price-to-earnings ratio decreasing from 7.2 to 7.0 over the same period [3][5].