Core Viewpoint - The compound fertilizer industry is undergoing structural changes, with leading companies enhancing their competitive advantages, making them typical cash cow assets with potential for increased dividends in the future [1][2]. Group 1: Dividend Potential - The long-term dividend potential of leading compound fertilizer companies is underestimated, as the market often focuses on the industry's low asset intensity and manufacturing barriers, overlooking the competitive advantages of leading firms [1][2]. - The expected increase in dividends is driven by steady profit growth, supported by the enhanced competitiveness of leading companies [2][3]. Group 2: Competitive Advantages - Leading companies are experiencing increased brand loyalty, which supports sales growth, as they reduce uncertainty for channels and farmers, ensuring mutual benefits amid price fluctuations [2]. - The continuous improvement of integrated layouts enhances product profitability, with leading firms investing in upstream integration and differentiating terminal products to increase pricing power [2]. Group 3: Capital Expenditure and Cash Flow - The phase of significant capital expenditure is coming to an end, with leading companies having healthy operating cash flows and ample cash on hand, which allows for potential increases in dividends as investment becomes more restrained [3].

Investment Rating - The report maintains a "Buy" rating for leading compound fertilizer companies, indicating a strong potential for returns exceeding the market benchmark by over 15% [3][52]. Core Viewpoints - The cash cow attributes of leading compound fertilizer companies are expected to continue enhancing, with significant dividend potential as capital expenditures peak and operational cash flows remain robust [8][52]. - The competitive advantages of leading firms are strengthening, driven by brand loyalty and improved pricing power, which supports stable sales growth and profitability [17][18]. - The industry is undergoing structural changes, with leading companies increasingly dominating market share, as evidenced by the CR3 rising from 15% in 2020 to 20% in 2024 [18][19]. Summary by Sections 1. Cash Cow Attributes of Leading Companies - The cash cow nature of leading compound fertilizer companies is underestimated, with their operational cash flow significantly exceeding net profits, showcasing strong bargaining power [12][18]. - The market often overlooks the competitive advantages of these firms, focusing instead on the industry's low barriers to entry and high fragmentation [12][18]. 2. Enhanced Competitive Strength Supporting Profitability - Leading companies are enhancing brand loyalty, which reduces uncertainty for distributors and farmers, thereby driving sales growth [16][17]. - The ongoing integration of upstream resources and differentiation in end products is expected to improve profitability [16][27]. 3. Dividend Potential - With capital expenditures reaching a peak, leading companies are positioned to increase dividend payouts, supported by healthy operational cash flows [41][44]. - Current dividend rates are relatively low, but there is significant potential for growth as competitive advantages strengthen [44][49]. 4. Investment Recommendations - The report identifies three key companies: Xin Yang Feng (000902, Buy), Shi Dan Li (002588, Not Rated), and Yun Tu Holdings (002539, Not Rated), which collectively account for approximately 20% of national sales in 2024 [3][52]. - These companies are expected to become stable, utility-like investments with substantial dividend growth potential [52].

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]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance has declined due to slight decreases in coal prices and volumes, with a focus on potential asset injections and dividend capabilities [1][4] - In 2024, the company achieved revenue of 15.03 billion yuan, a year-on-year decrease of 2%, and a net profit attributable to shareholders of 2.81 billion yuan, down 14.9% year-on-year [1][5] - The company is expected to see a significant increase in net profit in 2026 and 2027, with forecasts of 2.46 billion yuan and 2.61 billion yuan respectively, indicating a recovery trend [1][7] Financial Performance Summary - In 2024, the company’s coal production was 34.67 million tons, a slight decrease of 0.1% year-on-year, while coal sales were 29.97 million tons, down 0.4% year-on-year [5] - The average selling price of coal in 2024 was 490.6 yuan per ton, a decrease of 1% year-on-year, and in Q1 2025, it dropped to 426.1 yuan per ton, down 16.4% year-on-year [5] - The company plans to distribute a cash dividend of 7.55 yuan per 10 shares, with a dividend payout ratio of 45%, reflecting a year-on-year increase of 4.94 percentage points [6] Asset Injection and Growth Potential - There are expectations for asset injections from the parent company, which has a coal production capacity of nearly 400 million tons per year, compared to the company's current capacity of 34.5 million tons per year [6] - The company has significant room for capacity expansion, which could enhance its growth potential in the future [6] Valuation Metrics - The projected earnings per share (EPS) for 2025, 2026, and 2027 are 1.36 yuan, 1.47 yuan, and 1.56 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 8.4, 7.8, and 7.3 [1][7] - The company's return on equity (ROE) is expected to decline from 14.7% in 2024 to 10.3% in 2027, indicating a potential decrease in profitability [7]