Summary of Conference Call on Waste Incineration Industry and Hanlan Environment Industry Overview - The waste incineration industry is experiencing significant changes, particularly with the recent updates to the green electricity policy by the National Development and Reform Commission, which is expected to have a major impact on the sector [5][52]. - The collaboration between waste incineration plants and data centers (IDC) is becoming increasingly relevant, with the potential for direct electricity supply from waste-to-energy plants to data centers [14][68]. Company Insights: Hanlan Environment - Hanlan Environment has successfully completed the acquisition of Yuefeng, marking a significant milestone for the company [1][135]. - The merger is expected to enhance Hanlan's market position, with a projected waste incineration capacity of 97,600 tons per day, making it the largest in the A-share market [146][147]. - The acquisition is anticipated to lead to a compound annual growth rate (CAGR) of approximately 15% over the next three years, with a focus on improving cash flow and return on equity (ROE) [25][26]. Key Points and Arguments 1. **Green Electricity Policy**: The updated policy allows for direct electricity supply from waste incineration plants to data centers, expanding the customer base beyond self-consumption [14][18][99]. 2. **Profitability Potential**: Projects utilizing self-consumption models are projected to have a profit elasticity of 15% to 50% [13][21]. 3. **Acquisition Benefits**: The merger with Yuefeng is expected to enhance Hanlan's cash flow and ROE, with a potential increase in net profit from 1.75 billion to 19 billion RMB in the current year [150][155]. 4. **Market Valuation**: Hanlan's valuation is currently at ten times earnings, with expectations to reach fifteen times as cash flow improves and dividend capabilities increase [50][56]. 5. **Operational Synergies**: The integration of Yuefeng is expected to yield operational efficiencies, including reduced financial costs and enhanced supply chain management [186][188]. 6. **Future Growth**: The company anticipates maintaining a growth rate of approximately 15% from 2025 to 2027, driven by both internal improvements and the benefits of the acquisition [226][230]. Additional Important Insights - The waste incineration sector is seen as a unique asset class within the A-share market, with a strong potential for dividend growth and ROE enhancement [54][56]. - The collaboration between waste incineration and data centers is expected to become a standard practice, driven by policy support and market demand [101][102]. - The financial metrics indicate that Hanlan's free cash flow could potentially exceed 40 billion RMB post-acquisition, supporting a dividend payout ratio above 100% [230][232]. - The overall sentiment is optimistic regarding the future of the waste incineration industry, with a focus on sustainable growth and profitability [236].