Investment Rating - The report rates the environmental protection industry as "Overweight" for the third quarter of 2025, indicating an expectation for the industry to outperform the overall market [2][9]. Core Insights - Municipal water services are operating steadily, with some companies benefiting from strategic expansions and adjustments in sewage treatment pricing. However, the overall demand for sewage engineering is declining, leading to a forecasted slight decrease in engineering business [3]. - The waste incineration sector is stable, with operational improvements despite a slowdown in new project construction and bidding. Different companies are experiencing varied profit growth due to factors like historical electricity revenue recognition and depreciation from new capacity [3]. - The sanitation market remains stable, with an increase in orders for unmanned sanitation services, indicating a shift towards digital transformation in urban services [3]. - Equipment performance is diverging based on downstream influences, with conventional equipment facing margin pressure while power environmental equipment and water treatment equipment are expected to see significant profit growth [3]. Summary by Category Municipal Water Services - Overall operations are stable, with projected net profit growth for major companies: Tianyuan Environmental +18%, Xingrong Environment +5%, Hongcheng Environment +3%, and Zhongshan Public +32% for Q1-3 2025 [3][4]. Waste Incineration - The sector is expected to see varied profit growth among major companies: Hanlan Environment +16%, Green Power +15%, Junxin Co. +47%, Chengfa Environment +13%, and Yongxing Co. +8% for Q1-3 2025 [3][4]. Sanitation - Major companies are projected to have stable net profit growth: Yingfeng Environment +3% and Yuhua Tian +5% for Q1-3 2025 [3][4]. Equipment Products - Conventional equipment is expected to see a slight decline in net profit growth, with Jingjin Equipment projected at -25%. In contrast, power environmental equipment like Qingda Environmental is expected to grow by +255% [3][4]. Investment Recommendations - The report recommends focusing on municipal environmental companies such as Zhongshan Public, Junxin Co., Hanlan Environment, and others due to stable profitability and improving cash flow [3]. - For unmanned sanitation, companies like Yingfeng Environment and Yuhua Tian are highlighted for their potential in the digital transformation of urban services [3]. - The report also suggests monitoring suppliers of bio-aviation fuel and green methanol, as well as companies involved in reverse osmosis membrane technology due to ongoing market trends [3].