Core Viewpoint - China Everbright Green Environmental's 1H25 performance exceeded expectations, driven by effective cost control in the biomass power generation segment and reduced financial expenses [1][2]. Financial Performance - The company reported a revenue of HKD 3.4 billion in 1H25, a year-on-year decrease of 3%, while net profit attributable to shareholders reached HKD 190 million, up 33% year-on-year [1]. - The company declared a dividend of HKD 0.028 per share, a 50% increase year-on-year, with a payout ratio of 30%, up 10 percentage points year-on-year [1]. Biomass Utilization - The construction revenue from biomass utilization decreased to 1.8% of total revenue, with construction revenue falling 17% year-on-year to HKD 50 million [1]. - The biomass material disposal volume decreased by 4% year-on-year, while electricity generation increased by 3%, leading to operational revenue of HKD 2.5 billion, a 3% increase year-on-year [1]. - The cost of agricultural and forestry biomass fuel was effectively controlled, decreasing by 8% year-on-year, contributing to a net profit increase of 31% in the biomass utilization segment [1]. Hazardous Waste Disposal - The hazardous waste disposal segment faced continuous price pressure, resulting in a net loss of HKD 180 million, with average landfill and incineration prices down 17% and 4% year-on-year, respectively [2]. - The volume of harmless waste disposal decreased by 2% year-on-year, and electricity generation from this segment fell by 7% [2]. New Energy Sector - The new energy segment saw a 2% year-on-year decline in net profit, despite the commissioning of two solar projects, increasing total installed capacity to 250,000 kW from approximately 170,000 kW in the same period last year [2]. - Challenges in wind power consumption in Shanxi province affected overall electricity generation, which increased by only 1% year-on-year, while maintenance costs rose [2]. Development Trends - The company is expanding its diversified operations in heating and virtual power plants, with a focus on biomass business profitability recovery for the full year [2]. - As of the end of 1H25, the heating scale reached 2.18 million tons per year, with expectations to reach 2.5 million tons by the end of 2025 [2]. - The company has signed contracts with 136 manufacturers for virtual power plants, indicating a strategic shift towards combined heat and power generation as a primary development direction post-subsidy expiration [2]. Profit Forecast and Valuation - The company raised its annual dividend forecast to HKD 0.029 per share and adjusted the target price upward by 24% to HKD 1.05, indicating an 8% upside potential from the current stock price [3]. - The current stock price corresponds to a price-to-book ratio of 0.21x for 2025E/2026E, while the target price corresponds to a ratio of 0.23x for the same periods [3].