Investment Rating - The report assigns a "Buy" rating to the company [2]. Core Views - The company is backed by the Guangzhou government and has expanded its scale through asset injections from its parent company, Guangzhou Environmental Investment Group [5][10]. - The company operates a waste incineration capacity of 32,000 tons per day, holding a monopoly position in the Guangzhou area [5][10]. - The company has a high operational efficiency, with a projected revenue of 400 RMB per ton of waste in 2024, outperforming industry peers [5][38]. - The blending of aged waste is expected to enhance capacity utilization and profitability, with potential revenue increases of 6 billion RMB if 4 million tons of aged waste are processed annually [5][7]. - The company is entering a stable operational phase, committing to a dividend payout ratio of 60%, with a forecasted dividend yield of 4% for 2025 [5][28]. Summary by Sections 1. Company Overview - The company is the only waste incineration and biomass treatment platform under Guangzhou Environmental Investment Group, which is the largest waste management service operator in Guangzhou [10][13]. - The company has undergone significant restructuring and asset injections to solidify its market position [10][13]. 2. Financial Performance - The company has shown a compound annual growth rate (CAGR) of 45.54% in net profit from 2019 to 2024, with net profit expected to reach 932 million RMB in 2025 [6][17]. - The company’s revenue is primarily derived from operational activities, with a gross margin consistently above 40% [21][49]. - The company’s free cash flow is projected to turn positive in 2024, supported by reduced capital expenditures as major projects have been completed [26][28]. 3. Operational Efficiency - The company has a waste incineration capacity of 32,090 tons per day, with a significant portion of its operations in Guangzhou [33][34]. - The company benefits from high waste calorific values and large project scales, leading to superior operational efficiency compared to industry peers [38][39]. - The average waste treatment fee for the company was 152.6 RMB per ton in 2023, higher than the industry average [47]. 4. Future Growth Drivers - The ongoing blending of aged waste is expected to significantly improve capacity utilization, with estimates suggesting an increase in revenue by 1.6 billion RMB for every 1 million tons of aged waste processed [5][7]. - The company is also exploring opportunities in heat supply services to further enhance revenue streams [5][7].