Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Insights - In the first three quarters of 2025, the company achieved operating revenue of 3.25 billion yuan, a year-on-year increase of 16.3%, and a net profit attributable to the parent company of 750 million yuan, up 15.0% year-on-year. The third quarter alone saw a revenue of 1.19 billion yuan, growing 23.4% year-on-year, and a net profit of 280 million yuan, which is a 25.6% increase year-on-year [2][4][11]. Summary by Sections Financial Performance - The company’s operating gross margin improved by 0.8 percentage points, while the expense ratio decreased by 3.0 percentage points in the first three quarters. The comprehensive gross margin stood at 43.8% [2][11]. - Capital expenditure continued to decline, with cash flow remaining healthy. The capital expenditure for the first three quarters was 370 million yuan, a decrease of 14.0% year-on-year [11]. Business Drivers - The significant growth in performance is attributed to the accelerated co-incineration of aged waste and the acquisition of subsidiaries. The company has actively expanded its waste treatment services, significantly enhancing the capacity utilization of its waste-to-energy projects [11]. - The company signed a cooperation agreement for the excavation of aged waste in Guangzhou, aiming to process 2.37 million tons over approximately three years, which is expected to sustain performance in the coming years [11]. Market Positioning - The company possesses several advantages over its peers, including high-quality project locations, low national subsidy ratios, and high calorific values, which contribute to excellent cash flow performance [11]. - The company’s projects are primarily based on government procurement services, which provide a quasi-perpetual operating model, suggesting a premium in DCF valuation compared to traditional BOT models [11]. Profit Forecast and Valuation - The forecasted net profit attributable to the parent company for 2025-2027 is 940 million, 1.05 billion, and 1.12 billion yuan, respectively. The current market capitalization corresponds to PE ratios of 15.6x, 14.0x, and 13.1x for the respective years [11].

Investment Rating - The investment rating for the company is "Buy" and is maintained [8] Core Views - In the first half of 2025, the company achieved operating revenue of 2.065 billion yuan, a year-on-year increase of 12.60%, and a net profit attributable to the parent company of 461 million yuan, up 9.32% year-on-year. In Q2 alone, the company recorded operating revenue of 1.160 billion yuan, a 28.11% increase year-on-year, and a net profit of 265 million yuan, growing 21.17% year-on-year [2][6] - The acceleration of the co-incineration of aged waste has led to a 28.3% increase in waste processing volume in the first half of the year. The company processed 5.3583 million tons of municipal waste, significantly enhancing the capacity utilization of waste-to-energy projects [12] - The company's gross profit margin improved by 0.7 percentage points, while the expense ratio decreased by 4.3 percentage points, indicating operational efficiency [12] - Capital expenditures have continued to decline, with healthy cash flow maintained. The company’s cash collection ratio was 100.8%, reflecting a slight year-on-year increase of 1.2 percentage points [12] - The company possesses several advantages over its peers, justifying a higher valuation, including high-quality project locations, low national subsidy ratios, and strong cash flow performance [12] Summary by Sections Financial Performance - The company’s total revenue for 2025 is projected to be 4.198 billion yuan, with net profits of 932 million yuan, reflecting a PE ratio of 15.1x [17] - The gross profit margin for the first half of 2025 was 43.4%, with a significant contribution from the co-incineration of aged waste [12] Operational Insights - The company has actively expanded its waste processing services, leading to a notable increase in waste processing volume and energy generation [12] - The reduction in capital expenditures is attributed to the completion of ongoing projects, with future capital spending expected to decline further [12] Valuation and Forecast - The company is expected to achieve net profits of 930 million yuan, 1.04 billion yuan, and 1.11 billion yuan for 2025, 2026, and 2027 respectively, with a corresponding PE ratio decreasing to 12.7x by 2027 [12][17]

Group 1 - The core viewpoint of the report is a "buy" rating for Yongxing Co., supported by its government backing and asset injection for expansion [2] - Yongxing Co. has a waste incineration capacity of 32,000 tons per day, holding a monopoly position in the Guangzhou region [2] - The company is expected to enhance its profitability through co-incineration of aged waste, which may improve capacity utilization [2] - Yongxing Co. is entering a stable operational phase, committing to a dividend payout ratio of 60%, with a projected dividend yield of 4% by 2025 [2]

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].