Investment Rating - The report maintains a "Recommendation" rating for the industry [3] Core Insights - The report highlights a narrowing decline in hydropower generation, with significant year-on-year growth in photovoltaic and nuclear power generation [11] - The report emphasizes the importance of the newly established capacity pricing mechanism in Gansu Province, which raises the capacity price to 330 RMB/kW per year, enhancing the stability of coal power units [21][23] - The report recommends specific companies such as Sheneng Co., Guodian Power, and China Nuclear Power, while suggesting attention to Zhongmin Energy and Funiu Co. [7] Industry Overview - The environmental and public utility sectors experienced declines, with the environmental index down 0.49% and the public utility index down 1.37%, which is larger than the overall market decline [7] - The report notes that the total market capitalization of the industry is 383.21 billion RMB, with 240 listed companies [3] Key Events Analysis - In June, the total power generation reached 796.29 billion kWh, a year-on-year increase of 1.7%, with hydropower generation showing a reduced decline [11] - The report mentions significant events such as the issuance of guidelines for distributed photovoltaic power development by Jiangxi Province [2][69] Market Performance - The report indicates that the environmental sector has a cumulative increase of 11.17% since the beginning of 2025, outperforming the CSI 300 and ChiNext indices [7] - The report details the performance of various sub-sectors, with the electricity sector showing a cumulative increase of 0.74% [28] Key Data Tracking - The report tracks coal prices, noting that the Qinhuangdao 5500 kcal thermal coal price is 636 RMB/ton, a 0.79% increase from the previous week [39] - It also highlights the water levels in major reservoirs, with the Three Gorges Reservoir at 158.37 meters, a year-on-year decrease of 2.7% [41] Electricity Market - The report states that the weighted average electricity price in Guangdong Province reached a peak of 484.16 RMB/MWh, a 71.0% increase from the previous week [58] - It notes that the transaction volume in the Shandong Province's medium and long-term electricity market increased by 49.9% [58]

Investment Rating - The report maintains an "Outperform" rating for the environmental and public utility sector [7]. Core Insights - The report emphasizes the potential of Real World Assets (RWA) in conjunction with renewable energy companies, highlighting that RWA could become a significant development direction for stablecoins, with a projected market size of $16 trillion by 2030 [24][39]. - The report discusses the recent advancements in RWA, particularly in Hong Kong, where the Ensemble project has initiated themes related to green and sustainable finance, indicating a shift towards tokenizing assets like carbon credits and renewable energy charging stations [39][40]. Summary by Sections 1. RWA and Renewable Energy - RWA connects real-world assets with digital finance, providing unique value in bridging virtual and real economies [27]. - The Ensemble project in Hong Kong includes green finance as a key theme, with the first project involving the tokenization of electric vehicle charging stations [39][40]. - RWA technology can lower investment thresholds and attract more investors, offering new financing channels for renewable energy companies [42]. 2. Market Review - From July 5 to July 18, the Shanghai Composite Index rose by 1.79%, while the environmental index increased by 2.66%, outperforming the composite index [43]. - The public utility index decreased by 0.27%, underperforming the Shanghai Composite Index by 2.06 percentage points [43]. 3. Market Information Tracking - In July 2025, the average transaction price for electricity in Jiangsu was 395.6 RMB/MWh, up 26.47% month-on-month [55]. - The price of thermal coal at Qinhuangdao Port was reported at 642 RMB/ton, reflecting a 19 RMB/ton increase from the previous week [58]. 4. Industry Dynamics - The report notes that the garbage incineration sector is seeing improved cash flow due to debt reduction policies, while companies are exploring new trends such as high-energy direct power supply [13]. - The water service sector is expected to enhance profitability as residential water prices gradually adjust [13]. 5. Investment Portfolio and Recommendations - For public utilities, the report suggests focusing on thermal power companies that are expected to perform well due to proximity to coal production areas and cost reductions [12]. - In the green energy sector, companies that integrate power generation, sales, and consumption are recommended for their resilience against market disruptions [12].

Core Viewpoint - The Hong Kong stock market is experiencing significant changes, with the Hang Seng AH Premium Index declining and reaching a new low for the year, indicating a narrowing premium of A-shares relative to H-shares, reflecting improved liquidity and value reassessment in the market [1] Group 1: AH Premium Rate Trends - The trend of narrowing AH premium rates is particularly evident at the individual stock level, with all 160 A+H listed companies seeing their AH premium rates drop below 200% [3] - The highest premium rate is for Chenming Paper, at 199.54%, contrasting sharply with the end of 2024 when over 10 stocks had premium rates exceeding 200% [3] - As of July 18, the number of stocks with premium rates over 100% has decreased to 32, down from 57 at the end of 2024, with BYD and Hongye Futures leading at 185.83% and 185.47% respectively [3] - Notably, four stocks are now trading at a discount of A-shares relative to H-shares, with CATL showing the largest discount at 24.63% [3] Group 2: Foreign Investment Trends - H-shares have performed strongly this year, supporting the narrowing premium rates, with seven H-shares doubling in value, including Rongchang Bio, which surged by 3.91 times [4] - Foreign institutions are increasingly favoring leading assets in the Hong Kong market, as evidenced by Wellington Management's purchase of 1.14 million shares of Hengrui Medicine for approximately 84.93 million HKD [4] - CATL's H-shares have seen a cumulative increase of 50.19% since their listing on May 20, with JPMorgan increasing its stake to 5.26% after purchasing 851,600 shares [4] - WuXi AppTec also attracted foreign investment, with FMR LLC increasing its holdings to 14.04% after buying 1.72 million shares [4] Group 3: Structural Changes in the Market - The Hong Kong stock market is undergoing structural changes, with new economy sectors like innovative pharmaceuticals, new energy, and consumer electronics rapidly emerging [5] - These sectors demonstrate stronger profit growth certainty and align better with global investors' long-term allocation preferences [5] - There is a noticeable differentiation in market structure, with large-cap companies having significantly lower premium rates compared to small-cap companies, indicating institutional investors' growing recognition of industry leaders and companies with solid fundamentals [5]

Investment Rating - The report maintains an "Overweight" rating for the public utility industry, expecting the industry index to outperform the market index by more than 10% in the next six months [47]. Core Insights - The public utility index increased by 0.7% over the past two weeks, underperforming the CSI 300 index by 0.9 percentage points, ranking 23rd among 31 industries [5][12]. - The report highlights significant growth in the number of market participants in the electricity sector, with 816,000 entities expected in 2024, a year-on-year increase of 8.9% [43]. - The report suggests focusing on specific companies such as Huadian International and Guodian Power in the thermal power sector, and Xin'ao Co., Jiufeng Energy, and New Natural Gas in the gas sector due to favorable market conditions [43][44]. Summary by Sections 1. Market Review - As of July 17, the public utility index has seen a 0.7% increase year-to-date, lagging behind the CSI 300 index by 1.8 percentage points, ranking 24th among 31 industries [5][12]. - All sub-sectors of the public utility index experienced growth, with the heating service sector rising by 5.2% and the photovoltaic power sector by 4.0% [14]. 2. Industry Valuation - The public utility sector's price-to-earnings (P/E) ratio is currently at 18.5 times, with the photovoltaic sector having a notably high P/E ratio of 776.9 times [20][21]. 3. Industry Data Tracking - The average price of Shenxi Yulin thermal coal (Q6000) was 584 RMB/ton, down 2.1% from the previous value, while the average price at Qinhuangdao Port (Q5500) was 623 RMB/ton, up 1.6% [33][36]. 4. Key Industry News - The National Development and Reform Commission has issued a response regarding the normalization of electricity trading mechanisms across grid operating areas, aiming for better resource allocation [41]. - The Zhejiang Provincial Development and Reform Commission released guidelines for emergency management in offshore wind power projects [41]. 5. Weekly Industry Perspective - The report emphasizes the importance of monitoring coal prices and suggests that the average price of thermal coal has decreased this year, which could impact thermal power companies [43].

Core Viewpoint - The A-share market showed mixed performance with the Shanghai Composite Index rising by 0.09% and significant movements in various sectors, particularly the CPO concept and robotics [1] Market Performance - The three major A-share indices experienced upward fluctuations in the morning session, with the Shanghai Composite Index up by 0.09%, Shenzhen Component Index up by 0.87%, and ChiNext Index up by 1.13% [1] - The total trading volume in the Shanghai and Shenzhen markets reached 898.8 billion, a decrease of 16.1 billion compared to the previous trading day [1] Sector Highlights - The CPO, military equipment, and PEEK materials sectors saw notable gains, while insurance, real estate, electricity, and gas sectors faced declines [1] - The humanoid robot sector performed strongly, with Nanjing Julong hitting the daily limit up, and both Zhongdali De and Zhiwei Intelligent also reaching the limit up [1] - The military equipment restructuring concept surged in the morning session, with the construction industry touching the daily limit up [1] - The real estate sector experienced volatility, with Shibei Gaoxin hitting the daily limit down and Zhongxin Group dropping over 5% [1]

Investment Rating - The report maintains a "Positive" outlook on the public utility sector, indicating an expectation for the industry to outperform the overall market [2]. Core Insights - The report highlights significant improvements in coal-fired power profitability due to a notable decrease in coal prices, with a 25.5% year-on-year drop in the average spot price of 5500 kcal thermal coal [2]. - Hydropower performance varies across regions, with major hydropower companies in Sichuan and Yunnan showing increased generation hours, leading to a strong performance in the first half of 2025 [2]. - Nuclear power generation is expected to grow steadily with the expansion of new units and ongoing approvals for additional reactors, ensuring long-term growth potential [2]. - Natural gas consumption faced short-term pressure but is anticipated to recover in the medium to long term as costs decrease and residential gas prices adjust [2]. Summary by Sections Coal Power - In Q2 2025, the average utilization hours for coal-fired power plants decreased by 118 hours year-on-year, but profitability is expected to improve due to lower coal prices [2]. - Companies like Jingneng Power and Jiantou Energy reported over 100% growth in net profit for the first half of 2025 [2]. Hydropower - National hydropower utilization hours reached 1023 hours from January to May 2025, a decrease of 70 hours year-on-year, but major hydropower companies reported significant increases in generation [2]. - Companies such as China Yangtze Power and Huaneng Hydropower saw their hydropower generation increase by 5.01% and 10.93% respectively in the first half of 2025 [2]. Nuclear Power - Nuclear power generation for China Nuclear Power and China General Nuclear Power increased by 12.01% and 6.11% respectively in the first half of 2025 [2]. - The approval of new nuclear units is expected to support future growth, with 10 new units approved in April 2025 [2]. Natural Gas - Natural gas consumption in China decreased by 1.3% year-on-year in the first five months of 2025, but there is an upward trend in terminal consumption [2]. - The report anticipates a recovery in natural gas prices due to increased LNG exports from major producing regions [2]. Performance Forecast - The report forecasts significant profit growth for key companies in the public utility sector for the first half of 2025, with various companies expected to see net profit growth rates ranging from 0% to over 100% [2][3]. - Recommendations include focusing on companies with strong growth potential in hydropower, nuclear power, and natural gas sectors [2].

Summary of Conference Call Notes Industry Overview - The discussion primarily revolves around the **electric power industry**, focusing on both **thermal power** and **renewable energy** sectors, particularly in the context of recent market performance and regulatory changes. Key Points and Arguments Hydrological Data and Its Impact - Recent hydrological data indicates a slight decline, with the inflow at the Three Gorges Dam showing a year-on-year decrease of 2% compared to the beginning of the year. In contrast, the inflow at the Yangtze River has increased by 11.2% year-to-date. This situation has led to significant water retention efforts at the Yangtze River, impacting inflow rates substantially [1][1]. Performance of Power Companies - Companies such as **Huayin, Jingkong, and Datang Power** have shown strong performance, primarily driven by improved earnings in the thermal power sector. Conversely, gas and hydropower companies have experienced declines, indicating a lack of strong market preference for local assets [2][2]. Investment Sentiment and ETF Trends - The overall allocation to the electric power sector has decreased significantly, with the proportion dropping to 0.87% by the end of Q1, a reduction of approximately 66% from previous levels. This low allocation is attributed to a lack of confidence in ETFs, despite positive trends in the performance of thermal and hydropower ETFs [3][3]. Future Outlook for Thermal Power - The thermal power sector's performance is expected to extend beyond Q2, with ongoing strong earnings anticipated for Q3 and the full year. Current low coal prices are likely to further adjust the annual average coal price downward, with spot coal prices down by 227 yuan year-on-year [5][5]. Dividend Stability and Policy Implications - The stability of dividends is projected to increase, aligning with the broader trend of public sector investment. The introduction of new policies, particularly in Shandong, has set benchmark prices for mechanism electricity, which may enhance the return on equity (ROE) for green energy projects [6][9]. Mechanism Electricity Pricing - The recent policy changes in Shandong have established higher benchmark prices for mechanism electricity, which could positively influence the valuation of pre-construction investments. The expected utilization hours for existing projects are estimated to be between 80% and 85% [9][11]. Investment Strategies - Two primary investment strategies are suggested: focusing on short-term opportunities in green energy during the performance vacuum period and identifying long-term investment opportunities as policies are implemented. Companies with high ROE in the energy sector are highlighted as worthy of attention [14][15]. Market Dynamics and Portfolio Composition - The current market dynamics indicate a significant under-allocation to the electric power sector, with many companies showing a holding ratio of around 0.1%. This under-allocation is expected to shift as the market begins to recognize the value in both thermal and hydropower investments [17][18]. Additional Important Insights - The call concluded with a summary of investment combinations, emphasizing the defensive and offensive strategies within the thermal and renewable energy sectors, respectively. The importance of policy-driven investments in green energy was reiterated, highlighting the potential for high ROE companies in the energy sector [19][19].

Investment Rating - The report maintains a "Buy-A" investment rating for the company [4][6]. Core Views - The company's H1 2025 performance aligns with expectations, showing a significant improvement in cash flow, with operating cash flow increasing by 601.92% year-on-year [2][3]. - Revenue for H1 2025 reached 15.338 billion yuan, a year-on-year increase of 8.59%, while net profit attributable to shareholders was 309 million yuan, up 7.13% year-on-year [1][2]. Financial Performance Summary - H1 2025 total revenue: 15.338 billion yuan (up 8.59% YoY) [1][2]. - H1 2025 net profit: 309 million yuan (up 7.13% YoY) [1][2]. - H1 2025 operating cash flow: 685 million yuan (up 601.92% YoY) [1][2]. Business Structure and Growth Drivers - The city gas segment generated revenue of 6.577 billion yuan (down 4.88% YoY), primarily due to a weak domestic natural gas market [3]. - Supply chain and other business revenues reached 8.761 billion yuan (up 21.52% YoY), becoming the core growth driver [3]. - The company leverages its energy supply chain, engineering services, technology research and development, and equipment manufacturing to enhance growth potential under the "Energy + Technology + Supply Chain" strategy [3]. Future Projections - Expected revenue growth rates for 2025-2027 are 3.9%, 9.0%, and 8.0% respectively, with net profit growth rates of 7.7%, 9.7%, and 8.7% [4]. - Corresponding PE ratios for 2025-2027 are projected to be 14.9, 13.6, and 12.5 times [4].

Core Viewpoint - Wang Yusuo, a low-profile business tycoon from Hebei, is systematically advancing the A+H market listing plan for his assets, with New Hope Holdings planning to privatize its Hong Kong-listed subsidiary, New Hope Energy, and subsequently proceed with an IPO in Hong Kong [1][3]. Group 1: Company Strategy and Financials - New Hope Energy will be privatized at a ratio of 1 share of New Hope Energy for 2.9427 shares of newly issued H-shares of New Hope Holdings, plus HKD 24.50 in cash [1]. - The introduction listing method allows New Hope Holdings to bypass the traditional IPO process, shortening the listing timeline, but does not involve new share issuance or capital raising [1][5]. - New Hope Holdings claims to have sufficient cash on hand, but the market's confidence in its financial strength remains to be validated [2][3]. - The privatization transaction is valued at approximately HKD 600 billion, which is nearly 90% of New Hope Energy's market value of HKD 673 billion [11]. - If the cash portion of the transaction is fully financed through borrowing, the company's debt-to-asset ratio will increase from 54.3% to 67.08% [11]. - New Hope Holdings reported a significant decline in net profit, down 36.64% year-on-year, indicating financial strain amid a downturn in the natural gas industry [11][15]. Group 2: Market Position and Challenges - New Hope Holdings is the largest private gas company in China, serving over 31.38 million households and more than 270,000 enterprises across 261 urban gas projects [6][14]. - The company has faced challenges due to the sluggish real estate market, which has adversely affected its gas business and overall revenue [3][15]. - Revenue has decreased from CNY 1,438.42 billion to CNY 1,359.1 billion from 2023 to 2024, with a continued decline in the first quarter of 2025 [15]. - The stock prices of both New Hope Holdings and New Hope Energy have been stagnant, with New Hope Energy's stock price dropping significantly since its peak in August 2021 [4][18]. Group 3: Diversification and Future Outlook - Wang Yusuo has attempted diversification through various ventures, including the establishment of multiple listed companies, but these have not performed well [19][22]. - New Hope Holdings is expected to leverage its capital operations to stimulate asset appreciation, despite the financial burdens associated with the privatization of New Hope Energy [9][24]. - The company aims to achieve integration of upstream and downstream operations, enhancing its market position [5][6]. - The potential for H-shares to trade at a premium in the Hong Kong market remains uncertain, as many gas stocks are currently trading at significant discounts compared to their A-share counterparts [24].

Summary of the Conference Call for Hanlan Environment Company Overview - **Company**: Hanlan Environment - **Industry**: Waste Management and Environmental Services Key Points and Arguments Financial Performance - Hanlan Environment achieved a net profit attributable to shareholders of 967 million yuan in the first half of 2025, representing a year-on-year increase of 9%. Excluding one-time gains, the growth rate was 27.71% [3] - The company reported a 15.5% growth in organic business, surpassing the 10% growth in Q1 [3] - The company’s revenue from solid waste treatment has seen a compound annual growth rate (CAGR) of 29% from 2014 to 2023, while net profit attributable to shareholders grew at a CAGR of 20% [2][6] - In 2023, revenue slightly decreased, but net profit increased by 24.7%, primarily due to reduced capital expenditure in waste-to-energy projects [2][6] Core Business Segments - **Solid Waste Treatment**: This is the core business, with significant growth in revenue and profit over the years. The company has a current operational capacity of approximately 36,000 tons, with 31,000 tons already in operation [12] - **Gas Business**: The gas segment expanded into Jiangxi through acquisitions, maintaining a stable supply of around 1 billion cubic meters. The segment turned profitable in 2023 due to price adjustments [2][7] - **Water Supply**: The company has a complete water supply service chain covering all towns in the Nanhai District, with stable operations since 1995 [5][8] Future Development Focus - The company plans to enhance the management of waste-to-energy projects, explore the integration of waste incineration with heating to improve profit margins, and optimize core segments like gas and solid waste treatment [9] - There is a focus on expanding into emerging markets and strengthening national integration [9] Recent Acquisitions and Market Position - Hanlan Environment completed the privatization of Yuefeng Environmental, adding approximately 50 million yuan in operating profit [2][3] - The acquisition of Yuefeng is expected to increase the company’s total capacity to around 90,000 tons, positioning it among the top three in the industry [16] - The company is cautiously expanding into overseas markets, with a recent acquisition of a 40% stake in New Yuan China, which holds 4,500 tons of waste-to-energy capacity [13] Operational Efficiency - The company’s capacity utilization rate reached 112% in 2024, ranking second in the industry, while the overall industry utilization rate is between 70% and 80% [17] - The company has successfully recovered a significant amount of historical accounts receivable, with 2.4 billion yuan recovered in 2024, exceeding expectations [30] Dividend Policy and Future Outlook - The company has been increasing its dividend payout ratio, reaching 30.2% in 2023, with plans for continued increases in the coming years [31] - Future growth is expected to be driven by contributions from the heating segment and potential price increases in water supply [32] Industry Context - The waste management industry is characterized by a few dominant players, with Hanlan Environment positioned to become a leading entity following its acquisition of Yuefeng [26] - The company is viewed favorably in the context of rising dividend yields and stable growth prospects in the environmental sector [33] Additional Important Information - The company’s management has a strong track record of exceeding expectations in both performance and acquisitions [11] - The financial performance of Yuefeng Environmental post-acquisition shows promising metrics, with a revenue of 4.2 billion HKD and a net profit of 924 million HKD in 2024 [25]