Core Insights - The report highlights the increasing investment from insurance funds in the environmental sector, particularly in water and waste management companies, indicating a strong investment value in this sector [2][10][13] - The government policies are expected to further enhance the investment capacity of insurance funds, providing a stable influx of capital into the market [2][10] - The environmental sector is characterized by stable cash flows and strong profitability, driven by essential municipal services and favorable operating models [2][10][13] Summary by Sections Investment Trends - Insurance funds have been actively increasing their stakes in environmental assets, with notable investments in companies like Green Power and China Water Affairs [2][10][13] - The report notes that since 2023, several insurance companies have made significant investments in various water and environmental firms, showcasing the sector's attractiveness [2][10] Financial Performance - The water and waste management sector is described as having stable demand and revenue, with costs primarily related to depreciation and labor, leading to consistent profitability [2][10][13] - The report anticipates improvements in cash flow and dividend payouts as the sector matures, with capital expenditures (Capex) significantly decreasing [3][10][13] Investment Recommendations - The report recommends several A-share and H-share companies in the environmental sector, including Hanlan Environment, Xingrong Environment, and Everbright Environment, citing their strong profit certainty and improving cash flows [3][10][13] - It emphasizes that investments in environmental assets can yield multiple benefits, including dividends, earnings per share (EPS) growth, and valuation increases [3][10][13]

Investment Rating - The report rates the environmental industry as "Overweight" indicating that it is expected to outperform the overall market [2][10]. Core Insights - Insurance capital is increasingly investing in environmental assets, driven by favorable policies and the potential for long-term stable returns [2]. - The report highlights that insurance companies have made multiple significant investments in environmental firms, showcasing the sector's investment value [2]. - The water and waste management sectors are characterized by stable demand and revenue, with a strong potential for profit growth due to factors like water price adjustments and reduced financial costs [2]. - Cash flow in the environmental sector is expected to improve, leading to higher dividends as companies respond to shareholder return demands [2]. - Investing in environmental assets offers insurance companies a combination of dividends, earnings per share (EPS) growth, and valuation increases [2]. Summary by Sections Investment Opportunities - The report identifies specific companies for investment, recommending A-shares such as Hanlan Environment, Xingrong Environment, Yongxing Co., Hongcheng Environment, Green Power, Junxin Co., and Chengfa Environment, as well as H-shares like Conch Venture, Everbright Environment, and Yuehai Investment [2]. Financial Metrics - The report provides detailed financial metrics for various environmental companies, including market capitalization, dividend rates, and expected earnings growth for 2024 and 2025 [5]. For instance, Junxin Co. has a market cap of 120 billion RMB with a projected PE of 22 and a dividend yield of 4.23% for 2024 [5].

Group 1: Project Updates - The Chengdu Xiwayan Reclaimed Water Plant, Chengdu Sludge Phase III Project, and Qionglai Kitchen Waste Project have been put into operation in the first half of 2025 [2] - The Chengdu Water Supply Plant Phase III (remaining capacity of 40,000 tons/day) has entered trial operation, with other ongoing projects expected to be operational between 2025 and 2026 [2][3] Group 2: Pricing Mechanisms - The water supply pricing mechanism allows for adjustments based on national policies and agreements, requiring government approval after cost audits and hearings [3] - The sewage treatment service fee is typically adjusted every 2 to 3 years, with a current tentative price of 2.63 CNY/ton for the central urban area of Chengdu for the 2024-2026 period [3] Group 3: Waste-to-Energy Project - The Chengdu Wanxing Environmental Power Plant Phase III is under construction, with a waste processing capacity of 5,100 tons/day, sludge processing capacity of 800 tons/day, and kitchen waste processing capacity of 800 tons/day, expected to be operational by 2026 [3] Group 4: Accounts Receivable Management - The company has seen an increase in accounts receivable due to market expansion and is actively managing collections [4] Group 5: Market Expansion Strategy - The company aims to be a national water and environmental service provider, focusing on expanding in Chengdu and surrounding areas while pursuing acquisitions to enhance resource integration and market presence [4] Group 6: Capital Expenditure and Dividends - Significant capital expenditures are expected due to multiple water supply and waste projects, with a gradual decrease anticipated as projects are completed and begin to generate returns [4] - The company is committed to increasing cash dividend ratios as major projects come online and capacity is released [4]

Group 1: Water Supply and Waste Management Projects - The company operates and is constructing water supply projects with a scale of approximately 4.3 million tons/day, with a key project in trial operation at 400,000 tons/day [2] - The company has wastewater treatment projects exceeding 480,000 tons/day, with over 450,000 tons/day already in operation and additional projects expected to be operational within 1-2 years [2] - The company’s waste incineration power generation projects have a total scale of 12,000 tons/day, with 5,100 tons/day already operational and an ongoing project (Wangxing Phase III) of 6,900 tons/day planned for operation in 2026 [3] Group 2: Sludge Disposal Business - The company has a total sludge disposal project scale of 3,116 tons/day, including operational projects such as Chengdu First City Sewage Sludge Treatment Plant (1,400 tons/day) and Wangxing Environmental Power Plant (820 tons/day) [3] - An ongoing project at Chengdu Wangxing Environmental Power Plant (Phase III) will have a sludge treatment capacity of 800 tons/day [3] Group 3: Accounts Receivable and Market Expansion - The company has seen an increase in accounts receivable due to market expansion and business growth, with a strong focus on managing and collecting receivables [3] - The company aims to be a national water and environmental service provider, focusing on expanding its market presence in Chengdu and surrounding areas while pursuing acquisitions to enhance resource integration and industry positioning [3] Group 4: Capital Expenditure and Shareholder Returns - The company has significant capital expenditures due to multiple ongoing water supply and waste projects, which are expected to decrease as these projects become operational within the next 1-2 years [4] - The company emphasizes shareholder returns and has been increasing cash dividend ratios, with plans to further enhance returns once major projects are operational and capacity is released [4]

Report Summary 1. Report Industry Investment Rating No information provided. 2. Report's Core View No information provided. 3. Summary According to Relevant Catalogs 3.1. Research Basic Situation - The research object is Xingrong Environment, belonging to the public utilities industry. The reception time was July 9, 2025, and the listed company's reception staff was Liu Jie [17]. 3.2. Detailed Research Institutions - The research institutions include China Merchants Cigna (a life - insurance company with related personnel Chai Ruoqi, Peng Yiyang, and Zhao Ruoqiong), CITIC Asset Management (an asset management company with related personnel Zhang Xiaoliang, Sun Shuguang, Yuan Zhizhi, and Liu Jiangchao), and Changjiang Securities (a securities company with related personnel Xu Ke and Li Bowen) [18]. 3.3. Main Content Data - **Company's Main Business**: Xingrong Environment is a leading comprehensive water - environmental protection service provider in China, integrating investment, R & D, design, construction, and operation. Its business segments include tap - water business, sewage treatment and reclaimed - water utilization business, environmental protection business (including waste incineration power generation, landfill leachate treatment, sludge disposal, and food waste disposal), and engineering business [25]. - **Water Supply and Drainage Projects**: The scale of the company's current operating and under - construction water supply projects is about 4.3 million tons per day, with the remaining 400,000 tons per day of the third phase of Chengdu Tap - water Plant No.7 in the trial - operation stage. The scale of the company's current operating and under - construction sewage treatment projects exceeds 4.8 million tons per day, with over 4.5 million tons per day already in operation. The under - construction projects are planned to be put into operation in the next 1 - 2 years [27]. - **Water Supply and Drainage Pricing Mechanism**: For the water supply business, price adjustments can be applied to the government price administrative department under certain conditions. The adjustment must go through procedures such as cost supervision and hearings and be adjusted synchronously with upstream resource water prices. For the sewage treatment business, the service - fee unit price is adjusted regularly every 2 or 3 years according to the franchise agreement. Temporary adjustments can be applied for due to factors such as changes in sewage - treatment discharge standards. The tentative average sewage - treatment service fee in the fifth phase (2024 - 2026) in the central urban area of Chengdu is 2.63 yuan per ton [29][30]. - **Waste Incineration Power Generation Project**: The company is currently promoting the construction of the third phase of Chengdu Wanxing Environmental Protection Power Plant, with a domestic - waste treatment scale of 5,100 tons per day, a sludge co - treatment scale of 800 tons per day, and a food - waste treatment scale of 800 tons per day. It is expected to be put into operation in 2026 [32]. - **Sludge Disposal Business**: The scale of the company's current operating and under - construction sludge - disposal projects is 3,116 tons per day. Operating projects include the first, second, and third phases of Chengdu First Urban Sewage Sludge Treatment Plant (with a total treatment scale of 1,400 tons per day), the first and second phases of Wanxing Environmental Protection Power Plant (with a total sludge co - treatment scale of 820 tons per day), and a ditch - sludge disposal project (with a treatment scale of about 96 tons per day). The under - construction project is the third phase of Chengdu Wanxing Environmental Protection Power Plant, with a sludge co - treatment scale of 800 tons per day [34][35]. - **Accounts Receivable**: With the company's market expansion and business - scale growth in recent years, accounts receivable have increased. The company attaches great importance to accounts - receivable management and actively conducts collection work [37]. - **Capital Expenditure and Dividends**: The company has had large capital expenditures in recent years due to multiple water - supply, drainage, and solid - waste projects. These projects will be put into operation in the next 1 - 2 years, and capital expenditures will gradually decline. The company values shareholder returns and has been increasing the cash - dividend ratio in recent years. In the future, it will be more capable of further improving the level of shareholder returns [38].

Core Viewpoint - The company, Xingrong Environment, is a leading comprehensive water and environmental service provider in China, focusing on investment, research, design, construction, and operation across various segments of the water and waste management industry [2][7]. Business Overview - The company's main business segments include water supply, wastewater treatment, water reuse, and environmental services, which encompass waste incineration power generation, leachate treatment, sludge disposal, and kitchen waste disposal [2]. Operational Projects - The company currently operates and has under construction water supply projects with a total capacity of approximately 4.3 million tons per day and wastewater treatment projects exceeding 4.8 million tons per day. Notable projects include the Chengdu Xiwayan Reclaimed Water Plant, which has commenced operations, and several others in the commissioning phase [3]. Waste-to-Energy Projects - The company is advancing the Chengdu Wanxing Environmental Power Plant (Phase III), which will handle 5,100 tons per day of municipal waste, 800 tons per day of sludge, and 800 tons per day of kitchen waste, with an expected operational date in 2026 [4]. Accounts Receivable Management - The company has seen an increase in accounts receivable due to market expansion and business growth, and it places significant emphasis on managing and collecting these receivables [5]. Pricing Mechanism - The pricing for wastewater treatment services is determined by agreements with government entities, typically adjusted every 2 to 3 years. A recent approval set the tentative average price for wastewater treatment in Chengdu's central urban area at 2.63 yuan per ton for the 2024-2026 period [6]. Capital Expenditure and Dividends - The company has experienced substantial capital expenditures due to multiple ongoing water supply and waste projects, with expectations of reduced expenditures as these projects come online. The company is committed to increasing cash dividends for shareholders as operational capacity expands [7]. Financial Performance - In the first quarter of 2025, the company reported a main revenue of 2.023 billion yuan, a year-on-year increase of 9.61%. The net profit attributable to shareholders was 508 million yuan, up 11.19% year-on-year, with a debt ratio of 58.99% and a gross margin of 46.02% [7]. Analyst Ratings - Over the past 90 days, six institutions have rated the stock, with four buy ratings and two hold ratings, and the average target price set at 7.36 yuan [8]. Earnings Forecast - Various institutions have provided earnings forecasts for the company, with projected net profits for 2025 ranging from 2.115 billion yuan to 2.331 billion yuan, and increasing in subsequent years [9].

Group 1: Company Overview - The company is a leading comprehensive water and environmental service provider in China, with a complete industrial chain including investment, research and development, design, construction, and operation [2][3]. Group 2: Project Operations - The company currently operates and has under construction water supply projects with a scale of approximately 4.3 million tons/day and wastewater treatment projects exceeding 4.8 million tons/day [3]. - The Chengdu Xiwayan Reclaimed Water Plant has been put into operation this year, while the Chengdu Water Supply Plant Phase III (remaining 400,000 tons/day) and Chengdu Sixth Reclaimed Water Plant (Phase II) are in debugging or trial operation stages [3]. Group 3: Waste-to-Energy Projects - The company is advancing the Chengdu Wanxing Environmental Power Plant (Phase III) project, which has a household waste treatment capacity of 5,100 tons/day, sludge co-treatment capacity of 800 tons/day, and kitchen waste treatment capacity of 800 tons/day, expected to be operational by 2026 [3]. Group 4: Accounts Receivable Management - The company has seen an increase in accounts receivable due to market expansion and business growth, and it places high importance on accounts receivable management and collection efforts [3]. Group 5: Pricing Mechanism - The wastewater treatment service fee is adjusted according to the terms set in the franchise agreement with relevant government entities, typically reviewed annually or biannually. The tentative price for the fifth phase (2024-2026) of wastewater treatment services in Chengdu's central urban area is set at 2.63 CNY/ton [4]. Group 6: Capital Expenditure and Dividends - The company has significant capital expenditures due to multiple water supply and solid waste projects, which are expected to decrease as these projects come online in the next 1-2 years. The company emphasizes shareholder returns and aims to increase cash dividend ratios as major projects are completed and capacity is released [4].

Group 1 - Chengdu Xingrong Environment Co., Ltd. is a leading large-scale water and environmental service provider in China, focusing on water supply and drainage, waste disposal, and resource recycling [6][8] - The company has a total asset of 4,844,846.86 million yuan as of the end of 2024, reflecting an increase of 11.24% from 2023 [6] - The company's operating income for 2024 is reported at 904,866.98 million yuan, an increase of 11.90% compared to 2023 [6] Group 2 - The company has issued bonds under the management of CITIC Securities, with the latest bond interest rate adjusted to 3.64% as of August 7, 2023 [3][6] - The total liabilities of the company amount to 2,889,555.87 million yuan, which is a 12.16% increase from the previous year [6] - The company has established a special repayment working group to ensure timely payment of bond principal and interest [9][10] Group 3 - The company has successfully completed the interest payment for the bonds on August 6, 2024, without any defaults [11] - The company has a net profit of 205,483.74 million yuan for 2024, representing an 8.75% increase from 2023 [6] - The company has maintained a stable cash flow and has not experienced any significant adverse changes affecting its debt repayment capacity [8][9]

Group 1: Accounts Receivable and Project Development - The company has seen an increase in accounts receivable due to expanded business scale and is actively managing collections [2] - The Chengdu Wanxing Environmental Power Plant (Phase III) is under construction, with a waste processing capacity of 5,100 tons/day, sludge treatment of 800 tons/day, and kitchen waste processing of 800 tons/day, expected to be operational by 2026 [2][3] Group 2: Market Expansion and Pricing Mechanisms - The company aims to be a national comprehensive water and environmental service provider, focusing on expanding its market presence in Chengdu and surrounding areas while exploring niche markets nationwide [3] - The water pricing adjustment mechanism is based on national policies and agreements, requiring government approval after cost audits and hearings [3] - The temporary adjustment of sewage treatment prices can occur due to significant cost changes, with the average sewage treatment service fee in Chengdu's central urban area set at 2.63 CNY/ton for 2024-2026 [3][4] Group 3: Capital Expenditure and Shareholder Returns - Recent capital expenditures have been significant due to multiple water supply and waste projects, but these are expected to decrease as projects become operational within the next 1-2 years [4] - The company is committed to increasing cash dividends for shareholders, with plans to enhance returns once major projects are completed and operational [4]

Group 1: Company Overview - The company is a leading comprehensive water and environmental service provider in China, with a complete industry chain including investment, research and development, design, construction, and operation [2]. - Current operational and construction capacities include: - Water supply projects: approximately 4.3 million tons/day - Wastewater treatment projects: over 4.8 million tons/day - Reclaimed water utilization projects: approximately 1.3 million tons/day - Waste incineration power generation: 12,000 tons/day - Leachate treatment: 8,430 tons/day - Sludge disposal: 3,116 tons/day - Kitchen waste disposal: 1,950 tons/day [3]. Group 2: Pricing Mechanisms - Water pricing adjustments are submitted to government price authorities based on national policies and agreements, requiring cost audits and public hearings [5]. - Wastewater treatment service fees are adjusted every 2 to 3 years, with a current tentative average price of 2.63 RMB/ton for the 2024-2026 period in Chengdu [6]. Group 3: Project Developments - The Chengdu Wanxing Environmental Power Plant (Phase III) is under construction, with a waste processing capacity of 5,100 tons/day, sludge processing of 800 tons/day, and kitchen waste processing of 800 tons/day, expected to be operational by 2026 [7]. Group 4: Accounts Receivable Management - As of the end of 2024, accounts receivable amounted to approximately 4 billion RMB, with improvements in collection in some regions [8]. - The company emphasizes accounts receivable management and actively engages in collection efforts, integrating this into performance assessments. Group 5: Market Expansion Strategy - The company focuses on national expansion in the water and environmental service sector, particularly in the Chengdu market, while exploring resource integration and niche markets nationwide [8]. Group 6: Capital Expenditure and Dividends - Significant capital expenditures are expected due to multiple ongoing water supply and waste projects, with a gradual decrease anticipated as projects become operational in the next 1-2 years [8]. - The company is committed to increasing cash dividend ratios as major projects are completed and capacity is released [8].