Group 1 - The central urban work conference emphasizes the shift from large-scale incremental expansion to stock quality improvement and efficiency enhancement, indicating a sustained catalytic phase for urban renewal, particularly in pipeline renovation, which is expected to drive demand for municipal plastic pipes [1] - The scale of existing buildings is substantial, with 3.54 billion buildings and a total construction area of 128 billion square meters, leading to a natural increase in demand for renovation as urban development progresses [1] - The estimated renovation demand for existing buildings is around 2.4 billion square meters, with total investment in pipelines projected to be approximately 4 trillion yuan from 2025 to 2029 [1] Group 2 - The first industry fixed asset investment maintained a robust growth of 6.5% year-on-year in the first half of 2025, supported by high-standard farmland construction initiatives [2] - The subsidy for high-standard farmland is set to increase from 1,300 yuan per mu to 2,400 yuan per mu in 2024, which is expected to enhance agricultural investment [2] - The company has seen a continuous increase in revenue from agricultural pipes since entering the sector in 2021, effectively mitigating the decline in municipal demand [2] Group 3 - The company maintains EPS forecasts of 0.67, 0.74, and 0.82 yuan for 2025-2027, with an adjusted target price of 5.89 HKD, reflecting a 35% increase from the previous target [2] - The company’s revenue structure adjustment has significantly enhanced its ability to resist risks from declining demand in a single sector, leading to an upgraded PE ratio forecast [2]

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 5.89, up from the previous target of HKD 4.36, representing a 35% increase [1][5]. Core Views - The report emphasizes that urban renewal is transitioning from large-scale expansion to improving existing stock, which is expected to catalyze demand for municipal plastic pipes due to infrastructure upgrades [1][2]. - The company is well-positioned to benefit from the growing demand in the agricultural plastic pipe sector, supported by stable growth in primary industry investments and high market share in engineering [1][4]. - The projected total investment in urban gas, water supply, and heating networks over the next five years is approximately CNY 4 trillion, indicating significant market opportunities [3]. Summary by Sections Urban Renewal and Market Potential - The central urban work conference highlighted urban renewal as a key strategy for enhancing quality and efficiency, with a substantial number of existing buildings (3.54 billion) and a total area of 128 billion square meters [2]. - The estimated demand for building renovations is around 2.4 billion square meters, with a stable upward trend expected [3]. Agricultural Investment and Demand Stability - First industry fixed asset investment grew by 6.5% year-on-year in the first half of 2025, indicating robust growth [4]. - The government aims to transform 4.55 million acres of farmland into high-standard farmland by 2035, with increased subsidy standards from CNY 1,300 to CNY 2,400 per acre [4]. Financial Projections and Valuation - The company’s EPS forecasts for 2025-2027 are CNY 0.67, CNY 0.74, and CNY 0.82 respectively, with a projected PE ratio of 8x for 2025 [5][10]. - Revenue is expected to grow from CNY 27,026 million in 2024 to CNY 33,404 million by 2027, reflecting a compound annual growth rate [10][19].