Investment Rating - The industry investment rating is "Positive" [3] Core Viewpoints - The report emphasizes the investment opportunities in water assets combined with Real-World Assets (RWA) under innovative financing models. RWA refers to the tokenization of tangible or intangible assets through blockchain technology, allowing for the trading of these assets as digital tokens. As of July 30, 2025, the total RWA on-chain scale is $25.17 billion, with a total value of stablecoins at $253.66 billion [3][17][21]. - The report highlights the stable income and continuous cash flow characteristics of water assets, making them attractive for investment, especially in the context of the "14th Five-Year Plan" which emphasizes environmental quality and industrial green development [3][45]. Summary by Sections Market Performance - As of August 1, 2025, the environmental sector has underperformed the market, with a decline of 2.10%, while the Shanghai Composite Index fell by 0.94% to 3559.95. The top-performing sectors include pharmaceuticals and communications, while coal and non-ferrous metals saw significant declines [3][10][13]. Industry Dynamics - Recent statements from President Xi Jinping at the National Ecological Environment Protection Conference stress the importance of ecological civilization and the need for harmonious coexistence between humans and nature. Additionally, the Guangxi Zhuang Autonomous Region has allocated approximately $2.8995 million for air pollution prevention projects [27][28]. Investment Recommendations - The report suggests that the water and waste incineration sectors, as operational assets, are expected to see stable profit growth and positive cash flow. The report recommends focusing on companies such as Huanlan Environment, Xingrong Environment, and Hongcheng Environment, while also suggesting attention to Wangneng Environment and Junxin Co., Ltd. [3][45].

Group 1 - Kinko Environment has signed a cooperation framework agreement with Kunheng International for the issuance of Real-World Assets (RWA) based on its New Water Island product, aiming to enhance the market value of water assets through digital circulation and efficient management [1] - Kinko Environment emphasizes that recycled water should be the primary resource for global water utilization, capable of providing over 70% of resources through recycling, with the remaining 30% supplemented by other water sources [4] - The New Water Island, equipped with the self-developed WateRobot AI, integrates three functions: wastewater recycling, water supply, and wastewater treatment, significantly reducing land use by 80% and delivery time by 80%, while lowering the lifecycle costs of water plants [4] Group 2 - Kunheng International highlights two main advantages of the New Water Island as a quality underlying asset for RWA issuance: its dual nature as a physical and digital twin asset ensures real-time transparency and verifiability of operational data, and its status as a sustainable infrastructure generates stable cash flow with predictable long-term operational returns [5] - Kunheng International is a specialized service provider focused on RWA project solutions, leveraging its expertise in asset digitization, financial product design, and global network resources to offer efficient technology financial services across various sectors [5] - The collaboration aims to activate asset liquidity and reduce transaction costs by utilizing Hong Kong's position as an international financial hub, transforming traditional assets into freely tradable digital tokens through blockchain technology, thereby broadening financing channels and attracting diverse global investors [6]

Core Insights - The 2025 International Qingdao Water Conference gathered leaders and experts from the water treatment industry across 23 countries to discuss key areas such as industrial water conservation and seawater desalination [1] - Jinko Environment showcased its innovative product "New Water Island," which utilizes unconventional water resources to address water scarcity and achieve water freedom [1][2] - Jinko Environment's Chairman, Zhang Huichun, was awarded the title of "Top 100 Outstanding Figures in Desalination in China," highlighting the company's expertise and influence in the water treatment sector [2] Company Developments - The "New Water Island" product leverages artificial intelligence for unattended operation, transforming water treatment projects into standardized products, thus saving 80% in land area and delivery time [1] - The company officially joined the WATERPOSITIVE China Alliance, an international coalition focused on sustainable water resource management, marking a significant step towards efficient water utilization and sustainable development [2] - Joining the alliance allows Jinko Environment to collaborate with industry partners to explore new models and technologies for water resource recycling, promoting a greener and more efficient industry [2]

Core Viewpoint - The company, Jinko Environment (688466), is focusing on a three-pronged strategy of resource optimization, digitalization, and productization to transform the water treatment industry towards industrialized production and intelligent operations, ultimately aiming for universal water accessibility. Group 1: Strategic Framework - The company's "resource optimization, digitalization, and productization" strategy forms an organic and interdependent system [2] - The "resource optimization strategy" aims to build a water recycling ecosystem, reducing reliance on conventional water sources and providing core application scenarios for digitalization and productization [2] - The "digitalization strategy" leverages data to reconstruct water treatment paradigms, converting manual experiences into algorithmic models, which serve as a technical foundation for enhancing resource efficiency and productization [2] - The "productization strategy" integrates the results of the first two strategies through modular design, transforming traditional water treatment projects into mass-producible intelligent equipment, creating a positive cycle of process optimization, digital empowerment, and product iteration [2] Group 2: Technological Innovations - The "Water Radish" AI system is a self-developed smart water plant management platform that enables unattended operations through AI technology [3] - The AI system includes features such as operational condition management, which monitors and optimizes process data in real-time, generating autonomous optimization tasks [4] - It also provides smart online inspections, generating comprehensive monitoring reports covering various operational aspects, allowing users to analyze data further [4] - The intelligent work order system autonomously dispatches tasks when anomalies are detected, ensuring a fully digital assessment and recording of task handling quality [5] Group 3: Financial Performance - As of December 31, 2024, the company had total orders amounting to 670.73 million yuan, a year-on-year decrease of 8.84% [6] - The breakdown of orders shows a decline in water treatment technology solutions by 15.67% and a slight decrease in wastewater resource products by 3.81% [6][7] - The gross profit for the year-to-date period was 223.23 million yuan, a slight increase of 0.12%, with a gross margin of 36.17% [8] - The company reported a main revenue of 129 million yuan for Q1 2025, a year-on-year increase of 17.17%, and a net profit of 11.56 million yuan, up 33.14% [10] Group 4: Future Outlook and Shareholder Returns - The company has established a three-year shareholder return plan for 2023-2025, with cash dividends of 4.10 yuan per 10 shares distributed to shareholders [10] - The total dividend amount over two years is projected to be approximately 100.17 million yuan [10] - The company aims to balance short-term shareholder returns with long-term development needs, reflecting a commitment to investor-centric growth [10]