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].

Investment Rating - The investment rating for the company is "Buy" [10] Core Views - Yongxing Co., Ltd. is the sole investment and operation entity for waste incineration power generation projects in Guangzhou, with a total operational capacity of 32,090 tons/day as of the end of 2024. The company has no ongoing construction projects, and its revenue from construction has significantly declined to 0.15 million in 2023, with no contributions expected in 2024. The quality of revenue and profit is high [3][7][25]. - The company benefits from a favorable project location, low national subsidy ratio, high calorific value, and large individual project sizes, leading to excellent cash flow performance. The cash collection ratio for 2024 is 100%, and the net cash ratio is 232% [8][13][70]. - The company operates under a government procurement service model, which is akin to perpetual operation, providing a stable revenue stream. The majority of its projects are located in Guangzhou, ensuring a steady supply of waste [13][60]. Summary by Sections Company Overview - Yongxing Co., Ltd. was established in 2009 and is controlled by the Guangzhou Environmental Investment Group. It focuses on waste incineration power generation and has expanded into biomass processing since 2021. The company operates 14 waste incineration projects and 4 biomass processing projects, with a total operational capacity of 32,090 tons/day for incineration and 2,590 tons/day for biomass [7][18][25]. Financial Performance - The company achieved a revenue of 35.36 billion in 2023, a year-on-year increase of 7.4%, and a net profit attributable to shareholders of 7.35 billion, up 2.7%. For 2024, the projected revenue is 37.65 billion, with a growth of 6.4%, and a net profit of 8.21 billion, reflecting an 11.7% increase [25][26]. Competitive Advantages - The company has several competitive advantages over its peers, including: - High-quality project locations with low national subsidy ratios and high calorific values, leading to superior cash flow performance [8][60]. - A government procurement service model that ensures stable operations and revenue [13][60]. - Strong support from its major shareholder, which guarantees sufficient waste collection and enhances operational efficiency [13][60]. - Opportunities for growth in waste processing volume due to population inflow and expansion of waste sources [13][60]. Profitability Forecast and Valuation - The company is expected to see a steady increase in net profit from 9.0 billion in 2025 to 11.0 billion in 2027, with corresponding price-to-earnings ratios of 16.0x, 14.1x, and 13.2x. The "Buy" rating reflects the company's perpetual operation characteristics and location advantages that support earnings per share growth [9][10].

Summary of Yongxing Co., Ltd. Conference Call Company Overview - Yongxing Co., Ltd. operates in the waste incineration industry, primarily based in Guangzhou, with over 20 years of operational experience. The company controls 14 incineration projects with a total capacity of 32,000 tons per day and 4 biomass treatment projects with a designed capacity of 2,600 tons per day. In January 2025, the company plans to increase its stake in a solid waste treatment project to 50% to strengthen its industry position [4][8]. Core Business Logic - The core logic for Yongxing's sustained value growth and cash flow enhancement lies in its significant resource advantages and ample capital expenditure. The company's capacity utilization rate is approximately 70% in 2023, indicating substantial growth potential. The company does not rely on government subsidies but aims to enhance its valuation through improved asset quality, profitability, and cash flow. In 2023, free cash flow turned positive, with a commitment to a dividend payout ratio of no less than 60% [3][4]. Financial Performance - From 2019 to 2023, Yongxing achieved a compound annual growth rate (CAGR) of 25% in revenue and 55% in net profit. Although recent growth has slowed due to all projects entering the operational phase, long-term growth potential remains strong. The company expects to recognize over 100 million yuan in subsidy income once the Guangzhou Phase II project enters the national subsidy directory, indicating potential underestimation of profitability [4][9]. Revenue and Profitability - In 2023, Yongxing's revenue per ton was 417 yuan, and gross profit per ton was 190 yuan, both leading the industry. The weighted average return on equity (ROE) reached 9.3%. High profitability is attributed to elevated waste treatment fees and electricity income, along with efficient evaporation technology and Guangdong's benchmark coal-fired electricity price [4][15][16]. Capacity Utilization and Future Projections - The company anticipates an increase in capacity utilization from 71% in 2023 to 92% by 2026, with projected net profits of approximately 770 million, 910 million, and 1 billion yuan for 2024-2026, respectively. The company is expected to enjoy a higher price-to-earnings (PE) valuation due to its asset superiority [4][26]. Market Opportunities - Yongxing is actively engaging in the treatment of municipal and industrial waste, leveraging the substantial stock of municipal waste in Guangzhou (approximately 70 million tons) to fill capacity gaps. The company is also exploring partnerships with high-quality clients, such as data centers, to expand its energy supply and heating services [5][7][21]. Challenges and Risks - The company faces challenges such as depreciation pressure and potential impacts from changes in accounting policies. However, opportunities exist in expanding waste resources and enhancing heating services, which are expected to drive continued growth [10][11]. Cash Flow and Dividend Policy - Yongxing's cash flow structure is robust, with a healthy balance between waste treatment fees (36%), benchmark electricity prices (51%), and provincial subsidies (7%). The company has a low reliance on national subsidies compared to industry averages, enhancing cash flow security. The dividend payout ratio for 2023 was 64%, with a dividend yield exceeding 3% [12][19]. Geographic Advantages - Guangzhou's status as a population inflow area provides a stable and growing source of waste for Yongxing. The city's waste generation is projected to grow at a compound annual growth rate of approximately 7% from 2025 to 2035, which will support increased capacity utilization [14][20]. Future Growth Directions - Yongxing plans to focus on expanding its waste processing capacity and improving heating services. The company is also exploring opportunities in solid waste management in various regions and has outlined plans for emergency landfill projects [21][22]. Valuation and Market Position - Yongxing's asset superiority allows it to command a premium in valuation. The company is expected to see its price-to-book (PB) ratio increase as capacity utilization and ROE improve. The current overall PE level is around 14 times, higher than the industry average of 12 times, with potential for further upward movement [26][27].

1栋4层401-199房） 广州环投永兴集团股份有限公司 Grandtop Yongxing Group Co.,Ltd （广州市白云区广州民营科技园科泰二路13-19号高新区产业创新园 首次公开发行股票并在主板上市 招股说明书 （注册稿） 广东省深圳市福田区中心三路 8 号卓越时代广场（二期）北座 二〇二三年八月 保荐人（主承销商） 广州环投永兴集团股份有限公司 招股说明书（注册稿） 声 明 中国证监会、交易所对本次发行所作的任何决定或意见，均不表明其对发行 人注册申请文件及所披露信息的真实性、准确性、完整性作出保证，也不表明其 对发行人的盈利能力、投资价值或者对投资者的收益作出实质性判断或保证。任 何与之相反的声明均属虚假不实陈述。 根据《证券法》规定，股票依法发行后，发行人经营与收益的变化，由发行 人自行负责；投资者自主判断发行人的投资价值，自主作出投资决策，自行承担 股票依法发行后因发行人经营与收益变化或者股票价格变动引致的投资风险。 1-1-1 广州环投永兴集团股份有限公司 招股说明书（注册稿） 本次发行概况 | 发行股票类型 | 人民币普通股（A股） | | --- | --- | | 发行股数 ...

广州环投永兴集团股份有限公司 Grandtop Yongxing Group Co.,Ltd （广州市白云区广州民营科技园科泰二路13-19号高新区产业创新园 1栋4层401-199房） 首次公开发行股票并在主板上市 招股说明书 （上会稿） 广东省深圳市福田区中心三路 8 号卓越时代广场（二期）北座 二〇二三年七月 保荐人（主承销商） 广州环投永兴集团股份有限公司 招股说明书（上会稿） 声 明 中国证监会、交易所对本次发行所作的任何决定或意见，均不表明其对发行 人注册申请文件及所披露信息的真实性、准确性、完整性作出保证，也不表明其 对发行人的盈利能力、投资价值或者对投资者的收益作出实质性判断或保证。任 何与之相反的声明均属虚假不实陈述。 根据《证券法》规定，股票依法发行后，发行人经营与收益的变化，由发行 人自行负责；投资者自主判断发行人的投资价值，自主作出投资决策，自行承担 股票依法发行后因发行人经营与收益变化或者股票价格变动引致的投资风险。 1-1-1 广州环投永兴集团股份有限公司 招股说明书（上会稿） 本次发行概况 | 发行股票类型 | 人民币普通股（A股） | | --- | --- | | 发行股数 ...

广州环投永兴集团股份有限公司 Grandtop Yongxing Group Co.,Ltd （广州市白云区广州民营科技园科泰二路13-19号高新区产业创新园 1栋4层401-199房） 首次公开发行股票并在主板上市 招股说明书 （申报稿） 广东省深圳市福田区中心三路 8 号卓越时代广场（二期）北座 二〇二三年二月 保荐人（主承销商） 广州环投永兴集团股份有限公司 招股说明书（申报稿） 声 明 中国证监会、交易所对本次发行所作的任何决定或意见，均不表明其对发行 人注册申请文件及所披露信息的真实性、准确性、完整性作出保证，也不表明其 对发行人的盈利能力、投资价值或者对投资者的收益作出实质性判断或保证。任 何与之相反的声明均属虚假不实陈述。 根据《证券法》规定，股票依法发行后，发行人经营与收益的变化，由发行 人自行负责；投资者自主判断发行人的投资价值，自主作出投资决策，自行承担 股票依法发行后因发行人经营与收益变化或者股票价格变动引致的投资风险。 1-1-1 广州环投永兴集团股份有限公司 招股说明书（申报稿） 本次发行概况 | 发行股票类型 | 人民币普通股（A股） | | --- | --- | | 发行股数 ...