Summary of Sanfeng Environment Conference Call Company Overview - **Company**: Sanfeng Environment - **Industry**: Waste Management and Energy Recovery Key Financial Metrics - **Revenue**: 2.846 billion CNY in H1 2025, a decrease of 5.6% YoY [2][3] - **Net Profit**: Approximately 678 million CNY, a growth of 2.48% YoY on a comparable basis [2][3] - **Waste Processing Volume**: Increased by 2.6% YoY to 7.73 million tons [2][3] - **Steam Sales Volume**: Grew by 11.84% YoY [2][3] - **Accounts Receivable**: Approximately 2.6 billion CNY, with 1.4 billion CNY from government subsidies [3][16] Operational Highlights - **Market Expansion**: New contracts won for waste incineration and heating projects in Chongqing and 8 overseas projects, totaling a processing capacity of 3,000 tons/day [2][3] - **AI Technology**: 7 projects currently utilizing AI for operational assistance, with plans to add 6 more [2][3] - **Cost Efficiency**: Waste incineration heating costs are significantly lower than coal-fired power plants, unaffected by coal price fluctuations [2][9][10] Project and Contract Status - **Unexecuted Contracts**: Over 1 billion CNY in unexecuted equipment sales, EP contracts, and design contracts, ensuring revenue stability for the year [2][6][11] - **Project Development**: 1,900 tons of projects under construction, with 300 tons expected to be operational in 2025 and 1,700 tons in H1 2026 [20] Challenges and Risks - **Accounts Receivable Pressure**: Increased accounts receivable due to delayed payments from local governments, with ongoing efforts to improve collection [15][18] - **Market Competition**: Increased competition from domestic companies expanding overseas, complicating order acquisition [25] Future Growth Potential - **Solid Waste Operations**: Significant growth potential in solid waste operations, with expected revenue and profit increases from various waste treatment and steam sales [21] - **Capital Expenditure**: Decreased capital expenditure expected, with a focus on maintaining free cash flow while exploring quality overseas projects [22] International Market Focus - **Key Regions**: Southeast Asia (Vietnam, Thailand, Malaysia, Indonesia) identified as primary overseas markets for the next 2-3 years [24][27] - **Collaborations**: Ongoing projects with Suez in Shandong, with plans to expand into new markets [26][28] Conclusion - **Overall Outlook**: Despite a decline in revenue, the company shows resilience with profit growth, operational efficiency improvements, and a strong pipeline of projects, particularly in the international market. The focus on AI technology and cost-effective waste management solutions positions the company well for future growth.

Investment Rating - The report assigns no rating to the company [5] Core Viewpoints - The company is a clean energy operator with over 20 years of experience, focusing on combined heat and power generation and energy services. The mid-year performance is expected to increase by 20-35% [1][3] - The company has achieved a total installed capacity of 5.9GW, with significant contributions from various energy sources including gas, coal, solar, wind, and storage [1][3] - The company has initiated the issuance of Real World Assets (RWA) in the renewable energy sector, marking a significant innovation in financing [2][3] - The energy services segment has shown remarkable growth, with revenues increasing by over 337% year-on-year [3][19] Summary by Sections Financial Performance - The company forecasts a revenue of 9.8 billion yuan in 2024, a decrease of 3.4% year-on-year, with a net profit of 489 million yuan, down 46% [1][19] - For the first half of 2025, the expected net profit ranges from 493 to 555 million yuan, reflecting a year-on-year increase of 20-35% [1][18] - The company anticipates achieving net profits of 900 million, 983 million, and 1.05 billion yuan for 2025, 2026, and 2027 respectively, with growth rates of 84%, 9%, and 7% [3][57] Revenue Breakdown - The revenue from gas-fired combined heat and power generation is projected to be 5.24 billion yuan in 2024, accounting for 53.4% of total revenue [1] - The energy services segment is expected to generate 1.19 billion yuan in 2024, contributing 12.2% to total revenue [1][19] - The company’s total revenue is projected to reach 10.9 billion yuan in 2025, with a growth rate of 11.3% [4][51] Market Position and Strategy - The company has established a joint venture with Ant Group to provide RWA issuance services for distributed energy assets, enhancing its market position [3][49] - The company is focusing on expanding its virtual power plant and energy trading businesses, with a demand response capacity of approximately 500MW [3][49] - The company’s energy service revenue is expected to grow significantly, driven by the increasing demand for virtual power plants and energy trading [3][50] Future Outlook - The company is expected to maintain a stable growth trajectory, with projected revenues of 11.5 billion yuan in 2026 and 11.9 billion yuan in 2027 [4][51] - The gross margin is anticipated to stabilize around 27% in the coming years, reflecting operational efficiency [51][52] - The company’s strategic initiatives in RWA and energy services are expected to drive future growth and profitability [2][3][49]

Investment Rating - The report maintains a "Buy" rating for GCL-Poly Energy (002015) with a target price of 9.18 CNY over the next six months, compared to the current price of 7.30 CNY [1]. Core Insights - The company experienced a significant decline in net profit in 2024, primarily due to asset impairment losses and reduced gains from equity disposals. However, the first quarter of 2025 showed a strong recovery in revenue and net profit, driven by increased income from distributed photovoltaic and energy storage projects, as well as lower fuel prices [8][9]. - GCL-Poly is focusing on optimizing its asset structure and enhancing its core combined heat and power business while expanding its renewable energy projects. As of Q1 2025, the total installed capacity was 5,978 MW, with renewable energy accounting for 58.23% of total generation capacity [8][9]. - The company is also deepening its energy service offerings, particularly in energy efficiency and trading services, with significant growth in distributed photovoltaic projects and virtual power plant services [8][9]. Financial Summary - For 2024, GCL-Poly reported revenues of 9,796.41 million CNY, a decrease of 3.42% year-on-year, and a net profit attributable to the parent company of 489.04 million CNY, down 46.20% year-on-year. The first quarter of 2025 saw revenues of 29.33 million CNY, up 21.49% year-on-year, and a net profit of 2.54 million CNY, up 35.15% year-on-year [3][8]. - The forecast for 2025-2027 indicates a recovery in net profit, with estimates of 823.36 million CNY in 2025, 962.18 million CNY in 2026, and 1,190.87 million CNY in 2027, corresponding to a dynamic PE of 14.4, 12.3, and 10.0 respectively [9][10]. - The company is expected to achieve a revenue growth rate of 1.07% in 2025, followed by 23.21% in 2026 and 26.35% in 2027, with a projected total revenue of 12,199.53 million CNY in 2026 and 15,413.77 million CNY in 2027 [3][9].