Core Viewpoint - The company has established itself as a benchmark in environmental governance, focusing on various core businesses including environmental facility operation, denitration catalyst manufacturing, resource recycling, and new energy services [1][2]. Group 1: Company Overview - The company is backed by China Datang Group and has been deeply involved in environmental governance for over 20 years [1]. - As of mid-2025, the company’s cumulative installed capacity for desulfurization and denitration will reach 47.61 GW and 40.60 GW respectively [1]. - The company operates four water projects and has ten projects under construction, indicating steady progress in its water business [1]. Group 2: Industry Dynamics - The thermal power industry is balancing the dual goals of ensuring power supply safety and promoting low-carbon transition, with thermal power plants evolving to serve as peak-shaving power sources [2]. - The market for denitration catalysts is expanding, driven by new performance requirements for flexibility in thermal power units [2]. Group 3: CCUS Technology Development - CCUS technology is essential for achieving carbon neutrality in China, although it is still in the early stages of development with challenges such as low technological maturity and cost competitiveness [3]. - By the end of November 2024, over 120 CCUS demonstration projects are planned or operational, with a CO2 capture capacity of 600 million tons per year [3]. - A significant project led by Datang Environment Company, in collaboration with Tsinghua University, has been recognized as a major technological achievement in the energy sector [3]. Group 4: Financial Projections and Investment Recommendations - Revenue projections for the company from 2025 to 2027 are estimated at 5.705 billion, 5.767 billion, and 5.866 billion respectively, with net profits of 569 million, 634 million, and 667 million [4]. - The company is assigned a target price of 1.48 HKD per share, with a valuation of 7 times earnings for 2025, resulting in a market capitalization of 4.4 billion HKD [4].

Investment Rating - The report initiates coverage with a "Buy" rating for Datang Environment [4]. Core Views - Datang Environment has established itself as a leader in the environmental governance sector, backed by the Datang Group, with a focus on sustainable operations and high dividend capabilities [2][4]. - The company is positioned to benefit from the growing demand for desulfurization and denitrification services, as well as advancements in carbon capture technology [4][41]. Summary by Sections 1. Company Overview - Datang Environment has been deeply involved in environmental governance for over 20 years, with core businesses including environmental facility operation, denitrification catalyst manufacturing, resource recycling, and new energy services. As of mid-2025, the company has a cumulative installed capacity of 47.61 GW for desulfurization and 40.60 GW for denitrification [2][13]. - The company has transitioned to an operational model since 2022, enhancing profitability and cash flow while reducing capital expenditures, which supports a sustainable high dividend capability [2][4]. 2. Industry Dynamics - The thermal power industry is balancing the dual goals of ensuring power supply security and promoting low-carbon transformation. The installed capacity of thermal power is expected to continue growing steadily [3][41]. - The desulfurization and denitrification sectors are experiencing supply and demand growth, driven by stringent environmental policies and the need for upgrades in existing facilities [41][49]. 3. Carbon Capture Utilization and Storage (CCUS) - CCUS technology is essential for achieving carbon neutrality in China, with over 120 CCUS demonstration projects planned or operational by the end of 2024, capable of capturing 6 million tons of CO2 annually [4][41]. - Datang Environment is leading the development of a 20 MWth chemical looping combustion power generation system, which has been recognized as a significant technological advancement in the energy sector [4][41]. 4. Financial Forecast and Investment Recommendations - Revenue projections for Datang Environment are estimated at 5.71 billion CNY, 5.77 billion CNY, and 5.87 billion CNY for 2025, 2026, and 2027, respectively, with corresponding net profits of 569 million CNY, 634 million CNY, and 667 million CNY [4][6]. - The report assigns a target price of 1.48 HKD per share, based on a 7x PE valuation for 2025, leading to a market capitalization estimate of 4.4 billion HKD [4][6].