This report is read as follows:

The company operates steadily in waste incineration. The progress of the active expansion of the kitchen project is higher than expected. Look forward to the future performance release of the resource recycling plate.

Main points of investment:

Maintain the overweight rating. Maintain the forecast net profit of 8.25,9.49 and 1.074 billion yuan for 2023-2025, corresponding to 1.92,2.21,2.50 yuan for EPS. The company's solid waste business has a sound operation and a high level of fine management; the major shareholders with abundant cash flow and strong industrial resources will strongly support the company to build a second growth curve, waiting for the company's renewable resources business to develop and maintain the target price of 33.62 yuan.

The performance is in line with expectations. 2023H1 achieved an income of 1.54 billion yuan, an increase of 5% over the same period last year, a net profit of 351 million yuan, an increase of 5%, and a non-attributable net profit of 345 million yuan, an increase of 9% over the same period last year.

2023Q2 realized a net profit of 187 million yuan in a single quarter, an increase of 14% over the previous quarter.

Solid waste incineration operation, active expansion of food and kitchen projects. 1) the waste incineration project under construction has been successfully put into operation, and Jiangling Wangneng 750 tons has been put into production. At present, the company has put into operation a total of 21620 tons, trial operation of 700tons (Dingxi environmental protection), under construction of 1000 tons (South Taihu Lake Phase 5). 2) the garbage storage volume of 2023H1 Company is 4.64 million tons, an increase of 21% over the same period last year. 14 projects generate electricity and provide external heating at the same time, with a total heat supply of 530000 tons. 3) Food and kitchen: Suzhou Phase II 400 tons, Bengbu expansion 100 tons, Huzhou Phase II 300 tons officially put into production. 4) at present, the company has a total of 3320 tons in the hand food and kitchen project, of which 2650 tons are put into operation. 2023H1 treats 360000 tons of kitchen waste, an increase of 19 percent over the same period last year, and the amount of extracted oil is 12000 tons, an increase of 24 percent over the same period last year. Food and kitchen projects actively develop and operate steadily to contribute new growth points to the company's solid waste business.

The resource regeneration plate is under pressure for a short time and looks forward to the release of future performance. 1) in order to cope with the impact of rising raw material prices, the lithium recycling business adopts the production mode of less self-production and multi-generation processing. 2023 H1 Lixin cobalt-nickel lithium self-produced and substitute processing output totaled 925 gold tons. 2) the 30,000 ton butyl recycled rubber production line in the first phase of Nantong Huili has been in operation and has resumed normal contact with customers of many high-quality brands.

Risk tips: project schedule is lower than expected, industry policy changes, commodity prices fluctuate sharply, and so on.