GF Securities: An environmentally friendly high-dividend asset worth looking forward to in 26 years, focusing on solid waste and water

The Zhitong Finance App learned that GF Securities released a research report saying that EU carbon tariffs will be officially introduced on January 1, 2026. Currently, they involve industries such as cement, iron and steel, aluminum, fertilizer, electricity, and hydrogen. It is expected that after the 2027 review, they may expand to industries such as chemicals, plastics, ceramics, paper, organic basic chemicals, etc. In addition, carbon taxes may be extended to downstream products and commodities, affecting the automobile, home appliance and other industries. High-dividend assets are still worth looking forward to in 26 years, focusing on solid waste and water services.

The main views of GF Securities are as follows:

EU carbon tariffs will be officially introduced in 2026, boosting China's demand for circular emission reduction and green energy industries

After a transition period of about 2 years, EU carbon tariffs will be officially introduced on January 1, 2026. Currently, they involve industries such as cement, steel, aluminum, fertilizer, electricity, and hydrogen. It is expected that after the 2027 review, it may be extended to industries such as chemicals, plastics, ceramics, paper, organic basic chemicals, etc. In addition, carbon taxes may be extended to downstream products and commodities, affecting the automobile, home appliance and other industries. Currently, the EU ETS carbon price is 80-90 Euros/ton, which is about 13 times China's current carbon price. It will significantly increase the cost of China's exports to the EU, and exporters can reduce carbon emissions levels through green energy, renewable resources, etc. It is recommended to focus on the recycling industry chain to reduce carbon emissions and carbon tariffs: (1) Renewable resources: Yingke Renewable (recycled plastic), Langkun Technology, Shangao Environmental Energy, Excellent New Energy (biodiesel), etc. (2) Recovery system: Earth and Ocean, China Renewable Energy, etc.; (3) Green Steam: Brilliant Blue Ring Energy, Everbright Environment, etc.; (4) Green Methanol: China Tianying, Huaguang Huaneng, Fuclean and Environmental Protection, etc.

Recently, there have been frequent debt-conversion actions by listed companies, and the local debt conversion process is progressing rapidly

In the context of debt conversion, companies such as entrepreneurship and environmental protection (one-time recovery of 2 billion yuan in accounts receivable, sewage payment mechanism reform, etc.) and Mengcao Ecology have recently issued chemical bond announcements one after another. Local governments have achieved repayment optimization through one-time payments of historical arrears, early termination of PPP projects, and debt restructuring. Many environmental protection companies have large receivables, and a significant proportion of them come from government payment projects such as PPP. After the repayment was accelerated, the flexibility was outstanding compared to marginal market capitalization improvements. The following companies are theoretically most flexible in terms of market value and profit restoration under accounts receivable optimization. They can focus on individual stocks in the fields of solid waste (Chengfa Environmental, etc., 25H1 accounts receivable/current total market value 54%), water (Wuhan Holdings, Zhongyuan Environmental Protection, Pioneering Environmental Protection, etc.), Environmental Protection (Fulongma, Overseas Chinese Bank Co., Ltd., Yuhetian, etc.), ecological restoration (Menghao Ecology, etc.), and water treatment (Bishuiyuan, Bosch, Energy Saving Guozhen, etc.).

High-dividend assets are still worth looking forward to in 26 years, focusing on solid waste and water

In 2025, when the overall dividend style was relatively weak, environmental protection companies relied on lower valuation levels and active dividend promotion actions to still obtain significant excess revenue. Everbright Environment, Bright Blue Environment, Conch Venture, and Shanghai Industrial Holdings increased by 31.7%, 26.3%, 46.7%, and 30.6% respectively in 2025. What is particularly important is that in line with the reduction in active projects and orders for new projects signed by environmental protection companies, future capital investment is expected to be reduced, and expectations for continued increases in dividends are strengthened. It is recommended to focus on companies such as Hanlan Environment, Shanghai Industrial Holdings, Venture Environmental Protection (A) /Tianjin Chuangye Environmental Protection Co., Ltd. (H), Everbright Environment, Conch Venture, Weiming Environmental Protection, and Green Power Environmental Protection.

Risk Alerts

Orders and new business layout expectations are low, risk of policy changes, and dividend expectations are low.