Guohai Securities: Everbright Environment (00257) Revenue Structure Transformation Results Consolidate and Maintain “Gain” Rating

The Zhitong Finance App learned that Guohai Securities released a research report stating that maintaining the Everbright Environment (00257) “increase in holdings” rating, the company's 2026-2028 operating income is expected to be HK$266.20/260.91/25.912 billion, respectively, and net profit to mother is HK$39.09/40.16/4.379 billion, respectively, and the corresponding PE is 7.09/6.90/6.33 times. The company's share of operating revenue continues to rise, and cash flow is expected to continue to improve as the quality and efficiency of project operations improve.

Guohai Securities's main views are as follows:

2026H1's operating service revenue share increased to 76%, and the revenue structure transformation results were consolidated

With 2026H1, the company achieved operating income of HK$14.181 billion, a year-on-year decrease of 1%; realized net profit to mother of HK$2,431 billion, an increase of 10% over the previous year. 2026H1, the company's operating service revenue reached HK$10.755 billion, up 8% year on year, accounting for 76% of total revenue; construction service revenue reached HK$853 million, down 54% year on year, accounting for 6%; and accounting for 18% of financial revenue.

Domestic waste treatment scale reached 163,300 tons/day, and operational efficiency continued to improve

As of June 30, 2026, the company's environmental energy and green environmental protection sector has implemented a total of 196 waste power generation projects, designing and treating 163,300 tons/day of domestic waste (including commissioned operation scale); the design and treatment scale of kitchen and food waste is about 8,693 tons/day; and the design treatment/supply scale of water treatment and supply is about 7.6397 million m3/day. 2026H1, the environmentally friendly energy sector, the amount of garbage entering the factory/feed-in power/heating steam supply increased by about 2%/2%/11% year on year; the environmentally friendly water sector, sewage treatment/reclaimed water treatment volume increased 6%/3% year on year, respectively; in the green environmental protection sector, garbage entering the factory/biomass raw material processing volume/heating steam supply increased 2%/4%/19% year on year, respectively.

Year-over-year increase in dividends per share

The company paid a dividend of 16.0 HK cents per share in mid-2026, up from HK15.0 cents per share in the same period in 2025. The dividend payout ratio for the first half of 2026 (that is, the ratio of dividends to shareholders' earnings) reached 40%, down 2 pct from 42% in the same period of 2025.

Gross margin decreased slightly year on year, and net profit margin increased slightly year on year

2026H1, the company's gross margin was 43.06%, down 1.2 pct year on year, mainly affected by a sharp drop in construction service revenue; the company's net margin was 21.52%, up 2.08 pct year on year.

Risk Alerts

The progress of the increase in operating income falls short of expectations; the risk of a decline in gross margin; the recovery of accounts receivable falls short of expectations; the risk of falling dividends; the risk of a decline in construction revenue exceeding expectations; and the risk of impairment.