Environmental Protection Sector Weekly: The Dawn of the PV Recycling Era – New National Standards Catalyze Industry Formalization

Date: February 28, 2026
Analyst: Guo Xue (S1500525030002), Wu Boying (S1500524100001)
Institution: Cinda Securities Co., Ltd.
Rating: Overweight (Maintained)

Executive Summary

The Chinese environmental protection sector demonstrated robust outperformance in the week ending February 27, 2026, with the sector index rising 7.0%, significantly surpassing the Shanghai Composite Index’s gain of 2.0% (closing at 4,162.88). This momentum was driven by strong performances in sub-sectors such as Environmental Restoration (+16.22%), Resource Utilization (+10.89%), and Environmental Equipment (+9.43%).

The core thematic driver for this week’s analysis is the impending "Retirement Wave" of photovoltaic (PV) modules in China. Starting in 2025, China is projected to enter a phase of mass PV module decommissioning, with waste volumes expected to peak post-2030 at approximately 18 GW (1.4 million tons) annually, and cumulative waste reaching 2,000 million tons by 2040. The market potential is substantial, with the cumulative recycling market size estimated at RMB 26 billion by 2030 and soaring to RMB 420 billion by 2050 under early retirement scenarios.

A pivotal regulatory development occurred in February 2026, when the Ministry of Ecology and Environment (MEE) issued the "Technical Specifications for Pollution Control in the Recycling and Processing of Waste Photovoltaic Equipment." Effective March 1, 2026, this standard mandates strict emission controls, full-lifecycle traceability, and high-purity regeneration standards (silicon purity $\ge$ 99.999%). This regulatory shift is designed to eliminate the dominant "black market" of informal recyclers—who currently handle ~75% of the 1.2 million ton annual volume due to a lack of licensed capacity—and drive the industry toward formalization, favoring established players with technical and compliance capabilities.

Concurrently, the broader environmental sector benefits from macroeconomic tailwinds. In the context of local government debt resolution, operational assets such as water utilities and waste-to-energy (WtE) facilities are exhibiting stable profit growth and improving cash flows. Coupled with ongoing market-oriented reforms in public utilities, these sectors are poised for a potential "Davis Double Play" (simultaneous expansion in earnings and valuation multiples).

We maintain an Overweight rating on the Environmental Protection sector. We recommend focusing on high-quality operational assets with resilient cash flows and companies positioned to capitalize on the emerging PV recycling supply chain.

Top Picks: Grandblue Environment (600323.SH), Xingrong Environment (000598.SZ), Hongcheng Environment (600461.SH).
Watch List: Wangneng Environment (002034.SZ), Junxin Shares (301109.SZ), Wuhan Holdings (600168.SH), Intco Recycling (688087.SH), High Energy Environment (603588.SH), Qingda Environmental Protection (688501.SH).

Key Takeaways

1. Market Performance: Broad-Based Rally Led by Restoration and Resource Sectors

The environmental protection sector exhibited significant strength relative to the broader market during the reporting week. The sector’s 7.0% gain underscores renewed investor interest in defensive, cash-flow-generative assets and emerging themes in circular economy technologies.

Sector vs. Market Comparison

• Environmental Protection Index: +7.0%
• Shanghai Composite Index: +2.0%
• Outperformance: +5.0 percentage points

The top-performing industries across the A-share market were Steel (+12.3%), Non-ferrous Metals (+9.8%), and Basic Chemicals (+7.1%), reflecting a broader rotation into cyclical and resource-heavy sectors. Conversely, Media (-5.1%), Retail (-1.6%), and Food & Beverage (-1.5%) lagged.

Sub-Sector Performance Breakdown

The rally within the environmental sector was not uniform; it was led by segments with strong policy catalysts or technological breakthroughs.

Source: iFinD, Cinda Securities Research Center

Individual Stock Movers

• Top Gainers: Saiens (Saiens Environmental), Qingshuiyuan, Bestway (Beijiete), Far East Smarter Energy (Faersheng), Zhongke Environmental, High Energy Environment, Tus-Holdings (Qidi Environment), China Tianying, Hengyu Environmental, Seagull Shares.
• Top Decliners: Shijing Technology, Conglin Technology, Yuanda Environmental, Shenwu Energy Saving, Tianyuan Environmental, Yanpai Shares, Viga (Weipai Ge), Huicheng Environmental, Fulongma, Senyuan Shares.

The divergence between gainers and losers highlights a market preference for companies with clear growth trajectories in new areas (e.g., resource recovery, overseas expansion) versus those facing legacy headwinds or balance sheet concerns.

2. Thematic Deep Dive: The PV Recycling "Retirement Wave" and Regulatory Normalization

The central investment theme of this report is the structural transformation of the photovoltaic (PV) recycling industry. After years of rapid installation, China’s PV fleet is reaching the end of its initial lifecycle, creating a massive, untapped secondary resource market. However, the industry has historically been plagued by informality. The introduction of stringent national standards in February 2026 marks a turning point, shifting the competitive landscape from price-based informal competition to compliance-and-technology-based formal competition.

2.1. Market Scale and Growth Trajectory

The volume of retired PV modules is determined by the typical lifespan of 25–30 years, accelerated by early retirements due to quality issues, technological upgrades (efficiency improvements), and extreme weather events.

Forecasted PV Waste Volumes:
* 2025 (Inflection Point): China begins to see large-scale retirements. Estimated annual waste: 1.2 million tons.
* 2030 (Peak Onset): Annual waste reaches ~18 GW, equivalent to ~1.4 million tons.
* 2040 (Cumulative Surge): Cumulative waste reaches 253 GW, equivalent to ~20 million tons.

Market Value Projection:
According to the "2024 White Paper on China's PV Recycling and Circular Utilization," the economic value of this waste stream is significant, particularly if early retirement scenarios materialize (driven by efficiency upgrades rather than just failure):
* 2030 Cumulative Market Size: ~RMB 26 billion.
* 2050 Cumulative Market Size: ~RMB 420 billion.

This represents a compound annual growth rate (CAGR) that far exceeds most traditional industrial sectors, offering a long-duration growth runway for specialized service providers.

2.2. Technological Landscape: Physical, Chemical, and Pyrolysis Methods

Recycling PV modules involves separating glass, aluminum frames, silicon cells, silver, copper, and polymer encapsulants (EVA/POE). The choice of technology dictates recovery rates, purity, and environmental impact.

Source: Energy Circle, China Energy News, Cinda Securities Research Center

Investment Implication: While physical methods are currently common among informal players due to low entry barriers, they fail to capture the high-value silicon and silver. Chemical methods offer high purity but face environmental regulatory hurdles. Pyrolysis, despite higher CAPEX, is emerging as the optimal balance for规模化 (scaled) operations, provided that companies can manage the associated pollution control costs—a capability that new regulations will strictly enforce.

2.3. Competitive Landscape: Fragmentation and the "Black Market" Problem

The current state of the PV recycling industry in China is characterized by extreme fragmentation and a severe mismatch between legal capacity and actual waste volume.

Key Data Points (2025 Estimates):
* Total Retired Modules: 1.2 million tons.
* Licensed Recyclers: Fewer than 20 enterprises nationwide possess the necessary environmental qualifications.
* Legal Processing Capacity: Only 300,000 tons/year.
* Supply-Demand Gap: 900,000 tons (75% of total volume).
* Destination of Gap: The vast majority of this unmet volume flows into illegal channels.

The "Small Workshop" Distortion:
Informal recyclers ("small workshops") operate without environmental safeguards. They engage in predatory pricing to secure feedstock, undercutting compliant companies. Their processes often involve open burning or crude acid leaching, leading to:
1. Severe Environmental Pollution: Release of fluorinated gases, heavy metals, and hazardous liquids.
2. Resource Wastage: Low recovery rates of high-value materials like silver and high-purity silicon.
3. Market Disruption: Legitimate companies struggle to compete on price despite offering superior environmental and recovery standards.

This dynamic has created a "Gresham’s Law" scenario where bad money (informal, polluting recyclers) drives out good money (compliant, high-tech recyclers). The new national standard aims to reverse this.

2.4. Policy Catalyst: The New National Standard (GB)

In February 2026, the Ministry of Ecology and Environment (MEE) released the "Technical Specifications for Pollution Control in the Recycling and Processing of Waste Photovoltaic Equipment" (hereinafter referred to as the "Specifications"), effective March 1, 2026. This is the first national-level standard specifically targeting pollution control in PV recycling.

Three Hard Constraints Introduced by the Specifications:

1. Strict Emission Controls:

   • Exhaust Gas: Fluoride hydrogen (HF) removal efficiency must be $\ge$ 95%. This directly targets the pyrolysis and chemical processes that release fluorine from EVA encapsulants.
   • Wastewater: Heavy metal discharge must meet strict national standards. This eliminates informal operators who lack wastewater treatment infrastructure.

2. Full-Lifecycle Traceability:

   • Companies must establish a traceability ledger covering the entire chain: Production $\rightarrow$ Retirement $\rightarrow$ Dismantling $\rightarrow$ Regeneration.
   • This enables cross-regional regulatory coordination and prevents the leakage of waste to illegal channels. It effectively creates a "digital passport" for PV waste.

3. High-Quality Regeneration Standards:

   • Regenerated Silicon Purity: Must be $\ge$ 99.999% (5N purity). This ensures that recycled silicon can be reintroduced into the semiconductor or high-grade PV supply chain, rather than being downcycled into low-value alloys.
   • Other Materials: Recycled glass and aluminum frames must meet national environmental and quality standards.
   • Prohibition of "Selective Recycling": Operators cannot cherry-pick only high-value components (like aluminum frames) and discard the rest (glass, silicon, polymers) as waste. Comprehensive utilization is mandated.

Impact Analysis:
* Barrier to Entry Raised: The requirement for advanced off-gas treatment (for HF) and wastewater management significantly increases CAPEX and OPEX, excluding small, informal workshops.
* Consolidation Accelerated: Licensed companies with existing environmental infrastructure will gain a competitive moat.
* Value Chain Integration: The traceability requirement encourages vertical integration between PV manufacturers (who generate the waste or take back modules) and specialized recyclers.

2.5. Regional Policy Innovations

Beyond the national standard, local governments are piloting innovative mechanisms:
* Jiangsu Province: Drafted the "Technical Specifications for Pollution Control in the Comprehensive Utilization of Waste PV Modules," setting a regional precedent that may influence national enforcement.
* Zhejiang Province: Piloting an Extended Producer Responsibility (EPR) system. Manufacturers are required to establish electronic archives for the full product lifecycle, shifting the burden of recycling oversight upstream to the producers. This aligns with global best practices (e.g., EU WEEE Directive).

2.6. Relevant Listed Companies and Strategic Positioning

Several listed companies are positioning themselves to capture value in this emerging sector. Their strategies vary from pure-play recycling to integrated manufacturer-led initiatives.

Note: Other companies in the "Recommended Watch List" such as Intco Recycling (plastics/resource) and High Energy Environment (hazardous waste) possess adjacent capabilities that could be adapted for PV recycling.

3. Industry Dynamics: Global Standards and Domestic Regulatory Tightening

Beyond PV recycling, several key industry developments underscore the sector’s evolving landscape, emphasizing international leadership, stricter air quality controls, and regional solid waste management plans.

3.1. International Leadership: ISO Standard for Wastewater Energy Efficiency

Development: China’s proposal for the "Guidelines for Energy Efficiency Management of Urban Wastewater Treatment Facilities" has been successfully approved as a new work item by the International Organization for Standardization (ISO).

Significance:
* First of its Kind: This is the first ISO standard to focus specifically on energy efficiency in global urban wastewater treatment infrastructure.
* Strategic Context: Amidst "Dual Carbon" goals and high energy prices, energy efficiency has become a critical KPI for utilities. Existing ISO standards cover vehicles, buildings, and HVAC, but lacked a dedicated framework for wastewater.
* Technical Contribution: The standard aims to build a full-lifecycle, dynamic energy efficiency management system. It seeks to solve the long-standing industry problem of "incomparable energy consumption data" by establishing horizontal comparative energy performance indicators.
* Global Collaboration: The standard will be drafted by experts from 15 countries, including China, Germany, France, Bangladesh, Zambia, and Senegal.
* Market Impact: The global urban wastewater treatment market is valued at over $350 billion. Implementing精细化 (refined) and intelligent energy management is no longer optional but a strategic imperative with high economic returns. This positions Chinese engineering and technology firms as global leaders in green water infrastructure.

3.2. Domestic Air Quality: Stricter PM2.5 Limits (GB 3095—2026)

Development: On February 24, 2026, the MEE and the State Administration for Market Regulation jointly released the revised "Ambient Air Quality Standard" (GB 3095—2026) and supporting technical specifications.

Key Changes:
* Tighter Limits: The standard significantly tightens concentration limits for particulate matter (PM) and its precursors.
* PM2.5 Annual Average: Class I limit adjusted to 10 $\mu g/m^3$; Class II limit to 25 $\mu g/m^3$.
* PM2.5 Daily Average: Class I limit adjusted to 25 $\mu g/m^3$; Class II limit to 50 $\mu g/m^3$.
* Other Pollutants: Simultaneous tightening of limits for PM10, Sulfur Dioxide (SO2), and Nitrogen Dioxide (NO2).
* Phased Implementation:
* Phase 1 (Transition): March 1, 2026 – December 31, 2030. Interim Class II limits: PM2.5 Annual 30 $\mu g/m^3$, Daily 60 $\mu g/m^3$.
* Phase 2 (Full Enforcement): From January 1, 2031, the revised stricter limits apply nationwide.

Investment Implication:
* Short-Term: The transition period provides a buffer for industrial emitters and local governments to upgrade facilities.
* Long-Term: The tighter standards will drive sustained demand for advanced air pollution control technologies, including ultra-low emission retrofits, VOCs治理 (governance), and precision monitoring equipment. Companies specializing in high-efficiency desulfurization, denitrification, and particulate filtration will benefit from the 2031 deadline-driven capex cycle.

3.3. Regional Solid Waste Planning: Zhejiang’s "15th Five-Year Plan" Draft

Development: The Zhejiang Provincial Department of Ecology and Environment released a draft of the "15th Five-Year Plan for Industrial Solid Waste Pollution Prevention and Control."

Targets for 2030:
* Control industrial solid waste generation intensity at a low level.
* Comprehensive upgrade of utilization and disposal facilities.
* Achieve modernization of industrial solid waste environmental governance systems.
* Lead the nation in environmental risk prevention, R&D, and management decision support.

Quantified Indicators:
The plan sets specific metrics for:
1. Industrial solid waste generation intensity.
2. Comprehensive utilization rate of general industrial solid waste.
3. Proportion of hazardous waste landfilled.
4. Coverage of information-based supervision for hazardous waste units.
5. "Zero-Waste Index" (industrial solid waste sub-index).
6. Rate of illegal dumping/disposal.
7. Rectification rate of solid waste pollution hazards.

Implication: Zhejiang, as a economically advanced province, often serves as a policy bellwether. The emphasis on digital supervision and hazardous waste tracking reinforces the trend toward tech-enabled environmental compliance, benefiting companies like Intco Recycling and High Energy Environment that offer integrated waste management solutions.

3.4. Other Notable Policy Movements

• Guangxi "Chain Master" Action Plan: Aims to cultivate over 100 "chain master" enterprises in ten pillar industries (including new energy batteries and green chemicals) by 2028. This supports the aggregation of upstream/downstream resources, potentially benefiting environmental service providers embedded in these industrial chains.
• Shenzhen Ecological Environment Fund 2026: Open for applications in 12 areas, including GHG monitoring for power/WtE plants, near-zero carbon zones, carbon finance, and pollution facility upgrades. This provides direct financial incentives for technological adoption.
• Henan Equipment Update Scheme: Supports large-scale equipment updates in energy, logistics, and environmental protection, alongside improving the recycling network for consumer goods. This aligns with the national "Trade-In" policy, boosting demand for recycling infrastructure.
• Steel Industry Norms (2025 Edition): MIIT published the first batch of 205 companies complying with the new norms, signaling continued consolidation and green upgrading in the steel sector, which impacts industrial waste and emissions treatment demand.

4. Corporate Updates: Earnings, M&A, and Strategic Moves

The reporting week saw significant corporate announcements, ranging from strong earnings beats to strategic expansions and risk warnings.

4.1. Positive Developments & Earnings Beats

Xingrong Environment (000598.SZ): Stable Growth & High Dividend Proposal
* 2025 Performance: Revenue RMB 9.068 billion (+0.21% YoY); Net Profit attributable to shareholders RMB 2.004 billion (+0.41% YoY). EPS: RMB 0.67.
* Drivers: Increased volume in water supply, sewage treatment, and sludge disposal due to new projects. Offset by contraction in pipeline engineering due to the downturn in construction.
* Dividend: Controlling shareholder proposed a cash dividend of 35% of consolidated net profit. Estimated RMB 2.35 per 10 shares (tax inclusive). This reinforces its appeal as a high-yield defensive asset.

Intco Recycling (688087.SH): Revenue Breakthrough Despite Margin Pressure
* 2025 Performance: Revenue RMB 3.54 billion (+21.08% YoY), breaking the RMB 3.5 billion threshold for the first time. Q4 revenue hit a record RMB 957 million (+38.23% YoY).
* Profit: Net Profit RMB 301 million (-2.10% YoY). However, excluding share-based payments, net profit grew 3.41% to RMB 314 million.
* Drivers: Successful commissioning of the Vietnam Thanh Hoa Phase II project, releasing capacity. Phase III is progressing on schedule. The slight profit dip despite revenue growth suggests margin pressure, possibly from raw material costs or initial ramp-up expenses, but the overseas expansion story remains intact.

Qingda Environmental Protection (688501.SH): Exceptional Growth Driven by Diversification
* 2025 Performance: Revenue RMB 2.042 billion (+55.42% YoY); Net Profit RMB 181 million (+94.62% YoY).
* Drivers: Strong demand for traditional products (likely boiler efficiency/emission control) and successful landing of PV projects, which contributed significant incremental revenue. This validates the company’s diversification strategy into new energy-related environmental services.

Wanyi Technology (688600.SH): Profit Surge via Efficiency
* 2025 Performance: Revenue RMB 710 million (-4.07% YoY); Net Profit RMB 56.98 million (+295.51% YoY).
* Drivers: Despite a slight revenue decline, profit soared due to product structure optimization, cost reduction measures, and increased government subsidies related to R&D. This demonstrates operational leverage and improved profitability quality.

Saimesi (Saiens Environmental) (688480.SH): Revenue Growth, Profit Decline
* 2025 Performance: Revenue RMB 1.251 billion (+34.93% YoY); Net Profit RMB 110 million (-39.15% YoY).
* Analysis: The divergence between revenue and profit suggests rising costs, potential one-off expenses, or lower-margin project mix. Investors should monitor margin trends in subsequent quarters. Total assets grew 14.89% to RMB 2.098 billion.

4.2. Strategic Expansions & M&A

China Tianying (000035.SZ): Vietnam Project Expansion
* Update: Subsidiary Hanoi Tianyu received approval to expand the Hanoi Shuoshan Waste-to-Energy Plant (Phase II) by 1,600 tons/day.
* Implication: Reinforces China Tianying’s overseas growth strategy, particularly in Southeast Asia. Adds significant future capacity and revenue visibility.

Junxin Shares (301109.SZ): H-Share Listing Progress
* Update: Updated application for H-share listing on the HKEX submitted on Feb 13, 2026.
* Implication: Access to international capital markets will provide funding for overseas expansion and debt optimization, enhancing its competitiveness in the global waste management sector.

Jiarong Technology (301148.SZ): M&A Progress
* Update: Asset purchase and fundraising plan is proceeding smoothly. No material obstacles identified.
* Implication: Consolidation in the membrane technology sector continues, aiming for scale and broader product offerings.

Guolin Technology (300786.SZ): Major Asset Restructuring
* Update: Shareholders approved the restructuring plan. Asset transfer pending.
* Implication: Potential transformation of business scope or scale. Investors should await details on the target assets.

4.3. Risk Warnings & Negative News

Guozhong Water (600187.SH): Delisting Risk Alert
* Warning: Second risk alert issued. If 2025 net profit is negative AND revenue (deducting non-core items) is below RMB 300 million, the stock will be delisted risk warned (ST).
* Implication:* High speculative risk. Institutional investors should avoid until financial stability is restored.

Jinke Environment (688466.SH): Performance Decline
* 2025 Performance: Revenue RMB 580 million (-5.97% YoY); Net Profit RMB 50.7 million (-24.10% YoY).
* Reason: Proactive reduction in municipal water treatment project development to avoid low-margin orders. While prudent for long-term health, it impacts short-term top-line and bottom-line growth.

Labtech (688056.SH): Flat Performance
* 2025 Performance: Revenue RMB 402 million (-5.14% YoY); Net Profit RMB 39.38 million (+0.59% YoY).
* Implication: Stagnant growth in the analytical instrumentation sector. Needs new product drivers to reaccelerate.

East Lake High-Tech (600133.SH): Fund Extension
* Update: Extended the life of the Donghu Silicon Valley Fund by 2 years (until March 2028). No new investments or management fees during the extension.
* Implication: Neutral. Allows for orderly exit of existing investments without forcing fire sales.

Risks / Headwinds

While the sector outlook is positive, institutional investors must consider the following risks:

1. Project Execution Delays:

   • Environmental projects, particularly large-scale WtE plants and remediation sites, are subject to complex permitting, land acquisition, and community acceptance issues. Delays can push back revenue recognition and increase capital costs.
   • Specific to PV Recycling: The build-out of licensed recycling capacity may lag behind the surge in waste volume, temporarily sustaining the black market.

2. Intensified Market Competition:

   • As the PV recycling market becomes formalized, traditional waste management giants, PV manufacturers, and new entrants will compete fiercely for feedstock. This could compress margins in the early stages of industry consolidation.
   • In water and sanitation, local protectionism and bidding wars can erode profitability.

3. Policy Implementation Uncertainty:

   • While national standards are set, local enforcement varies. If local governments lack the resources or will to crack down on illegal recyclers, compliant companies may still face unfair price competition.
   • Changes in subsidy policies for renewable energy or waste treatment could impact project economics.

4. Geopolitical and International Political Risks:

   • For companies with overseas operations (e.g., China Tianying in Vietnam, Intco in Malaysia/US), geopolitical tensions, trade tariffs, or changes in foreign investment laws pose significant risks.
   • Currency fluctuations can impact the reported earnings of multinational operations.

5. Electricity Price Downside Risk:

   • Waste-to-Energy and some industrial waste treatment revenues are linked to electricity prices. If grid electricity prices decline due to oversupply from renewables or policy adjustments, the revenue per kWh for WtE plants could drop, affecting profitability.
   • Mitigation: Many WtE contracts have floor prices or adjustment mechanisms, but exposure remains.

6. Local Government Fiscal Pressure:

   • Although debt resolution efforts are underway, prolonged fiscal stress on local governments could lead to delayed payments for municipal environmental services (water, sanitation), impacting the working capital and cash flow of operational companies.

Rating / Sector Outlook

Sector Rating: Overweight (Look Bullish)

Rationale:
The Environmental Protection sector is transitioning from a purely policy-driven, capex-heavy model to a more sustainable, operationally driven, and technology-enabled industry. Two primary forces support our Overweight rating:

1. Defensive Value in Operational Assets: In a macroeconomic environment focused on debt resolution and stability, Water Utilities and Waste-to-Energy companies offer predictable cash flows, resilient earnings, and attractive dividend yields. The proposed 35% payout ratio by Xingrong Environment exemplifies this trend. These assets are likely to re-rate as bond proxies with growth options.
2. Growth Optionality in Circular Economy: The PV Recycling theme represents a nascent, high-growth market catalyzed by regulatory normalization. The new national standard creates a moat for compliant players, transforming a fragmented, informal market into a structured industry with significant barriers to entry. Early movers with technology and licensing advantages (e.g., Dongjiang, GEM) are well-positioned for outsized growth.

Valuation Perspective:
Many leading environmental stocks trade at reasonable P/E multiples (10x–15x for 2026E earnings), offering a margin of safety compared to high-growth tech sectors, while providing exposure to secular trends in decarbonization and resource security.

Investment View

We recommend a barbell strategy: combining high-dividend, stable operational assets with high-growth, technology-led recycling players.

1. Core Holdings: High-Quality Operational Assets (Defensive + Yield)

These companies benefit from stable demand, improving cash flows due to local government debt swaps, and potential valuation re-rating (Davis Double Play).

• Grandblue Environment (600323.SH):

  • Logic: Leading integrated environmental service provider with strong WtE and water assets. Consistent earnings growth and robust cash flow generation. Well-positioned to benefit from industry consolidation.
  • Valuation: 2026E P/E ~10.3x. Attractive entry point for long-term holders.

• Xingrong Environment (000598.SZ):

  • Logic: Dominant water utility in Chengdu. High visibility on earnings stability. The proposed 35% dividend payout enhances its appeal as a yield stock. Beneficiary of water price reforms and regional expansion.
  • Valuation: 2026E P/E ~8.9x. Undervalued relative to its growth and yield profile.

• Hongcheng Environment (600461.SH):

  • Logic: Integrated water and solid waste operator in Nanchang. Strong regional monopoly characteristics. Stable dividend history and consistent performance.
  • Valuation: 2026E P/E ~10.0x. Defensive pick with low volatility.

2. Growth Satellites: PV Recycling & Resource Utilization (Offensive + Theme)

These companies are positioned to capture the alpha from the PV recycling boom and broader resource circularity trends.

• Dongjiang Environmental (002672.SZ):

  • Logic: Established player in hazardous waste and industrial resource utilization. Its pilot projects in PV recycling and breakthroughs in fluorine/silicon recovery place it at the forefront of the formalized recycling wave.
  • Catalyst: Scaling of PV recycling pilots into commercial operations; enforcement of new national standards driving feedstock to licensed players.

• GEM Co., Ltd. (002340.SZ):

  • Logic: Global leader in battery and metal recycling. Its expertise in hydrometallurgy and precious metal extraction is directly transferable to PV modules (silver, silicon). Strong partnerships with OEMs enhance feedstock security.
  • Catalyst: Announcement of major JV or commercial-scale PV recycling facility; recovery of high-value metals from PV waste.

• Intco Recycling (688087.SH):

  • Logic: Leader in PS foam recycling, expanding into broader plastic and resource circulation. Successful overseas capacity expansion (Vietnam) mitigates domestic competition. Revenue breakthrough signals strong market demand.
  • Catalyst: Margin improvement as Vietnam Phase II/III reach full efficiency; expansion into new recycled material streams.

• Qingda Environmental Protection (688501.SH):

  • Logic: Demonstrated ability to pivot and grow via new energy-related environmental services (PV projects). High earnings growth (+94% in 2025) validates its diversification strategy.
  • Catalyst: Continued order book growth in PV-related environmental equipment; expansion into other renewable energy waste streams.

3. Watch List: Speculative & Turnaround Plays

• Wangneng Environment (002034.SZ): Solid WtE operator with potential for asset injections or regional expansion.
• Junxin Shares (301109.SZ): H-share listing could unlock value and fund overseas growth. Strong presence in hazardous waste treatment.
• Wuhan Holdings (600168.SH): Regional water utility with potential for reform-driven efficiency gains.
• High Energy Environment (603588.SH): Hazardous waste and soil remediation leader. Beneficiary of stricter industrial waste regulations.
• China Tianying (000035.SZ): Aggressive overseas expansion (Vietnam, Singapore). High growth potential but higher geopolitical risk. Note the significant jump in projected 2026/2027 earnings in consensus estimates, reflecting confidence in its overseas pipeline.

Conclusion

The environmental protection sector is entering a phase of quality-driven growth. The convergence of strict regulatory standards (PV recycling, air quality) and macroeconomic shifts (debt resolution, utility reforms) creates a favorable environment for well-managed, compliant, and technologically advanced companies. Investors should prioritize firms with strong balance sheets, proven operational track records, and clear exposure to the circular economy megatrend. The PV recycling sector, in particular, offers a compelling long-term growth narrative that is just beginning to be priced in by the market.

Appendix: Detailed Financial Forecasts & Valuation Table

The following table summarizes the consensus and Cinda Securities forecasts for key companies in the sector. Data is as of February 27, 2026.

Source: iFinD, Cinda Securities Research Center. Note: * denotes Cinda Securities forecasts; others are Wind consensus estimates. Data as of 2026.02.27.

Valuation Commentary:
* Operational Leaders: Grandblue, Xingrong, and Hongcheng trade at forward P/Es of 8–10x, offering significant value given their stable growth and dividend profiles.
* Growth Stocks: Qingda Environmental and China Tianying command higher multiples due to expected earnings acceleration. China Tianying’s P/E drops dramatically in 2026/2027 as its overseas projects come online, suggesting high upside if execution meets expectations.
* Turnaround Candidates: High Energy Environment and Intco Recycling are trading at moderate multiples, with potential for multiple expansion as their new capacities and recycling themes gain traction.

Analyst Certification & Disclaimer

Analyst Certification:
The analysts responsible for this report, Guo Xue and Wu Boying, certify that they have the requisite securities investment consulting qualifications and are registered as securities analysts with the Securities Association of China. They declare that they have prepared this report with diligence, independence, and objectivity. The views expressed herein accurately reflect their personal research opinions. No part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

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Risk Warning:
The securities market is a market where risks exist at all times. Investors face the possibility of profit as well as the risk of loss when engaging in securities trading. It is recommended that investors fully and deeply understand the various risks inherent in the securities market and act with caution.

The securities described in this report may not be sold to all types of investors in all countries and regions. Investors should independently evaluate the information and opinions in this report and simultaneously consider their own investment purposes, financial status, and specific needs. When necessary, consult professional advisors on legal, commercial, financial, tax, and other aspects. Under no circumstances shall Cinda Securities be liable for any losses incurred by any person due to the use of any content in this report. Investors shall bear the risks themselves.