New Stock Preview | Leading player in solid waste treatment prepares for Hong Kong IPO: Can Hunan Junxin Environmental Protection leverage the capital to tap into new overseas markets?

In the first half of this year, the Hong Kong IPO market grew strongly, surpassing other major international markets and ranking first in the world in terms of IPO fundraising. According to statistics, a total of 53 new stocks were listed in the first 7 months of this year, raising approximately HK$127 billion, an increase of more than 6 times compared to the previous three years' annual fundraising totals. There are over 210 listing applications currently being processed. In the first half of the global IPO market, fundraising increased by only about 10% year-on-year, while the number of transactions decreased by 5%. This is largely due to the continuous strong enthusiasm of mainland companies listing in Hong Kong, with the number showing a sharp increase. Since August, several A-share listed companies have disclosed their plans and latest developments for listing in Hong Kong, including Hunan Junxin Environmental Protection (301109.SZ). Steady revenue and net profit growth, active layout in overseas markets According to the Hong Kong Stock Exchange, Hunan Junxin Environmental Protection Co., Ltd. (hereinafter referred to as "Hunan Junxin Environmental Protection") submitted an application to the Hong Kong Stock Exchange Main Board, with CICC and CITIC SEC as joint sponsors. According to the prospectus, Hunan Junxin Environmental Protection was established in 2011 and is a leading enterprise in the field of environmental protection in Hunan, focusing on solid waste treatment and green energy business, covering areas such as household waste, kitchen waste, municipal sludge, etc., with projects located in Changsha, Liuyang in Hunan and overseas. According to Frost & Sullivan data, in terms of project scale, the Changsha Environmental Industry Park where the company's main business operations are located is one of the largest comprehensive environmental parks in China. As of now, it covers multiple projects, including projects related to clean incineration power generation of garbage and comprehensive treatment of various waste materials. In terms of performance, the company has achieved steady revenue and net profit growth in recent years. In the first three months of 2022, 2023, 2024, and 2025, Hunan Junxin Environmental Protection recorded revenues of about RMB 1.548 billion, RMB 1.837 billion, RMB 2.411 billion, and RMB 697 million respectively, with net profits of about RMB 587 million, RMB 653 million, RMB 686 million, and RMB 236 million respectively. During the reporting period, the company's core business included garbage clean incineration power generation, comprehensive treatment of various waste materials (including sludge, sewage, leachate, fly ash, and others), transfer and compression of household garbage, collection, harmless treatment, and resource utilization of kitchen waste. Among them, the garbage clean incineration power generation business is one of the company's main sources of revenue. It is understood that the company provides garbage clean incineration power generation and green energy through its Changsha garbage incineration power generation projects (phases one and two), Liuyang project, and Pingjiang project. Currently, the company's total daily processing capacity of garbage clean incineration power generation projects is 9,600 tons of household waste. In addition, according to Frost & Sullivan data, based on the average on-grid electricity generated per ton of garbage in 2024, the company ranks first among all companies in China that provide garbage incineration power generation, becoming one of the leading garbage incineration power generation companies in China. Looking at the revenue, the revenue from this business was RMB 661 million in 2022, RMB 698 million in 2023, and RMB 685 million in 2024. Although the revenue steadily increased, the revenue ratio has significantly declined, from 42.7% in 2022 to 28.5% in 2024. It is observed that this may be related to the growth in construction service revenue for the company in recent years. During the reporting period, revenue from this business increased from RMB 83.738 million in 2022 to RMB 827 million in 2024, with the revenue ratio also growing from 5.4% to 34.7%, mainly due to the development of the Liuyang and Pingjiang projects by the company. Although Hunan Junxin Environmental Protection is at the forefront of the industry in terms of waste treatment scale and technical efficiency, its business still heavily depends on a few major customers. The prospectus shows that the company's main customers include government agencies and State Grid Corporation. During the reporting period, revenues from the company's top five customers were RMB 1.545 billion, RMB 1.832 billion, RMB 2.335 billion, and RMB 652 million respectively, accounting for 99.9%, 99.7%, 96.8%, and 93.5% of the company's total revenue. Among them, revenues from the company's largest customer accounted for 54.3%, 42.4%, 34.0%, and 51.4% of the company's total revenue in the same year, indicating a certain level of customer concentration risk. In order to expand its market and further optimize its customer structure and enhance its risk resistance capabilities, the company has actively expanded into overseas markets in recent years. As part of its overseas strategic expansion, Hunan Junxin Environmental Protection has been establishing operations in Central Asia. In 2024, the company signed a service franchise agreement with the local authorities in Kyrgyzstan to develop green environmental energy projects in the capital city of Bishkek. In 2025, the company also signed a framework agreement to develop similar projects in the city of Osh and Issyk-Kul Province in Kyrgyzstan. In the same year, Hunan Junxin Environmental Protection expanded its business scope in Central Asia, signing a memorandum of understanding to develop similar projects in Almaty, Kazakhstan. With broad industry prospects and a leading market position From an industry perspective, according to Frost & Sullivan data, with population growth and economic development, the global volume of various solid waste continues to increase, with waste generation in global urban areas expected to reach 2.619.1 million tons by 2029. Compared to European and American companies that rely more on customized designs and local engineering teams, Chinese top enterprises have demonstrated higher project implementation efficiency under EPC general contracting and BOT/BOO models, especially in emerging markets facing fiscal pressures and weak infrastructure backgrounds, Chinese companies with mature operational capabilities and fast project implementation solutions are more attractive. China's municipal solid waste generation has maintained steady growth, increasing from 235.1 million tons in 2020 to 260.6 million tons in 2024. As of the end of 2023, China had 696 operating facilities for the harmless treatment of urban waste incineration. The incineration processing capacity of municipal solid waste in China has experienced fast growth, increasing from 146.1 million tons in 2020 to 220.0 million tons in 2024, achieving a compound annual growth rate of 10.8%. With the continuous advancement of urbanization, the incineration and power generation processing capacity and growth of municipal solid waste in China will tend towards stability; at the same time, the historical pollution caused by landfilling waste in the soil urgently needs to be solved through incineration treatment, allowing previously stored waste to be incinerated and processed harmlessly, further expanding the market space. It is expected that from 2025 to 2029, the compound annual growth rate of the incineration and power generation processing capacity of municipal solid waste in the country will reach 7.0%, with an increase of 308.5 million tons by 2029. The concentration in China's waste incineration and power generation industry is relatively low, with most companies operating locally based on government concession rights, and few nationwide enterprises, with the top ten enterprises having a market concentration of only 30%. The scale of a single waste incineration and power generation project is a key dimension to assess the operational efficiency and resource integration capabilities of an enterprise. Compared to the overall processed volume of waste by the enterprise, the scale of a single unit can better reflect the process integration, equipment configuration level, and resource utilization efficiency of an individual station. In terms of market competition, according to Frost & Sullivan data in 2024, the Changsha waste incineration power generation project of Hunan Junxin Environmental Protection ranked fourth among all solid waste incineration projects nationwide in terms of daily processing capacity and ranked first in China among all waste incineration power generation companies based on the average on-grid electricity generated per ton of waste. In addition, the Changsha transfer project of Hunan Junxin Environmental Protection also ranked first among all waste transfer handling and transportation projects in the country, and the Changsha kitchen waste project ranked third among all kitchen waste processing projects in the country in terms of daily processing capacity. Overall, Hunan Junxin Environmental Protection has maintained a stable growth in performance due to its technological accumulation and scale advantage in the field of solid waste treatment, and actively seeks new development opportunities through expanding its presence in Central Asia. In the future, if the company successfully lists in Hong Kong, it is expected to further enhance its capital strength and market influence, providing support for the continued expansion of its domestic and international business. At the same time, the high customer concentration remains one of the operational risks that the company needs to continuously monitor and manage.