Earnings forecasts and valuation
Based on our latest earnings forecasts for Conch Cement, we lower our investment income estimates. We thus trim our 2026/2027/2028 attributable NP forecasts by 22/21/19% to RMB1.96/2.12/2.39bn (previous: RMB2.50/2.70/2.94bn). In our SOTP model, we value the environmental segment at 9.0x 2026E PE, a 10% discount to its peers' average of 10.0x on Wind consensus, considering the company's smaller grate furnace WTE asset base and diversified operations; we value its investment in Conch Holdings at 13.0x 2026E PE, in line with the target 2026E PE for Conch Cement's H-share on Wind consensus. We lower our target price by 13.2% to HKD11.73 (previous: HKD13.52, based on 9.6x 2026E PE for the environmental segment and 10.7x for the investment in Conch Holdings).