NewTimeSpace | IPO Decoding:Solid Waste Leader Junxin Files for HKEX Listing, Embarking on a New Journey of A+H Internationalization

NewTimeSpace News: On 13 August, Hunan Junxin Environmental Protection Co., Ltd. submitted a listing application to the Main Board of the Stock Exchange of Hong Kong, with CICC and CITIC SEC acting as joint sponsors. The Company has been listed on the ChiNext of the Shenzhen Stock Exchange since 2022 (301109.SZ). As a company providing professional solutions for comprehensive waste treatment and resource utilization, Junxin's principal businesses include clean waste incineration for power generation, comprehensive treatment of various wastes, municipal solid waste transfer and treatment, and food waste resource utilization. According to Frost & Sullivan, the Changsha Environmental Protection Industrial Park, where the Company's principal operations are located, is one of the largest comprehensive environmental protection parks in China; by average grid electricity per tonne of waste, the Company ranked first in China in 2025 among all companies providing waste incineration for power generation.

I. Business Model: Integrated Collaborative Treatment, Building a Full-Chain Solid Waste Solution

Junxin's business covers the full value chain of solid waste treatment, forming a comprehensive business layout centered on incineration for power generation, with coordinated treatment of multiple wastes and integrated collection, transfer and transportation.

Clean waste incineration for power generation is the Company's core business. The Company operates the Changsha waste incineration projects (Phase I and II), the Liuyang project, the Pingjiang project and the overseas Bishkek project (Phase I). As of the latest practicable date, the aggregate daily treatment capacity of its waste incineration projects reached 10,600 tonnes. From 2023 to 2025, the total volume of municipal solid waste processed was 3.2 million, 3.2 million and 3.8 million tonnes respectively, generating 1.5 billion, 1.5 billion and 1.8 billion kWh of grid electricity, with grid electricity per tonne of waste rising from 452 kWh to 509 kWh, reflecting continuously improving operational efficiency. By average grid electricity per tonne of waste, the Company ranked first in China in 2025 among all waste incineration companies.

Comprehensive treatment of multiple wastes is an important supplementary business. The Changsha Environmental Protection Industrial Park hosts treatment projects for sludge (daily capacity of 1,000 tonnes), leachate (2,700 tonnes) and fly ash (215 tonnes), achieving coordinated disposal of various wastes within the park and improving overall operational efficiency.

Municipal solid waste transfer and food waste resource utilization are new business segments expanded through the acquisition of Renhe Environmental Technology in 2024. The Changsha transfer project has a daily treatment capacity of 10,000 tonnes of municipal solid waste, making it the largest waste transfer project in China; the Changsha food waste project has a daily capacity of 1,200 tonnes, with an oil extraction rate exceeding 7%, producing 30,000 tonnes of industrial-grade mixed oil annually and ranking third among food waste treatment projects nationwide.

In terms of overseas expansion, the Company has established a presence in Central Asia. Phase I of the Bishkek project commenced operation in December 2025; waste supply agreements and power purchase agreements have been signed for the project in Almaty, Kazakhstan (daily capacity of 2,000 tonnes); and projects in Osh and Issyk-Kul Region of Kyrgyzstan are also progressing, with the internationalization strategy steadily taking shape.

II. Financial Performance: Sustained Revenue and Profit Growth, High Gross Margins Maintained

Junxin is in a phase of steady growth. Revenue increased by 31.3% from RMB 1.84 billion in 2023 to RMB 2.41 billion in 2024, and further grew by 13.3% to RMB 2.73 billion in 2025. Revenue for the first quarter of 2026 was RMB 736 million, up 5.6% year on year. Revenue growth was mainly driven by the consolidation of new businesses from the November 2024 acquisition of Renhe Environmental Technology and improved operational efficiency of existing projects.

In terms of profitability, net profit for 2023, 2024 and 2025 was RMB 653 million, RMB 686 million and RMB 994 million respectively, with net margins of 35.5%, 28.5% and 36.4%. Profit surged 44.8% in 2025, mainly attributable to the revenue contribution from the Renhe acquisition and improved project operating efficiency. Net profit for the first quarter of 2026 was RMB 305 million, up 29.2% year on year, with a net margin of 41.4%.

Gross margins for 2023, 2024 and 2025 were 51.2%, 41.5% and 55.0% respectively, further rising to 56.6% in the first quarter of 2026. Gross margin fluctuations were mainly affected by changes in the revenue contribution of construction services; excluding construction services, operating gross margins were 62.9%, 63.6%, 56.6% and 58.5%, remaining broadly stable.

In terms of cost structure, administrative and selling expenses as a percentage of revenue declined from 9.6% in 2023 to 9.3% in the first quarter of 2026, with R&D costs accounting for approximately 2%-3%, reflecting sound expense control.

In terms of balance sheet, the gearing ratio improved continuously from 46.4% in 2023 to 31.5% in 2025, standing at 33.8% in the first quarter of 2026, indicating a solid financial structure.

III. Risk Factors

High customer concentration. Revenue from the Company's top five customers has consistently accounted for over 90% of total revenue, with the largest customer exceeding 50%; principal customers are local governments and power grid companies. If major customers adjust spending priorities, delay payments or encounter financial difficulties, the Company's revenue and cash flow could be adversely affected.

Geographic concentration risk. Most of the Company's operating projects are located in Hunan Province, and this geographic concentration exposes the Company to region-specific risks such as changes in local policies, economic fluctuations and demographic changes. If local governments reduce waste management budgets or delay payments under concession agreements, the financial performance of related projects could deteriorate.

Accounts receivable collection risk. Affected by fiscal tightening of local governments, the Company's trade receivables have continued to increase, with turnover days extending from 137.5 days in 2023 to 242.5 days in 2025. If customers fail to pay on time, the Company's cash flow and liquidity could be materially adversely affected.

Tax incentive change risk. The Company currently enjoys multiple tax incentives; if relevant policies change or eligibility is revoked, income tax expenses would increase significantly, putting pressure on profitability.

Earnings volatility arising from concession accounting treatment. The Company's projects adopt BOT, TOT, BOOT and BOO models, under which revenue is recognized during the construction phase while cash inflows are typically realized during the operation phase; the time mismatch between revenue recognition and cash generation may cause earnings volatility.

Property title defects. Approximately 0.96% of the Company's floor area has not obtained property ownership certificates. Although the relevant authorities have confirmed that the properties can be used for their current purposes, potential compliance risks remain.

IV. Market Outlook and Use of Proceeds: Domestic Industry Maturing, Overseas Markets Opening New Space

China's waste incineration industry has entered a mature stage. As of the end of 2025, incineration accounted for approximately 85% of domestic waste treatment volume, already exceeding the 65% target set in the 14th Five-Year Plan, and is expected to reach 90% by 2029. With most cities having signed long-term concession agreements, the incremental market space in China is limited, and industry leaders are seeking growth through M&A consolidation and technology export.

In overseas markets, Central Asia, Southeast Asia, South America and the Middle East are undergoing rapid urbanization, with municipal solid waste generation surging, yet incineration rates remain below 10% and collection rates far below the global average. Chinese companies possess significant advantages in standard processes, cost efficiency and project experience; the Belt and Road Initiative and green financing channels have further facilitated project access, making overseas markets the industry's true growth engine. The Company has already landed multiple projects in Kyrgyzstan and Kazakhstan, with its international footprint taking initial shape.

The proceeds from this IPO will be mainly used for the expansion of overseas and domestic projects (with Central Asia as the core, replicating the "Changsha model" to advance multiple overseas projects, including those in Osh and Issyk-Kul Region of Kyrgyzstan and Almaty of Kazakhstan, with funds to be used for civil engineering, equipment procurement and project management), continued R&D investment (covering technologies including fly ash resource utilization, flue gas emission control, AI intelligent control and waste-to-hydrogen), and general working capital.

This filing marks the formal launch of the international capital layout of this solid waste treatment leader following its A-share listing, which is expected to accelerate overseas business expansion through the H-share platform and realize the transformation from a regional leader into an international environmental company.

NewTimeSpace Disclaimer: All content herein is the original work of NewTimeSpace. Any reproduction, reprinting, or use of this content in any other manner must clearly indicate the source as "NewTimeSpace". NewTimeSpace and its authorized third-party information providers strive to ensure the accuracy and reliability of the data, but do not guarantee the absolute correctness thereof. This content is for reference only and does not constitute any investment advice. All transaction risks shall be borne by the user.