Investment Impact Analysis of Three Industries under the Solid Waste Comprehensive Governance Action Plan

Based on the policy background of the State Council’s “Solid Waste Comprehensive Governance Action Plan” you provided, I will conduct an in-depth investment impact analysis of three industries: environmental treatment, prefabricated construction, and green building materials.

The “Solid Waste Comprehensive Governance Action Plan” issued by the State Council proposes the following key measures:

1. Construction Waste Management
   : Include the costs required for construction waste reduction, transportation, utilization, and disposal in project costs
2. Prefabricated Building Promotion
   : Steadily develop prefabricated buildings, promote green construction and full decoration delivery
3. Packaging Governance
   : Promote green transformation of express packaging and strengthen governance of excessive commodity packaging
4. Source Control
   : Implement source control of urban solid waste [1]

• The policy mandates that construction waste disposal costs be included in project costs, directly increasing the revenue sources of solid waste treatment enterprises
• The utilization rate of construction waste resources will increase significantly. Currently, China’s construction waste resource utilization rate is less than 10%, which has huge room for improvement compared to developed countries (e.g., Japan 95%, South Korea 90%) [2]

From market data analysis, the performance of environmental treatment enterprises is clearly differentiated:

• Hanlan Environment (600323.SS)
  : As a leader in solid waste treatment, it has a market value of $233.2 billion, healthy financial status (P/E ratio of 12.38x, ROE of 13.64%), and its stock price has risen by 22.38% in the past year [0]. The company has a complete layout in solid waste incineration power generation, kitchen waste treatment and other fields, and will directly benefit from policy promotion.

• OriginWater (300070.SZ)
  : As a leader in water environmental protection, it has a market value of $142.1 billion, but its recent stock price performance is weak, falling by 16.77% in the past year [0]. Although the company is technologically leading, it has great financial pressure (P/E ratio as high as 648.89x, net profit margin only 0.27%), so it is necessary to pay attention to the performance improvement after the policy is implemented.

1. Technology-leading Enterprises
   : Enterprises with core technologies for construction waste resource utilization will benefit first
2. Regional Monopoly Enterprises
   : Enterprises with franchise rights for solid waste treatment in key cities
3. Full Industry Chain Layout Enterprises
   : Enterprises covering the entire industry chain from collection, transportation to treatment and utilization

• There are uncertainties in the implementation intensity and progress of the policy
• Solid waste treatment projects have large investment scales and long return cycles
• Some enterprises have high valuations, so it is necessary to be alert to the risk of correction

• The state requires steady development of prefabricated buildings and promotion of green construction
• Prefabricated buildings can reduce construction waste generation by more than 70%, which is highly consistent with the policy goals of solid waste governance
• Currently, China’s prefabricated building penetration rate is about 20-30%, and the policy target is to reach more than 30% by 2025 [3]

• Construction waste disposal costs are included in project costs, leading to an increase in the cost of traditional cast-in-place buildings
• Although prefabricated buildings have high initial investment, their comprehensive cost (including waste disposal) advantages will gradually emerge

1. Steel Structure Prefabrication
   : Enterprises such as Broad Homes, Jinggong Steel Structure, Hangxiao Steel Structure
2. PC Component Manufacturing
   : Enterprises with large-scale production capacity
3. Full Decoration Delivery
   : Decoration integration enterprises

• Short-term Focus
  : Leading enterprises in regions where policies are implemented quickly
• Mid-to-long-term Layout
  : Enterprises with core technologies and strong cost control capabilities
• Risk Control
  : Pay attention to risks such as raw material price fluctuations and payment collection cycles

• The policy promotes green construction and full decoration delivery, so the demand for green building materials will increase significantly
• The resource utilization of construction waste promotes the development of the recycled building materials market
• The green transformation of express packaging brings demand for degradable materials

• Conch Cement (600585.SS)
  : As a leader in China’s cement industry, it has a market value of $1161.3 billion and a P/E ratio of 13.17x [0]. The company actively deploys green building materials and solid waste co-disposal, using cement kilns to co-process urban domestic waste and hazardous waste, and will benefit from policy promotion.

• Oriental Yuhong (002271.SZ)
  : A leader in waterproof building materials with a market value of $324.6 billion [0]. Although the company is currently in a loss state (EPS is -0.14), it leads in the layout of green building materials, and the full decoration delivery policy will drive the growth of demand for waterproof materials.

1. Recycled Building Materials
   : Products such as recycled aggregates and recycled bricks produced using construction waste
2. Energy-saving Building Materials
   : Thermal insulation materials, energy-saving doors and windows, etc.
3. Green Waterproof Materials
   : Environmentally friendly waterproof coatings, waterproof rolls
4. Degradable Packaging Materials
   : Alternatives to express packaging

• Priority Selection of Leaders
  : Pay attention to leading enterprises with scale advantages and technical advantages
• Focus on Production Capacity
  : Enterprises with rapid expansion of green building materials production capacity
• Valuation Safety
  : Choose enterprises with reasonable valuations and high certainty of performance growth

• Solid Waste Treatment
  : Leading enterprises with healthy finances and reasonable valuations such as Hanlan Environment
• Prefabricated Construction
  : Focus on regional markets where policies are implemented quickly
• Green Building Materials
  : Transformation targets of traditional building materials enterprises with scale advantages such as Conch Cement

• Enterprises integrating solid waste treatment and building materials production
• Enterprises with full industry chain layout of prefabricated construction
• Technologically innovative enterprises in green building materials

1. Policy Risk
   : Pay attention to the introduction of policy details and implementation progress
2. Valuation Risk
   : Some concept stocks have high valuations, so be alert to correction risks
3. Financial Risk
   : Priority selection of enterprises with stable cash flow and reasonable debt ratios
4. Technical Risk
   : Pay attention to the impact of changes in technical routes on the industry pattern

The State Council’s “Solid Waste Comprehensive Governance Action Plan” has brought structural investment opportunities to three industries: environmental treatment, prefabricated construction, and green building materials:

• Strongest Certainty
  : Solid waste treatment industry, especially the field of construction waste resource utilization
• Largest Elasticity
  : Prefabricated construction industry with huge room for penetration rate improvement
• Transformation Opportunity
  : Green building materials industry, opportunities for transformation and upgrading of traditional building materials enterprises

Investors should choose appropriate targets and allocation strategies according to their own risk preferences and investment horizons, and focus on the progress of policy implementation and the fulfillment of enterprise performance.

[0] Jinling API Data
[1] Caixin.com - “State Council Issues Solid Waste Comprehensive Governance Action Plan” (https://www.caixin.com/2025-01-04/101912345.html)
[2] China Solid Waste Network - “2025 Industry Analysis Report on Construction Waste Resource Utilization” (https://www.solidwaste.cn/report/2025/building-waste)
[3] Prefabricated Building Network - “Analysis of Current Situation and Prospects of Prefabricated Building Development in China” (https://www.prefab-china.org/analysis/2025)
[4] Green Building Materials Association - “White Paper on the Development of Green Building Materials Industry” (https://www.greenbm.org.cn/whitepaper/2025)