Shenwan Hongyuan Group: ENVISION GREEN (01783) dual-core business transformation inflection point established, computing power track to forge a new growth curve, initiate with "Buy" rating

Shenwan Hongyuan Group released a research report stating that ENVISION GREEN (01783) has completed its transformation from a traditional construction contractor to a dual-core business platform of circular economy + computing power: U.S. industrial metal reverse recycling provides deterministic cash flow (carriers' copper cable decommissioning brings continuous supply, fixed contracts lock in costs, and high metal prices amplify the price spread). Hong Kong power battery recycling leverages the territory's first licensed processing facility to secure scarce capacity, with retired batteries about to surge, and the "service fee + resource recovery" dual-wheel drive combining stability and elasticity. The acquisition of YV Cloud marks its entry into AI computing power leasing, where high industry demand prosperity resonates with rising energy consumption and licensing thresholds on the supply side, and the performance threshold and deferred payment mechanism provide a safety cushion for the premium transaction. The three major businesses relay in sequence, with a clear performance growth path. The bank believes that the combined reasonable valuation of the company's resource recycling and computing power services businesses can reach HK$25.827 billion, representing 94.7% upside from the current total market capitalization of HK$13.262 billion. Initiate coverage with a "Buy" rating. Shenwan Hongyuan Group's main views are as follows: Business transformation inflection point established: circular economy as the foundation, computing power services adding wings. ENVISION GREEN's predecessor was founded in 1985, initially engaged in Hong Kong construction engineering. Since 2022, the company has entered the power battery echelon utilization and recycling business and the U.S. reverse supply chain management business through mergers and acquisitions. With the rising proportion of high-gross-margin circular economy business, the company achieved net profit attributable to shareholders of HK$61 million in FY2025/26, turning positive for the first time after business transformation. In June 2026, the company advanced the acquisition of YV CLOUD Limited and Shanghai Youfu Cloud Computing, entering AIDC and AI computing power services, and building a multi-business system of "infrastructure engineering + resource recycling + computing power leasing." Renewable resource business: solid foundation, clear development prospects. U.S. copper cable decommissioning is accelerating, and reverse recycling demand has entered a phase of sustained release. The acceleration of telecom giants such as AT&T and Verizon migrating to wireless communications and fiber optic networks has become an irreversible trend. The company is deeply bound to leading customers such as AT&T, Verizon, and Amazon, with broad room for penetration improvement among existing customers. The company uses fixed-term contracts to lock in procurement costs at agreed prices, and sells high-purity copper and aluminum after dismantling at market prices. Under high copper prices, metal price increases directly amplify recycling spreads, combining profit stability and elasticity. Power battery recycling business: retired batteries about to surge, scarce licenses build a moat. As of the end of May 2026, Hong Kong's electric vehicle fleet was approximately 178,000 units, nearly ten times higher than in 2020. After full electrification of private cars before 2035, the fleet is expected to exceed 500,000 units. The rising number of batteries will bring substantial demand for retired battery recycling, and retired battery recycling is expected to accelerate from 2026. The Basel Convention ban amendment prohibits hazardous waste in principle from being exported to non-OECD regions such as mainland China and Southeast Asia, making local compliant capacity highly scarce. The company's Tuen Mun EcoPark factory is Hong Kong's first power battery processing facility. In June 2026, it obtained a chemical waste disposal license from the Hong Kong Environmental Protection Department and commenced production that month, with a designed annual capacity of 10,000 tons. It is currently in the capacity ramp-up period before the peak of power battery retirement. While processing service fees ensure stable revenue, black mass resource recovery sales further contribute elasticity, continuously providing incremental performance for the company. Computing power services business: acquiring YV Cloud to enter the AI computing power track and create a new growth curve. In recent years, China's intelligent computing power scale has grown rapidly, downstream internet giants have significantly increased capital expenditure in computing power, and the AIGC sector is extremely prosperous. In June 2026, the company began the acquisition of YV CLOUD Limited and its operating company Shanghai Youfu Cloud Computing Co., Ltd., formally entering the computing power services track. The target company, as one of China's earliest NVIDIA Cloud Partners, has advantages in GPU allocation priority and original manufacturer pricing. ENVISION GREEN has simultaneously begun expanding computing power assets and has completed the procurement of more than 500 NVIDIA high-performance GPU servers. It is optimistic that after the expansion of computing power scale, it will inject new momentum for high-speed growth into the company. Earnings forecast and valuation: The bank expects the company's forecast FY2026/27-FY2028/29 revenue to be HK$7.068 billion, HK$10.044 billion, and HK$12.333 billion, respectively, with net profit attributable to shareholders of HK$389 million, HK$715 million, and HK$1.036 billion, respectively, EPS of HK$0.13, HK$0.24, and HK$0.34 per share, respectively, corresponding to PE of 34x, 19x, and 13x, respectively. Considering the significant differences between the resource recycling and computing power services business models, the bank adopts sum-of-the-parts valuation for the company. Since from FY2028/29 the company's resource recycling business performance stability will strengthen after rapid capacity ramp-up, and the computing power business will have passed the cultivation period, valuation based on that fiscal year's performance can better reflect the company's true value level. The bank expects FY2028/29 resource recycling business to contribute net profit attributable to shareholders of approximately HK$579 million, assigning a 13x PE valuation, corresponding to a market capitalization of HK$7.524 billion. The computing power services business is expected to contribute approximately HK$458 million, assigning a 40x PE valuation, corresponding to a market capitalization of HK$18.303 billion, for a combined reasonable valuation of HK$25.827 billion, representing 94.7% upside from the current total market capitalization. Initiate coverage with a "Buy" rating.