From environmental system service provider to resource recycling leader, the leapfrog advancement of GaoNeng Environment

Ask AI · How can Gaon Environment leverage national strategies to achieve resource-based transformation?

Recently, Gaon Environment (stock code: 603588.SH) released its 2025 annual report, delivering a performance beyond market expectations: the company’s net profit attributable to parent reached 838 million yuan, a year-on-year increase of 73.94%; achieved a net cash flow from operating activities of 1.17B yuan, up 54.50% compared to the same period last year, with multiple core indicators hitting record highs.

The confidence behind the high growth in performance stems from Gaon Environment having stepped out of the environmental protection enterprise framework, transforming into a rare and precious metal “production giant.” Data from the internationally authoritative consulting firm Frost & Sullivan show that, based on 2024 revenue, Gaon Environment’s market share in bismuth and antimony resource recycling markets reached 33.9% and 18.4%, respectively, ranking first nationwide; in copper and platinum group metal recovery markets, the shares are 9.2% and 6.7%, ranking third.

Transforming into a resource-based enterprise not only brings higher profit margins and greater market valuation potential for Gaon Environment but, more importantly, aligns perfectly with national strategic needs amid current international trade conditions. This will lay a solid foundation for the company’s stable and sustainable high-performance growth.

Gaon Environment President Ling Jinming stated that at the national strategic level, resource security has risen to an unprecedented height, especially as rare and precious metals are vital for the development of strategic emerging industries. In this context, the company’s renewable resources will become an important supplement to the national resource security system. In the future, Gaon Environment will actively participate in the national resource reserve system, building an autonomous and controllable supply chain, and fully integrating economic, environmental, and social benefits.

Transforming into a “Resource-Based” Enterprise

The first step in Gaon Environment’s turnaround was choosing to proactively shrink low-margin environmental engineering businesses.

After more than twenty years of development, the current environmental protection industry has evolved into a red ocean market with limited incremental business opportunities. Companies generally face issues such as decreasing new orders and rising operating costs. About ten years ago, Gaon Environment foresaw the development trend of the industry and gradually shifted its focus to resource recycling in this blue ocean market.

Simply put, Gaon Environment leverages technological advantages to extract rare and precious metals such as copper, lead, nickel, gold, silver, platinum group metals, bismuth, and antimony from large amounts of waste generated by manufacturing, thereby supporting high-end manufacturing industries in cities.

Ling Jinming said that one of the core judgments behind the company’s strategic transformation was that resource security had become a national strategy, but some domestic products still heavily depended on native mineral resources. Renewable resources can perfectly supplement market demand gaps.

Multiple operational data points from Gaon Environment also point to this strategic development trend: from 2023 to 2025, the revenue contribution weight of resource recycling business has increased year by year, solidifying as the company’s core revenue pillar. In 2025, the company achieved operating revenue of 14.73B yuan, with resource recycling business revenue rising to 11.9B yuan, accounting for 80.77%.

Most critically, the strategic shift to a resource-based enterprise has significantly boosted the company’s profitability, greatly enhancing the sustainability of its performance growth.

The financial report shows that in 2025, Gaon Environment’s net profit attributable to parent jumped from 482 million yuan last year to 838 million yuan, and non-recurring net profit soared from 324 million yuan to 794 million yuan, with profit growth far exceeding revenue growth, reflecting ongoing optimization of the business structure and a significant increase in high-value-added businesses.

In terms of profitability efficiency, Gaon Environment’s gross profit margin rose sharply from 14.43% in 2024 to 18.96%, and net profit margin reached 7.06%, both hitting three-year highs, highlighting the company’s core competitiveness in cost control, product pricing, and process optimization. Additionally, the company’s cash flow also hit a record high, with profit quality steadily improving. In 2025, cash flow from operating activities reached 1.17B yuan, up 54.5% year over year.

Building a Closed-Loop Industrial Chain

In the field of resource recycling, especially rare and precious metal recovery, technological barriers have always been high. When companies extend from basic metal recovery to high-end new material recovery, they often need more core technologies, but this technological route can also bring more considerable profit margins and better growth prospects.

Gaon Environment has been continuously optimizing its product structure along the path of perfecting rare metal recovery technology. To date, it can extract 14 kinds of metals including gold, silver, platinum, palladium, ruthenium, rhodium, iridium, bismuth, and antimony from solid waste and hazardous waste resources, with coverage surpassing many international resource recovery giants.

On a specific business level, Gaon Environment’s three subsidiaries—Jingyuan Gaon, Jiangxi Xinke, and Jinchang Gaon—have established leading positions in resource recovery, making it the most comprehensive resource recycling enterprise in China with the broadest service scope for solid waste and hazardous waste.

First, Jingyuan Gaon possesses globally leading refined bismuth capacity and has extended from basic bismuth recovery to high-end 4N-grade bismuth trioxide. In 2025, Jingyuan Gaon’s 4N-grade bismuth trioxide project was successfully put into operation. Bismuth, an important strategic rare metal, is widely used in medicine, metallurgy, semiconductors, and photovoltaics.

In 2025, Gaon Environment contributed a refined bismuth output of 4,021.41 tons. Multiple data reports show that Gaon Environment ranks first nationwide in bismuth resource recycling market share. Ling Jinming said that next, Jingyuan Gaon will continue to extend to 5N and 6N-grade bismuth trioxide, with such high-purity products directly meeting the demands of high-end manufacturing industries like semiconductors, further increasing product added value.

Second, Jiangxi Xinke has optimized raw material structure and upgraded processes, with net profit increasing from 70 million yuan in 2024 to 150 million yuan in 2025, an over 100% growth. Moreover, in 2026 and the coming years, Jiangxi Xinke’s capacity will further significantly increase.

Third, since its establishment in 2020, Jinchang Gaon has been committed to the deep value mining of platinum group metals. In 2025, its platinum group metal business became the biggest highlight of performance growth, with platinum group metal output increasing sixfold year-on-year, contributing over 360 million yuan in net profit. Today, Jinchang Gaon’s market share in platinum group metal recovery has ranked among the top three in the industry.

Looking ahead, Gaon Environment continues to seek breakthroughs. Ling Jinming said, “As the industry chain further expands, the company will extract more types of metals from solid and hazardous waste resources, and strategically venture into the mining resource sector, extending business to the upstream core resource end of the industry chain, moving toward leading international resource recycling enterprises.”

For resource recovery companies, on one hand, raw materials from native mines can complement recycled raw materials, smoothing price fluctuations and cycles; on the other hand, if companies can connect the entire industry chain from mining to refining, they can enhance control over the industry chain and ensure stable raw material supply.

In 2025, Gaon Environment finally made breakthroughs in native mineral resources, successfully obtaining exploration rights for four high-quality gold mines in Qingshan Cave and Bajiao Bay in Hunan Province. This means Gaon Environment is establishing a complete closed-loop industry chain of “mining—raw material security—resource regeneration—high-value utilization,” filling the last gap in its transformation into a resource-based enterprise. As mineral resources are gradually developed and utilized, Gaon Environment’s rapid growth is expected to gain more momentum.

Ling Jinming said that the mining and resource recovery main businesses are highly synergistic. The company’s refining technology and production management capabilities can be fully applied to mining. With this layout, the company has officially formed a dual-driven strategy of “urban mines + native mines.”

“Resource-Based” Layout Takes Center Stage

Over the past decades, with rapid industrial economic development, China has become the world’s largest manufacturing power, with manufacturing added value maintaining the top position globally for 16 consecutive years. In this process, large amounts of waste generated by manufacturing were once regarded as “urban garbage.”

In recent years, against the backdrop of intensified international trade conflicts and global supply chain restructuring, the strategic value of rare and precious metal resources has become a global consensus. For example, platinum group metals are core materials for automotive, electronics, semiconductors, medical, biochemical, and new energy industries, but domestic reserves are scarce, relying heavily on imports, with over 90% dependence.

Thus, “industrial waste” has transformed into “urban mines,” and resource recycling of solid and hazardous waste has gained strategic importance worldwide. Data shows that from 2021 to 2024, China’s recycled non-ferrous metal output reached 69.3 million tons cumulatively. In 2024, recycled non-ferrous metals accounted for one-quarter of China’s total non-ferrous metal output and one-third of global recycled non-ferrous metal production.

Ling Jinming said Gaon Environment has mastered independent refining technology for platinum group metals. This breakthrough not only breaks foreign technological monopoly and allows companies to gain higher profits but also has strategic significance: recyclable platinum group metals will become an important supplement to national resource security.

Compared to traditional mining, resource recovery for extracting rare and precious metals offers multiple advantages. On one hand, it helps fill supply gaps left by traditional mines and can produce continuously; on the other hand, resource recycling often has cost advantages. Industry estimates suggest that recycled copper production costs are 40% lower than primary copper, and recycled bismuth costs are 30% lower.

At the policy level, resource recycling has also received multiple favorable signals. In 2024, the General Office of the State Council issued the “Opinions on Accelerating the Construction of Waste Recycling Systems,” explicitly stating that building waste recycling systems is an important measure to implement a comprehensive conservation strategy, ensure resource security, promote carbon peaking and neutrality, and accelerate green transformation of development modes.

Market insiders believe that under the guidance of national strategies and policies, green and efficient resource recycling companies like Gaon Environment will enjoy broader market growth space and play increasingly important roles in national strategies.

Unlocking Corporate Valuation Potential

On March 27, shortly after the impressive release of the 2025 annual report, Gaon Environment submitted an application for H-share issuance and listing on the Hong Kong Stock Exchange.

Overall, the move to list in Hong Kong (H-shares) aims to further support the company’s internationalization strategy, diversify financing channels, and better reflect the company’s valuation.

In recent years, resource recycling has become a global consensus, and emerging markets in Southeast Asia, Latin America, the Middle East, and Africa have seen surging demand for environmental protection, making overseas markets a “must-competition” for domestic resource recovery companies.

Gaon Environment has natural advantages in expanding overseas markets. For example, its over thirty years of accumulated solid waste treatment technology is well-suited to the needs of emerging markets in Central Asia, Latin America, and Africa, including its waste incineration technology that adapts to high-moisture, low-calorific waste; its capital, management, and full industry chain layout capabilities support building overseas heavy asset projects.

These advantages have already translated into numerous overseas projects. In March 2025, Gaon Environment successively signed two waste sorting projects in Thailand, and by the end of that year, won a 427 million yuan waste incineration power generation project in Thailand; in December 2025, it signed a resource utilization project for waste tires in Mexico.

Regarding fundraising purposes, Gaon Environment’s push for Hong Kong listing aligns precisely with its resource recycling and global expansion strategies.

According to the prospectus, the funds raised in Hong Kong will be allocated to four main areas: acquisitions and capacity expansion, and equipment upgrades to enhance competitiveness in resource recycling; extending upstream into mining by acquiring promising domestic and international exploration projects in gold, copper, and other minerals; promoting overseas waste incineration power projects to further develop Southeast Asian markets; and replenishing working capital to meet daily operational needs.

Furthermore, although Gaon Environment has transformed from a traditional environmental protection company into a resource giant, its market valuation still does not fully reflect this transformation. Typically, traditional environmental protection companies are valued at 10–15 times PE (price-to-earnings ratio), focusing on project growth and operational stability; resource companies, however, are valued based on resource reserves, capacity layout, and industry chain control, with industry leaders reaching 20–30 times PE.

If successfully listed in Hong Kong, Gaon Environment’s valuation potential could further expand. President Ling Jinming said, “The Hong Kong market has abundant resource-focused investors. We hope that through listing in Hong Kong, more international investors will understand our business, change the stereotype that Gaon Environment is just an environmental protection company, and strengthen recognition of our resource attributes, ultimately reshaping our valuation.”