Envision Greenwise Holdings Shenwan Hongyuan Initiates Envision Green (01783) at Buy: Dual-Business Transformation Inflection Point Established, Fair Valuation of HK$25.827 Billion, Implies 94.7% Upside from Current Market Cap

According to the Zhitong Finance APP,Shenwan Hongyuan said in a research note that Envision Green (01783) has completed its transformation from a traditional construction contractor into a dual-business platform spanning circular economy and AI compute. U.S. industrial metal reverse recycling provides highly visible cash flow, with telecom carriers’ copper network decommissioning offering a steady supply of feedstock, fixed-price contracts locking in costs, and elevated metal prices widening spreads. Hong Kong power battery recycling secures scarce capacity through the city’s first licensed processing facility, with retired battery volumes poised to surge; a dual model of service fees and resource recovery offers both stability and upside. The acquisition of YV Cloud marks its entry into AI compute leasing, where booming industry demand is combining with rising energy-consumption and licensing barriers on the supply side; performance thresholds and deferred payment mechanisms provide downside protection for the premium acquisition. With the three businesses progressing in sequence, the earnings growth path is clear. The broker believes the combined fair value of the company’s resource recycling and AI compute services businesses could reach HK$25.827 billion, implying 94.7% upside to its current market capitalization of HK$13.262 billion. It initiated coverage with a “Buy” rating.

Key takeaways:

Transformation inflection point established: circular economy as the foundation; AI compute as a new growth engine. Envision Green’s predecessor was founded in 1985 and initially focused on Hong Kong construction engineering. Since 2022, the company has moved into second-life power battery utilization and recycling and U.S. reverse supply chain management through M&A. As high-margin circular economy revenue increased, the company reported net profit attributable to shareholders of HK$61 million in FY2025/26, its first positive result since the business transformation. In June 2026, it moved to acquire YV CLOUD Limited and Shanghai Yovole Cloud Computing, entering AIDC and AI compute services and building a multi-business model spanning infrastructure engineering, resource recycling and compute leasing.

Resource recycling: solid core business with clear growth prospects. U.S. copper cable decommissioning is accelerating, and reverse recycling demand is entering a sustained release phase. Telecom giants such as AT&T and Verizon are accelerating their migration to wireless and fiber networks, an irreversible trend. The company has deep ties with leading customers including AT&T, Verizon and Amazon, leaving ample room to increase penetration among existing clients. It uses fixed-term contracts to lock in procurement costs at agreed prices and sells high-purity copper and aluminum recovered from dismantling at market prices. With copper prices elevated, metal price gains directly widen recycling spreads, offering both earnings stability and upside.

Power battery recycling: retired battery volumes are set to surge; scarce licences build a moat. As of end-May 2026, Hong Kong had about 178,000 EVs, nearly 10 times the 2020 level. With private cars set to be fully electric by 2035, the fleet could exceed 500,000 units. Rising battery numbers will create substantial retired battery recycling demand, with volumes expected to accelerate from 2026. The Basel Convention Ban Amendment prohibits, in principle, the export of hazardous waste to non-OECD regions such as mainland China and Southeast Asia, making local compliant capacity highly scarce. The company’s Tuen Mun EcoPark plant is Hong Kong’s first power battery processing facility. In June 2026, it obtained a chemical waste disposal licence from the Hong Kong Environmental Protection Department and began production that month, with designed annual capacity of 10,000 tonnes. It is currently ramping up capacity ahead of the peak in power battery retirements. While processing service fees provide stable revenue, black mass resource recovery sales add further upside and continue to contribute incremental earnings.

AI compute services: YV Cloud acquisition marks entry into AI compute, creating a new growth curve. China’s intelligent computing capacity has grown rapidly in recent years. Major internet companies have significantly increased capex in computing power, and the AIGC sector is booming. In June 2026, the company began acquiring YV CLOUD Limited and its operating company Shanghai Yovole Cloud Computing, formally entering the compute services market. As one of China’s earliest NVIDIA Cloud Partners, the target has advantages in GPU allocation priority and favorable original manufacturer pricing. Envision Green has also begun expanding its compute assets and has completed the procurement of more than 500 Nvidia high-performance GPU servers. It expects the expansion of computing capacity to inject new momentum for rapid growth.

Earnings forecast and valuation: The broker forecasts revenue of HK$7.068 billion, HK$10.044 billion and HK$12.333 billion for FY2026/27–FY2028/29; net profit attributable to shareholders of HK$389 million, HK$715 million and HK$1.036 billion; EPS of HK$0.13, HK$0.24 and HK$0.34 per share; and P/E of 34x, 19x and 13x, respectively. Given the significant differences between the resource recycling and AI compute services business models, the broker uses a sum-of-the-parts valuation. As the resource recycling business’s earnings stability improves after rapid capacity ramp-up from FY2028/29, and the compute business has moved past its incubation phase, valuing the company on that fiscal year’s performance better reflects its intrinsic value. The broker estimates that in FY2028/29, resource recycling will contribute about HK$579 million in net profit attributable to shareholders. Applying a 13x P/E gives a market capitalization of HK$7.524 billion. AI compute services will contribute about HK$458 million. Applying a 40x P/E gives a market capitalization of HK$18.303 billion. The combined fair value is HK$25.827 billion, implying 94.7% upside to the current market capitalization. It initiated coverage with a “Buy” rating.