Investment Rating - The report maintains a positive outlook on the power and gas sectors, recommending specific companies for investment based on their performance and market conditions [3][16][18]. Core Insights - The report highlights that in August, the total electricity consumption reached 10,154 billion kWh, marking a year-on-year growth of 5.0%. The second industry contributed the largest increase, accounting for 59% of the total electricity increment [3][8][9]. - The report notes that global gas prices are experiencing slight fluctuations, with the Henry Hub spot price at $2.90/mmBtu and the TTF spot price at €32.15/MWh as of September 26 [18][19]. - The report emphasizes the stable growth in electricity consumption driven by high temperatures and government policies aimed at boosting consumption [8][9]. Summary by Sections 1. Electricity Sector - In August, the second industry saw a significant increase in electricity consumption, with a year-on-year growth of 5.0% and contributing 59% to the total electricity increment [3][9]. - The manufacturing sector achieved a record monthly growth rate, particularly in high-tech and equipment manufacturing, which grew by 9.1% year-on-year [9][10]. - The report recommends investments in hydropower, green energy, nuclear power, and thermal power companies, citing favorable conditions for growth and profitability [16][17]. 2. Gas Sector - The report indicates that the supply-demand dynamics for gas remain stable, with slight fluctuations in global gas prices. The LNG price in Northeast Asia decreased by 2.61% to $11.20/mmBtu [18][19]. - It highlights the steady increase in U.S. natural gas inventories and the impact of mild weather on heating and cooling demands, leading to low price volatility [21][27]. - The report suggests focusing on integrated gas companies and city gas firms that are expected to benefit from cost reductions and improved profitability [41][42]. 3. Market Performance Review - The report notes that the public utility and environmental sectors underperformed compared to the Shanghai and Shenzhen 300 indices, while the power equipment sector outperformed [43][44]. 4. Company and Industry Dynamics - Recent government initiatives aim to enhance the quality of energy equipment and promote the development of renewable energy sources [52]. - The report includes updates on major companies' announcements, including contract wins and strategic investments, which are expected to positively impact their future performance [52][53]. 5. Key Company Valuation Table - The report provides a valuation table for key companies in the public utility and environmental sectors, indicating their market positions and potential for growth [54].

[Company Information](index=3&type=section&id=Company%20Information) This section provides essential corporate details, including board composition, company registration, auditor information, and shareholder dividend schedule [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The company's board comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - Board members include Executive Directors Ms. Bai Tao (Chairperson) and Mr. Kuang Hu (Managing Director), as well as Non-executive Directors Mr. Wang Min and Ms. Wang Surong[7](index=7&type=chunk) - The Audit, Remuneration, and Nomination Committees are all chaired by independent non-executive directors, strengthening independent oversight[7](index=7&type=chunk) [Company Basic Information](index=3&type=section&id=Company%20Basic%20Information) The company's registered office is in Hong Kong, with KPMG as its auditor, and lists key bankers, stock code 00270, and a fiscal year-end of December 31 - The company's registered office is at Yuehai Investment Building, 148 Connaught Road Central, Hong Kong, with KPMG as its auditor[7](index=7&type=chunk)[8](index=8&type=chunk) Share and Fiscal Year Information | Metric | Details | | :--- | :--- | | Stock Code | 00270 | | Trading Lot | 2,000 shares | | Fiscal Year End | December 31 | | Listing Place | Main Board of The Stock Exchange of Hong Kong Limited | [Shareholder Timetable and Dividends](index=3&type=section&id=Shareholder%20Timetable%20and%20Dividends) The company declared an interim dividend of HKD 26.66 cents per ordinary share, expected around October 23, 2025, with a book close date of October 10, 2025 2025 Interim Dividend Information | Metric | Details | | :--- | :--- | | Book Close Date | October 10, 2025 | | Interim Dividend | HKD 26.66 cents per ordinary share | | Payment Date | Around October 23, 2025 | [Review Report](index=4&type=section&id=Review%20Report) This section presents the independent auditor's review report on the interim financial information [Scope of Review and Conclusion](index=4&type=section&id=Scope%20of%20Review%20and%20Conclusion) KPMG reviewed the interim financial report under Hong Kong Standard on Review Engagements 2410, finding no material matters indicating non-compliance with HKAS 34 - The scope of review is substantially less than an audit, thus no audit opinion was expressed[11](index=11&type=chunk) - The conclusion states that the interim financial report is prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[12](index=12&type=chunk) [Unaudited Interim Financial Report](index=4&type=section&id=Unaudited%20Interim%20Financial%20Report) This section contains the unaudited condensed consolidated interim financial statements, including income, comprehensive income, financial position, equity changes, and cash flows [Condensed Consolidated Income Statement](index=5&type=section&id=Condensed%20Consolidated%20Income%20Statement) For the six months ended June 30, 2025, profit from continuing operations increased by 7.5% year-on-year, and profit for the period grew by 11.5%, with a significant reduction in loss from discontinued operations Key Data from Condensed Consolidated Income Statement (for the six months ended June 30) | Metric | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 9,428,291 | 9,486,866 | -0.6 | | Gross Profit | 5,246,448 | 5,307,492 | -1.1 | | Profit Before Tax | 4,105,084 | 3,848,913 | +6.7 | | Profit for the period from continuing operations | 2,993,281 | 2,783,807 | +7.5 | | Loss for the period from discontinued operations | (21,267) | (118,025) | -82.0 | | Profit for the period | 2,972,014 | 2,665,782 | +11.5 | | Attributable to owners of the Company | 2,681,733 | 2,410,985 | +11.2 | | Basic and diluted earnings per share | HKD 41.02 cents | HKD 36.88 cents | +11.2 | - Finance costs significantly decreased by **30.7%** from HKD **492,799 thousand** in 2024 to HKD **341,461 thousand** in 2025[14](index=14&type=chunk) [Condensed Consolidated Statement of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, total comprehensive income significantly increased to HKD 3,826,110 thousand, primarily due to a swing from loss to gain in foreign currency translation differences Key Data from Condensed Consolidated Statement of Comprehensive Income (for the six months ended June 30) | Metric | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Profit for the period | 2,972,014 | 2,665,782 | +11.5 | | Exchange differences on translation of foreign operations | 810,643 | (412,588) | Swing from loss to gain | | Total comprehensive income for the period | 3,826,110 | 2,259,527 | +69.3 | | Attributable to owners of the Company | 3,324,696 | 2,121,850 | +56.7 | - The aggregate exchange differences on translation of foreign operations for subsidiaries and associates swung from a loss of HKD **412,588 thousand** in 2024 to a gain of HKD **810,643 thousand** in 2025, driving the increase in total comprehensive income[16](index=16&type=chunk) [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets significantly decreased due to the distribution of Yuehai Land, but equity attributable to owners of the Company increased, and net current liabilities decreased Key Data from Condensed Consolidated Statement of Financial Position (as of June 30) | Metric | 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 75,799,887 | 74,846,936 | +1.3 | | Total current assets | 21,297,597 | 60,748,467 | -65.0 (primarily due to Yuehai Land distribution) | | Total current liabilities | (17,992,857) | (55,737,907) | -67.7 (primarily due to Yuehai Land distribution) | | Net current assets | 3,304,740 | 5,010,560 | -34.1 | | Net assets | 55,849,970 | 56,675,473 | -1.4 | | Equity attributable to owners of the Company | 42,177,713 | 41,658,024 | +1.2 | - Total assets decreased from HKD **135,595,403 thousand** as of December 31, 2024, to HKD **97,097,484 thousand** as of June 30, 2025, primarily due to the distribution of Yuehai Land Holdings Limited[18](index=18&type=chunk)[87](index=87&type=chunk) - Trade and other receivables, prepayments, and other receivables increased by **20.9%** from HKD **5,578,979 thousand** as of December 31, 2024, to HKD **6,749,709 thousand** as of June 30, 2025[17](index=17&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity increased due to profit for the period and foreign currency translation gains, but was reduced by the in-specie distribution of Yuehai Land shares Key Data from Condensed Consolidated Statement of Changes in Equity (for the six months ended June 30) | Metric | 2025 (HKD '000) | 2024 (HKD '000) | | :--- | :--- | :--- | | Total equity at beginning of period | 56,675,473 | 58,029,625 | | Profit for the period | 2,972,014 | 2,665,782 | | Total other comprehensive income for the period | 854,096 | (406,255) | | In-specie distribution of shares of a subsidiary | (4,155,844) | – | | Final dividend for 2024 | (475,300) | (806,113) | | Total equity at end of period | 55,849,970 | 59,267,963 | - Equity attributable to owners of the Company increased from HKD **41,658,024 thousand** at the beginning of the period to HKD **42,177,713 thousand** at the end of the period, primarily driven by profit for the period of HKD **2,681,733 thousand** and an increase in foreign exchange fluctuation reserve of HKD **599,915 thousand**, partially offset by the in-specie distribution of Yuehai Land shares of HKD **2,335,074 thousand** and a final dividend of HKD **475,300 thousand**[19](index=19&type=chunk)[87](index=87&type=chunk) [Condensed Consolidated Cash Flow Statement](index=12&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2025, net cash inflow from operating activities decreased, net cash outflow from investing activities decreased, and net cash outflow from financing activities significantly increased, resulting in a net decrease in cash and cash equivalents Key Data from Condensed Consolidated Cash Flow Statement (for the six months ended June 30) | Metric | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Net cash inflow from operating activities | 3,339,443 | 4,875,738 | -31.5 | | Net cash outflow from investing activities | (846,116) | (2,302,676) | -63.3 | | Net cash outflow from financing activities | (4,306,501) | (1,528,835) | +181.7 | | Net (decrease)/increase in cash and cash equivalents | (1,813,174) | 1,044,227 | Swing from increase to decrease | | Cash and cash equivalents at end of period | 11,583,087 | 12,361,739 | -6.3 | - Net cash outflow from financing activities significantly increased, primarily due to repayment of bank and other borrowings of HKD **3,857,090 thousand** and net cash outflow from in-specie distribution of HKD **2,176,240 thousand**[22](index=22&type=chunk) - Net cash inflow from operating activities decreased, partly due to reduced cash inflow from discontinued operations of Yuehai Land[111](index=111&type=chunk) [Notes to the Interim Financial Report](index=14&type=section&id=Notes%20to%20the%20Interim%20Financial%20Report) This section details the basis of preparation, changes in accounting policies, operating segment information, revenue, expenses, taxation, dividends, earnings per share, financial instruments, commitments, discontinued operations, contingent liabilities, and related party transactions [General Information and Accounting Policies](index=14&type=section&id=General%20Information%20and%20Accounting%20Policies) This interim financial report is prepared in accordance with HKAS 34, disclosing the reclassification of Yuehai Land's business as discontinued operations due to an in-specie share distribution, with comparative figures restated - On January 21, 2025, the Company distributed approximately **99.9%** of Yuehai Land shares to its shareholders, resulting in Yuehai Land's business being classified as a discontinued operation[24](index=24&type=chunk) - The interim financial report is prepared in compliance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the disclosure requirements of Appendix D2 to the Listing Rules[25](index=25&type=chunk) [Changes in Accounting Policies and Disclosures](index=15&type=section&id=Changes%20in%20Accounting%20Policies%20and%20Disclosures) Revised Hong Kong Financial Reporting Standards were applied this period, but they did not materially impact the Group's financial position or performance - Revised Hong Kong Financial Reporting Standards adopted for the first time this period include amendments to HKAS 21 "The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability"[27](index=27&type=chunk) - The application of new standards had no material impact on the Group's financial position and performance for the current and prior periods[27](index=27&type=chunk) [Operating Segment Information](index=16&type=section&id=Operating%20Segment%20Information) The Group is divided into seven reportable operating segments: water resources, property investment, department store operations, power generation, hotel operation and management, roads and bridges, and "others," with varying revenue and performance, and water resources remaining the primary contributor - The Group's principal operating segments include water resources, property investment, department store operations, power generation, hotel operation and management, and roads and bridges[31](index=31&type=chunk) Revenue and Results from Continuing Operations by Segment (for the six months ended June 30) | Segment | 2025 Revenue (HKD '000) | 2024 Revenue (HKD '000) | 2025 Results (HKD '000) | 2024 Results (HKD '000) | | :--- | :--- | :--- | :--- | :--- | | Water Resources | 7,153,052 | 7,051,438 | 3,402,202 | 3,421,332 | | Property Investment | 810,718 | 778,698 | 479,589 | 425,405 | | Department Store Operations | 216,529 | 389,592 | 23,891 | (9,387) | | Power Generation | 610,859 | 629,462 | 84,580 | 77,302 | | Hotel Operation and Management | 336,393 | 315,188 | 51,438 | 60,216 | | Roads and Bridges | 300,740 | 322,488 | 221,187 | 225,158 | | Consolidated Total | 9,428,291 | 9,486,866 | 4,235,330 | 4,138,917 | - The Department Store Operations segment swung from a loss of HKD **9,387 thousand** in 2024 to a profit of HKD **23,891 thousand** in 2025, despite a significant decline in revenue[32](index=32&type=chunk) [Revenue from Continuing Operations](index=21&type=section&id=Revenue%20from%20Continuing%20Operations) The Group's total revenue from continuing operations was HKD 9,428,291 thousand, slightly lower than the prior period, primarily from water resources, followed by property investment and power generation, with a significant decrease in department store operations revenue Revenue Breakdown from Continuing Operations (for the six months ended June 30) | Type of Goods or Services | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Water Resources Segment | 7,153,052 | 7,051,438 | +1.4 | | Property Investment Segment | 123,854 | 111,788 | +10.8 | | Department Store Operations Segment | 201,602 | 370,567 | -45.6 | | Power Generation Segment | 610,859 | 629,462 | -3.0 | | Hotel Operation and Management Segment | 315,621 | 292,751 | +7.8 | | Roads and Bridges Segment | 300,740 | 322,488 | -6.8 | | Finance income from service concession arrangements | 388,461 | 397,460 | -2.3 | | Rental income | 718,259 | 703,047 | +2.2 | | Total Revenue | 9,428,291 | 9,486,866 | -0.6 | - Mainland China contributed the vast majority of revenue, with HKD **8,220,783 thousand** in 2025, while the Hong Kong Hotel Operation and Management segment generated HKD **100,788 thousand** in revenue[39](index=39&type=chunk) [Finance Costs from Continuing Operations](index=24&type=section&id=Finance%20Costs%20from%20Continuing%20Operations) For the six months ended June 30, 2025, finance costs from continuing operations significantly decreased by 30.7%, primarily due to reduced interest on bank and other borrowings Finance Costs from Continuing Operations (for the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Interest on bank and other borrowings | 301,503 | 411,783 | -26.8 | | Interest on loans from fellow subsidiaries | 31,726 | 50,220 | -36.8 | | Interest on loans from an associate | 3,064 | 15,319 | -80.0 | | Interest on lease liabilities | 7,426 | 14,212 | -47.8 | | Finance costs incurred | 344,353 | 492,799 | -30.1 | | Finance costs expensed for the period | 341,461 | 492,799 | -30.7 | - Interest of HKD **2,892 thousand** was capitalized during the period, compared to no capitalized interest in the prior period[40](index=40&type=chunk) [Profit Before Tax from Continuing Operations](index=25&type=section&id=Profit%20Before%20Tax%20from%20Continuing%20Operations) Profit before tax from continuing operations this period was influenced by various income and expense items, including a decrease in interest income and changes in costs of sales and services provided Items Affecting Profit Before Tax from Continuing Operations (for the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Bank interest income | (43,827) | (78,996) | -44.5 | | Interest income from other financial assets measured at amortized cost | (40,587) | (6,399) | +534.2 | | Cost of sales of inventories | 642,123 | 840,182 | -23.6 | | Cost of services provided | 2,768,671 | 2,571,916 | +7.6 | | Depreciation of property, plant and equipment | 365,054 | 412,498 | -11.5 | | Amortisation of operating concessions | 771,049 | 767,276 | +0.5 | | Government grants | (40,241) | (27,807) | +44.7 | - Government grants significantly increased by **44.7%** to HKD **40,241 thousand**[41](index=41&type=chunk) [Income Tax Expense from Continuing Operations](index=26&type=section&id=Income%20Tax%20Expense%20from%20Continuing%20Operations) Income tax expense from continuing operations increased by 4.4% year-on-year this period, primarily due to charges from Mainland China and deferred tax Income Tax Expense from Continuing Operations (for the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Current period – Mainland China charge | 941,866 | 944,269 | -0.3 | | Underprovision/(overprovision) in prior years | 17,003 | (7,283) | Swing from overprovision to underprovision | | Current period – Hong Kong charge | 5,216 | 7,203 | -27.6 | | Deferred tax | 147,718 | 120,917 | +22.2 | | Total tax expense for the period | 1,111,803 | 1,065,106 | +4.4 | - The corporate income tax rate in Mainland China is **25%**, and the Hong Kong profits tax rate is **16.5%**[42](index=42&type=chunk)[43](index=43&type=chunk) [Dividends](index=27&type=section&id=Dividends) The Board declared an interim dividend of HKD 26.66 cents per share for 2025, and completed an in-specie distribution of Yuehai Land shares as a special dividend this period Dividend Distribution (for the six months ended June 30) | Dividend Type | 2025 (HKD '000) | 2024 (HKD '000) | Dividend per share (2025) | | :--- | :--- | :--- | :--- | | Interim dividend | 1,742,983 | 1,567,116 | HKD 26.66 cents | | Final dividend for previous financial year | 475,300 | 806,113 | HKD 7.27 cents | - On January 21, 2025, the Company distributed **1,261,799,423** shares of Yuehai Land as a special dividend to its shareholders, representing approximately **99.9%** of the Company's holdings in Yuehai Land[46](index=46&type=chunk) [Earnings/(Loss) Per Share Attributable to Owners of the Company](index=28&type=section&id=Earnings%2F%28Loss%29%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Company) For the six months ended June 30, 2025, basic and diluted earnings per share were HKD 41.02 cents, an increase from the prior period, with no potential dilutive ordinary shares Earnings Per Share Calculation (for the six months ended June 30) | Metric | 2025 (HKD '000)/Number of shares | 2024 (HKD '000)/Number of shares | | :--- | :--- | :--- | | Profit from continuing operations | 2,698,784 | 2,473,445 | | Loss from discontinued operations | (17,051) | (62,460) | | Profit attributable to owners of ordinary equity | 2,681,733 | 2,410,985 | | Weighted average number of ordinary shares in issue | 6,537,821,440 | 6,537,821,440 | | Basic and diluted earnings per share | HKD 41.02 cents | HKD 36.88 cents | - As there were no potential dilutive ordinary shares in the current and prior periods, diluted earnings per share are the same as basic earnings per share[48](index=48&type=chunk) [Service Concession Arrangements](index=29&type=section&id=Service%20Concession%20Arrangements) Receivables from service concession arrangements primarily stem from water supply and sewage treatment businesses with Mainland Chinese government entities, with some revenue rights pledged for bank borrowings Receivables from Service Concession Arrangements (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Receivables from service concession arrangements | 17,652,940 | 17,581,443 | | Non-current portion | 17,042,274 | 16,966,044 | | Current portion | 610,666 | 615,399 | - As of June 30, 2025, revenue rights from certain water supply, sewage treatment, and toll road concession arrangements were pledged to secure bank and other borrowings of HKD **12,448,775 thousand**[49](index=49&type=chunk) [Other Financial Assets Measured at Amortized Cost](index=30&type=section&id=Other%20Financial%20Assets%20Measured%20at%20Amortized%20Cost) The Group's other financial assets measured at amortized cost are deposits with various licensed banks in China, denominated in RMB, maturing within three years, and principal-protected - The principal of these financial assets is denominated in RMB, matures within three years, and is principal-protected at maturity[51](index=51&type=chunk) [Trade and Other Receivables, Prepayments and Other Receivables](index=30&type=section&id=Trade%20and%20Other%20Receivables,%20Prepayments%20and%20Other%20Receivables) Total trade and bills receivables significantly increased, with a rise in amounts overdue for over one year, exposing the company to concentrated credit risk Trade and Other Receivables, Prepayments and Other Receivables (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | Trade and bills receivables | 4,811,634 | 3,837,959 | +25.4 | | Other receivables | 1,135,558 | 987,217 | +15.0 | | Prepayments and deposits | 187,473 | 224,467 | -16.5 | | Contract assets | 816,141 | 768,414 | +6.2 | | Amounts due from fellow subsidiaries | 193,599 | 107,447 | +80.2 | | Amounts due from associates | 132,390 | 172,709 | -23.3 | | Loan to a fellow subsidiary | 548,300 | – | New | | Current portion | 6,749,709 | 5,578,979 | +20.9 | Ageing Analysis of Trade and Bills Receivables (as of June 30) | Ageing | 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Current or less than 3 months overdue | 2,967,878 | 2,282,981 | | 3 to 6 months overdue | 260,396 | 303,668 | | 6 months to 1 year overdue | 575,230 | 661,312 | | Over 1 year overdue | 1,046,110 | 627,659 | | Total (net of loss allowance) | 4,811,634 | 3,837,959 | - **10%** of the total trade and bills receivables are due from one customer, indicating concentrated credit risk[52](index=52&type=chunk) [Trade and Other Payables, Accruals and Other Liabilities and Contract Liabilities](index=31&type=section&id=Trade%20and%20Other%20Payables,%20Accruals%20and%20Other%20Liabilities%20and%20Contract%20Liabilities) Total trade and bills payables decreased, but amounts due to fellow subsidiaries significantly increased. Most payables are non-interest bearing and settled within 60 days Trade and Other Payables, Accruals and Other Liabilities and Contract Liabilities (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | Trade and bills payables | 5,299,129 | 5,611,573 | -5.6 | | Accruals, other payables and other liabilities | 5,481,053 | 5,685,071 | -3.6 | | Contract liabilities | 1,123,595 | 1,339,525 | -16.1 | | Amounts due to fellow subsidiaries | 507,903 | 295,415 | +72.0 | | Current portion | 11,390,251 | 12,094,358 | -5.8 | - Of the trade and bills payables, **99.9%** (HKD **5,297,002 thousand**) are due for settlement within three months[55](index=55&type=chunk) [Bank and Other Borrowings](index=32&type=section&id=Bank%20and%20Other%20Borrowings) Total bank and other borrowings decreased, with a notable reduction in current borrowings. Most borrowings are RMB-denominated and some are secured Total Bank and Other Borrowings (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | Current borrowings | 4,923,655 | 7,330,175 | -32.8 | | Non-current borrowings | 16,253,676 | 16,531,830 | -1.7 | | Total bank and other borrowings | 21,177,331 | 23,862,005 | -11.3 | - Approximately **83.0%** of bank and other borrowings are denominated in RMB, with the remainder in HKD[59](index=59&type=chunk) - **79%** equity interest in a subsidiary has been pledged to secure bank loans amounting to HKD **657,960 thousand**[59](index=59&type=chunk) [Share Capital and Reserves](index=33&type=section&id=Share%20Capital%20and%20Reserves) The company's issued and fully paid share capital remained unchanged, with details of reserve movements presented in the condensed consolidated statement of changes in equity Share Capital Information (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Number of issued and fully paid ordinary shares | 6,537,821,440 | 6,537,821,440 | | Amount of share capital | 8,966,177 | 8,966,177 | - The Group's reserves and their movements are presented in the condensed consolidated statement of changes in equity[58](index=58&type=chunk) [Financial Instruments by Category](index=34&type=section&id=Financial%20Instruments%20by%20Category) The Group's financial assets and liabilities are measured at fair value through other comprehensive income or amortized cost, with total amounts increasing, but assets and liabilities classified as held for distribution have been removed Total Financial Assets (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Equity investments at fair value through other comprehensive income | 16,997 | 16,738 | | Financial assets measured at amortized cost | 41,139,910 | 39,171,047 | | Total financial assets | 41,156,907 | 39,187,785 | Total Financial Liabilities (as of June 30) | Item | 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Financial liabilities included in trade and other payables, accruals and other liabilities | 9,628,300 | 9,888,517 | | Bank and other borrowings | 21,177,331 | 23,862,005 | | Lease liabilities | 340,133 | 379,134 | | Dividends payable | 475,300 | – | | Total financial liabilities | 32,029,132 | 34,552,271 | - Assets and liabilities classified as held for distribution as of December 31, 2024, were removed this period, impacting comparative figures[61](index=61&type=chunk)[62](index=62&type=chunk) [Fair Value Hierarchy of Financial Instruments](index=37&type=section&id=Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) Management assesses that the fair value of most financial instruments does not materially differ from their carrying amounts, while fair value of unlisted equity investments is estimated using market-based valuation methods - The fair value of most financial instruments does not materially differ from their carrying amounts due to their immediate or short-term maturities[63](index=63&type=chunk) - The fair value of unlisted equity investments is estimated using market-based valuation methods, based on the assumption of no observable market prices or market rental values[64](index=64&type=chunk) [Commitments](index=38&type=section&id=Commitments) The Group has capital commitments for property, plant and equipment, investment properties, intangible assets, and properties under development, and is involved in the Xinghua and Yinping PPP projects Capital Commitments (as of June 30) | Type of Commitment | 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Relating to property, plant and equipment, investment properties, intangible assets and properties under development | 2,592,600 | 8,861,296 | | Relating to contributions payable to an associate and an unlisted equity investment | 31,607 | 41,817 | | Relating to project financing payable to an associate | 1,725,790 | 1,699,508 | - The Yinping PPP project's cumulative construction costs are approximately RMB **2.09 billion** (approximately HKD **2.291 billion**)[65](index=65&type=chunk) [Discontinued Operations](index=39&type=section&id=Discontinued%20Operations) Yuehai Land was classified as a discontinued operation on January 21, 2025, due to an in-specie distribution. It recorded a loss but positive cash flow for the period from January 1 to January 21, 2025 - Yuehai Land, primarily engaged in property development and investment, ceased to be a subsidiary of the Company after the distribution was completed on January 21, 2025[68](index=68&type=chunk) Results from Discontinued Operations (for the period ended January 21, 2025) | Metric | January 1 to January 21, 2025 (HKD '000) | Six months ended June 30, 2024 (HKD '000) | | :--- | :--- | :--- | | Revenue | 251,831 | 2,803,824 | | Gross Profit | 27,057 | 161,550 | | Loss before tax | (12,063) | (184,735) | | Loss for the period | (21,267) | (118,025) | Cash Flows from Discontinued Operations (for the period ended January 21, 2025) | Item | January 1 to January 21, 2025 (HKD '000) | Six months ended June 30, 2024 (HKD '000) | | :--- | :--- | :--- | | Cash flows from operating activities | 267,758 | 1,291,772 | | Cash flows from/(used in) investing activities | 260 | (3,189) | | Cash flows from/(used in) financing activities | 537,478 | (1,086,346) | | Net cash flows | 805,496 | 202,237 | [Contingent Liabilities](index=42&type=section&id=Contingent%20Liabilities) The Group provides guarantees to certain banks for mortgage loans of buyers of sold properties, with the guaranteed amount significantly reduced - As of June 30, 2025, the Group's outstanding guarantees amounted to HKD **1,007 thousand**, a significant decrease from HKD **4,714,446 thousand** as of December 31, 2024[73](index=73&type=chunk) - The guarantee period extends from the date of mortgage loan grant until the issuance of the property ownership certificate[73](index=73&type=chunk) [Related Party Transactions](index=42&type=section&id=Related%20Party%20Transactions) The Group engages in various related party transactions, including rental income, water resources-related income, dividend distributions, interest expenses and income, electricity sales, consulting fees, property management fees, and hotel management fees, with outstanding balances Major Related Party Transactions (for the six months ended June 30) | Type of Transaction | 2025 (HKD '000) | 2024 (HKD '000) | | :--- | :--- | :--- | | Rental income from certain subsidiaries of Guangdong Holdings and Hong Kong (Holdings) | 21,356 | 16,511 | | Water resources related income from fellow subsidiaries and associates | 98,708 | 66,900 | | Special dividend of Yuehai Land shares distributed in-specie to Hong Kong (Holdings) and certain of its subsidiaries | 1,360,522 | – | | Dividends paid and payable by the Company to Hong Kong (Holdings) and certain of its subsidiaries | 276,932 | 465,425 | | Interest expense to Guangdong Holdings | 8,314 | 55,597 | | Loans from fellow subsidiaries | 2,353,088 | 2,570,889 | | Loans from an associate | – | 917,915 | - Total key management personnel remuneration decreased from HKD **5,844 thousand** in 2024 to HKD **3,140 thousand** in 2025[81](index=81&type=chunk) [Capital Expenditure](index=47&type=section&id=Capital%20Expenditure) For the six months ended June 30, 2025, the Group's total capital expenditure was approximately HKD 557,092 thousand, primarily for additions to property, plant and equipment, right-of-use assets, and operating concessions Total Capital Expenditure (for the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total capital expenditure | 557,092 | 351,969 | +58.3 | - Capital expenditure primarily relates to additions to property, plant and equipment, right-of-use assets, and operating concessions[82](index=82&type=chunk) [Management Discussion and Analysis](index=48&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's perspective on the Group's financial performance, business operations, and future outlook [Results and Interim Dividend](index=48&type=section&id=Results%20and%20Interim%20Dividend) Consolidated profit attributable to owners of the Company increased by 11.2% year-on-year to HKD 2.682 billion, with basic earnings per share at HKD 41.02 cents. The Board declared an interim dividend of HKD 26.66 cents per share Performance and Dividend Overview (for the six months ended June 30) | Metric | 2025 | 2024 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Consolidated profit attributable to owners of the Company | HKD 2.682 billion | HKD 2.411 billion | +11.2 | | Basic earnings per share | HKD 41.02 cents | HKD 36.88 cents | +11.2 | | Interim dividend | HKD 26.66 cents per share | HKD 23.97 cents per share | +11.2 | [Financial Review](index=48&type=section&id=Financial%20Review) Consolidated revenue from continuing operations slightly decreased this period, but profit before tax grew due to finance cost savings. Total assets declined due to the disposal of Yuehai Land, while equity attributable to owners of the Company increased Key Financial Review Data (as of June 30) | Metric | 2025 (HKD billion) | 2024 (HKD billion) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Consolidated revenue from continuing operations | 94.28 | 94.87 | -0.6 | | Consolidated profit before tax from continuing operations | 41.05 | 38.49 | +6.7 | | Net finance costs from continuing operations | 1.88 | 3.89 | -51.7 | | Total assets | 970.97 | 1,355.95 | -28.3 (primarily due to Yuehai Land disposal) | | Equity attributable to owners of the Company | 421.78 | 416.58 | +1.2 | - Net loss from fair value adjustments on investment properties from continuing operations decreased from HKD **61 million** in 2024 to HKD **3 million** in 2025[86](index=86&type=chunk) - The **1.4%** depreciation of RMB against HKD impacted financial performance[86](index=86&type=chunk) [Business Review](index=48&type=section&id=Business%20Review) The Group's major business segments showed mixed performance, with stable contributions from water resources, increased property investment income, decreased department store revenue but a swing to profit before tax, increased hotel revenue but decreased profit before tax, increased power sales from energy projects, and decreased revenue from roads and bridges [Water Resources](index=48&type=section&id=Water%20Resources) The Dongjiang-Shenzhen Water Supply project remains the primary profit contributor, with increased revenue from Hong Kong supply but decreased revenue from Shenzhen and Dongguan supply. Other water resources projects saw increased revenue and successful new bids Key Data for Dongjiang-Shenzhen Water Supply Project (for the six months ended June 30) | Metric | 2025 | 2024 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total water supply volume | 1.147 billion tonnes | 1.159 billion tonnes | -1.0 | | Total revenue | HKD 3.506 billion | HKD 3.485 billion | +0.6 | | Revenue from water supply to Hong Kong | HKD 2.869 billion | HKD 2.802 billion | +2.4 | | Revenue from water supply to Shenzhen and Dongguan | HKD 0.637 billion | HKD 0.683 billion | -6.7 | | Profit before tax (excluding exchange differences and net finance costs) | HKD 2.396 billion | HKD 2.325 billion | +3.1 | - Under the 2024-2026 Hong Kong water supply agreement signed on December 27, 2023, the basic water price for 2025 is HKD **5,259,000,000**[89](index=89&type=chunk) - During the period, the Group successfully bid for a new water resources project in Maoming City, Guangdong Province, with a total designed sewage treatment capacity of **194,000 tonnes per day** and an estimated total investment of approximately RMB **400 million**[91](index=91&type=chunk) [Property Investment](index=53&type=section&id=Property%20Investment) Yuehai Teemall's property investment business in Mainland China saw increased revenue and profit before tax, driven by higher average rental rates and occupancy. Hong Kong Yuehai Investment Tower's revenue slightly decreased Yuehai Teemall Property Investment Business Revenue (for the six months ended June 30) | Property | 2025 Revenue (HKD '000) | 2024 Revenue (HKD '000) | Change (%) | Average Occupancy Rate (2025) | | :--- | :--- | :--- | :--- | :--- | | Teemall Plaza - Teemall Shopping Centre | 352,146 | 349,486 | +0.8 | 99.5% | | Panyu Teemall Shopping Centre | 139,411 | 120,017 | +16.2 | 95.5% | | Tianjin Teemall Shopping Centre | 144,924 | 140,127 | +3.4 | 95.8% | | Shenzhen Teemall | 47,457 | 32,088 | +47.9 | 93.4% | | Total | 821,509 | 793,223 | +3.6 | | - Profit before tax from Yuehai Teemall's property investment business (excluding fair value changes of investment properties and net interest income) increased by **9.7%** to HKD **491,600 thousand**[95](index=95&type=chunk) - Hong Kong Yuehai Investment Tower's average occupancy rate was **93.3%**, with total revenue decreasing by **3.0%** to HKD **23,852 thousand**[97](index=97&type=chunk) [Department Store Operations](index=54&type=section&id=Department%20Store%20Operations) Total department store operations revenue significantly decreased by 44.4%, but profit before tax grew, primarily due to cost control and the closure of the Huadu store Department Store Operations Revenue (for the six months ended June 30) | Department Store | 2025 Revenue (HKD '000) | 2024 Revenue (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | Teemall Department Store | 156,746 | 309,523 | -49.4 | | Wanbo Department Store | 19,687 | 23,134 | -14.9 | | Dongpu Department Store | 20,320 | 25,045 | -18.9 | | Aoti Department Store | 19,654 | 20,892 | -5.9 | | Huadu Store (ceased operations in November 2024) | – | 10,956 | -100.0 | | Total Revenue | 216,529 | 389,592 | -44.4 | - Profit before tax from department store operations (excluding fair value changes of investment properties) increased by **18.5%** to HKD **45,828 thousand**[98](index=98&type=chunk) [Hotel Holding, Operation and Management](index=55&type=section&id=Hotel%20Holding,%20Operation%20and%20Management) Hotel holding, operation, and management business revenue grew by 6.8%, but profit before tax decreased by 19.8%, despite improvements in average room rates and occupancy Key Hotel Business Data (for the six months ended June 30) | Metric | 2025 | 2024 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | HKD 336,542 thousand | HKD 315,188 thousand | +6.8 | | Profit before tax (excluding fair value changes of investment properties and net exchange differences) | HKD 51,058 thousand | HKD 63,655 thousand | -19.8 | | Average room rate of Guangdong Hotel Sheraton | HKD 1,257 | HKD 1,291 | -2.6 | | Average room rate of other six hotels | HKD 725 | HKD 698 | +3.9 | | Average occupancy rate of Guangdong Hotel Sheraton | 93.8% | 93.4% | +0.4pp | | Average occupancy rate of other six hotels | 72.8% | 68.3% | +4.5pp | - The Group manages **17** hotels, of which **7** are self-operated, and leased the property at 181 Connaught Road West, Hong Kong, in Q4 2024 to operate Guangdong Hotel 181[100](index=100&type=chunk) [Energy Projects](index=55&type=section&id=Energy%20Projects) Guangdong Energy project saw increased electricity sales and profit before tax. Guangdong Electric Jinghai Power Generation experienced decreased electricity sales and revenue, leading to a reduced share of profit for the Group Key Energy Project Data (for the six months ended June 30) | Project | Metric | 2025 | 2024 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | :--- | | Guangdong Energy | Electricity sales volume | 1.679 billion kWh | 1.362 billion kWh | +23.3 | | | Revenue from electricity sales and related businesses | HKD 769,657 thousand | HKD 804,563 thousand | -4.3 | | | Profit before tax (excluding net finance costs) | HKD 91,177 thousand | HKD 74,338 thousand | +22.7 | | Guangdong Electric Jinghai Power Generation | Electricity sales volume | 6.216 billion kWh | 6.867 billion kWh | -9.5 | | | Revenue | HKD 2,402,480 thousand | HKD 3,255,091 thousand | -26.2 | | | Share of profit of the Group | HKD 18,264 thousand | HKD 54,800 thousand | -66.7 | - The decrease in Guangdong Energy project revenue was a combined effect of increased electricity sales volume, lower electricity prices, and the depreciation of RMB against HKD[102](index=102&type=chunk) [Roads and Bridges](index=56&type=section&id=Roads%20and%20Bridges) Xingliu Expressway experienced decreased average daily toll traffic and toll revenue, leading to reduced profit before tax. Yinping project's combined interest, management, and maintenance fees increased, resulting in higher profit before tax Key Roads and Bridges Business Data (for the six months ended June 30) | Project | Metric | 2025 | 2024 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | :--- | | Xingliu Expressway | Average daily toll traffic volume | 24,457 vehicles | 26,954 vehicles | -9.3 | | | Toll revenue | HKD 289,948 thousand | HKD 312,881 thousand | -7.3 | | | Profit before tax (excluding net finance costs) | HKD 147,110 thousand | HKD 161,899 thousand | -9.1 | | Yinping Project | Total interest, management and maintenance fees | HKD 80,750 thousand | HKD 77,486 thousand | +4.2 | | | Profit before tax | HKD 68,984 thousand | HKD 65,726 thousand | +5.0 | - The Yinping project's cumulative construction costs are approximately RMB **2.09 billion** (approximately HKD **2.291 billion**), with four project roads completed and one under construction[105](index=105&type=chunk) [Discontinued Operations](index=57&type=section&id=Discontinued%20Operations) Yuehai Land ceased to be a subsidiary after its in-specie distribution on January 21, 2025. Its revenue significantly decreased during January 1-21, 2025, but its loss before tax narrowed considerably Key Data for Yuehai Land Discontinued Operations (for the period ended January 21, 2025) | Metric | January 1 to January 21, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | HKD 251,831 thousand | HKD 2,803,824 thousand | | Revenue from property sales | HKD 247,894 thousand | HKD 2,778,718 thousand | | Loss before tax | HKD 9,516 thousand | HKD 282,564 thousand | | Profit/(loss) before tax excluding fair value changes of investment properties and net finance costs | HKD 13,454 thousand | HKD (105,005) thousand | - Yuehai Land's loss before tax for the period ended January 21, 2025, was HKD **9,516 thousand**, a significant reduction from the prior period[108](index=108&type=chunk) [Other Financial Assets Measured at Amortized Cost](index=57&type=section&id=Other%20Financial%20Assets%20Measured%20at%20Amortized%20Cost) The Group's other financial assets measured at amortized cost amount to HKD 3.478 billion, primarily RMB deposits with licensed banks in China maturing within three years Other Financial Assets Measured at Amortized Cost (as of June 30) | Metric | 2025 (HKD billion) | December 31, 2024 (HKD billion) | | :--- | :--- | :--- | | Other financial assets | 34.78 | 33.85 | - These assets are denominated in RMB, will mature within three years, and are principal-protected[109](index=109&type=chunk) [Liquidity, Gearing Ratio and Financial Resources](index=57&type=section&id=Liquidity,%20Gearing%20Ratio%20and%20Financial%20Resources) The Group's cash and bank balances from continuing operations slightly decreased, total financial borrowings declined, gearing ratio and debt service coverage remained robust, and operating cash flow was sufficient Key Liquidity and Financial Resources Data (as of June 30) | Metric | 2025 (HKD billion) | December 31, 2024 (HKD billion) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and bank balances | 120.36 | 121.54 | -1.0 | | Total financial borrowings | 211.77 | 238.62 | -11.3 | | Credit facilities | 94.73 | 93.49 | +1.3 | | Gearing ratio | 24.7% | 30.9% | -6.2pp | | EBITDA/finance costs incurred ratio | 16.2 times | 10.5 times | +5.7 times | | Net cash inflow from operating activities | 33.39 | 48.76 | -31.5 | - Of the financial borrowings from continuing operations, **83.0%** are RMB-denominated and **17.0%** are HKD-denominated[110](index=110&type=chunk) - The interest rate structure of financial borrowings comprises **95.4%** floating-rate borrowings, **3.7%** fixed-rate borrowings, and **0.9%** non-interest-bearing borrowings[110](index=110&type=chunk) [Pledge of Assets and Contingent Liabilities](index=58&type=section&id=Pledge%20of%20Assets%20and%20Contingent%20Liabilities) Portions of the Group's service concession arrangement revenue rights and subsidiary equity have been pledged, and contingent liabilities primarily consist of mortgage loan guarantees for sold properties, with a significantly reduced amount - Revenue rights from certain water supply, sewage treatment, and toll road service concession arrangements were pledged to secure bank and other borrowings of HKD **12.449 billion**[112](index=112&type=chunk) - The Group provided guarantees to certain banks for mortgage loans of sold properties, amounting to HKD **1 million**, a significant decrease from HKD **4.714 billion** at the end of last year[112](index=112&type=chunk) [Capital Expenditure](index=58&type=section&id=Capital%20Expenditure) Total capital expenditure for the period was HKD 566 million, primarily for additions to property, plant and equipment, leased land, and the construction of water supply and sewage treatment plants Capital Expenditure (for the six months ended June 30) | Metric | 2025 (HKD billion) | 2024 (HKD billion) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total capital expenditure | 5.66 | 4.45 | +27.2 | - Capital expenditure was primarily for additions to property, plant and equipment, leased land, and construction costs of water supply and sewage treatment plants[113](index=113&type=chunk) [Exchange Rate and Interest Rate Fluctuation Risks and Related Hedging](index=59&type=section&id=Exchange%20Rate%20and%20Interest%20Rate%20Fluctuation%20Risks%20and%20Related%20Hedging) The Group faces RMB exchange rate fluctuations and interest rate risks from floating-rate borrowings, but currently manages these through natural hedging mechanisms and dynamic monitoring rather than derivative financial instruments - RMB-denominated borrowings from continuing operations totaled HKD **17.571 billion**, posing exchange rate risk[114](index=114&type=chunk) - The Group employs natural hedging mechanisms and dynamically monitors foreign exchange exposure, but does not use derivative financial instruments for hedging[114](index=114&type=chunk) - Floating-rate borrowings from continuing operations totaled HKD **20.193 billion**, exposing the Group to interest rate risk, but no interest rate hedging instruments are used[114](index=114&type=chunk) [Principal Risks and Uncertainties](index=59&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces multiple risks, including macroeconomic, foreign exchange, market competition, and project safety management, with corresponding control strategies in place [Macroeconomic Risks](index=59&type=section&id=Macroeconomic%20Risks) International trade barriers and geopolitical conflicts increase economic recovery uncertainty, while the domestic economy remains stable, prompting the company to closely monitor macroeconomic conditions and adjust development strategies - Internationally, factors such as US tariff policies and escalating geopolitical conflicts increase uncertainty regarding the economic recovery outlook[115](index=115&type=chunk) - Domestically, the macroeconomic environment generally maintains a long-term trend of stable and progressive development[115](index=115&type=chunk) [Foreign Exchange Risk](index=59&type=section&id=Foreign%20Exchange%20Risk) With primary operations in China, the company faces exchange rate fluctuation risks, including translation gains/losses and net asset value translation risk, managed by optimizing fund arrangements and adjusting financing methods - The Company faces risks of exchange gains and losses due to exchange rate fluctuations and foreign currency translation risk for net asset values of projects invested in Mainland China[116](index=116&type=chunk) - The Company manages foreign exchange risk through multiple channels, including optimizing existing fund arrangements and adjusting project financing methods[116](index=116&type=chunk) [Market Competition Risk](index=59&type=section&id=Market%20Competition%20Risk) Intensified market competition may reduce expansion capabilities and project investment returns, which the company addresses by optimizing products, enhancing efficiency, strengthening management, and cutting costs to boost profitability - The Company actively explores new revenue streams and saves operating costs by optimizing products, enhancing efficiency, strengthening project management teams, and implementing refined management measures[117](index=117&type=chunk) [Project Safety Management Risk](index=60&type=section&id=Project%20Safety%20Management%20Risk) Project safety management encompasses product and operational personnel safety risks, which the company effectively controls through standardized management, quality control, regular inspections, a safety responsibility system, and employee training - The Company standardizes, streamlines, and institutionalizes relevant risk management and control efforts, strengthens quality management at the source, and conducts regular inspections of production and operation sites[118](index=118&type=chunk) - All investment projects under the Company have established a comprehensive safety responsibility system covering all employees, clarifying responsibilities and divisions of labor, and conducting regular safety training for employees[118](index=118&type=chunk) [Number of Employees and Remuneration Policy](index=60&type=section&id=Number%20of%20Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 10,180 employees, with a remuneration policy designed to ensure market competitiveness and performance linkage, while emphasizing employee training to enhance overall quality and professional capabilities Number of Employees and Total Remuneration (as of June 30) | Metric | 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total number of employees | 10,180 people | 10,759 people | | Total remuneration for continuing operations | HKD 752,598 thousand | HKD 828,537 thousand | - The remuneration policy includes fixed salaries, discretionary incentives, insurance, and benefits, determined based on employee qualifications, experience, job responsibilities, performance, and market conditions[119](index=119&type=chunk) - The Group aims to build a learning organization, providing multi-dimensional professional training to enhance employees' overall quality, compliance awareness, and professional capabilities[120](index=120&type=chunk) [Review and Outlook](index=61&type=section&id=Review%20and%20Outlook) In H1 2025, the global economy faced challenges, while China's economy showed resilience. Looking ahead to H2, with increased global economic downside risks, the Group will adhere to a "seek progress while maintaining stability, improve quality and efficiency" strategy, consolidating core businesses, expanding into high-value-added areas, and seizing Greater Bay Area development opportunities - Since 2025, persistent geopolitical tensions, rising tariffs, and trade policy uncertainties have pressured global economic recovery[121](index=121&type=chunk) - The Group will continue to focus resources on extending the water resources segment into high-value-added areas, promoting business structure transformation and upgrading[122](index=122&type=chunk) - The Group will proactively seize potential development opportunities arising from the "Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area" and actively explore relevant market investment and M&A opportunities[122](index=122&type=chunk) [Directors' Securities Interests and Short Positions](index=62&type=section&id=Directors'%20Securities%20Interests%20and%20Short%20Positions) This section details the interests and short positions of the company's directors in the securities of the company and its associated corporations [Directors' Interests in the Company and Associated Corporations](index=62&type=section&id=Directors'%20Interests%20in%20the%20Company%20and%20Associated%20Corporations) As of June 30, 2025, certain directors held long positions in ordinary shares of the Company, Yuehai Land Holdings Limited, and Guangdong Guangnan (Holdings) Limited Directors' Interests in Ordinary Shares of the Company (as of June 30) | Name of Director | Capacity/Nature of Interest | Number of Ordinary Shares Held | Long/Short Position | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | :--- | | Chan Cho Chak | Personal | 5,450,000 | Long Position | 0.083% | | Cheng Mo Chi | Personal | 2,268,000 | Long Position | 0.035% | Directors' Interests in Ordinary Shares of Yuehai Land Holdings Limited (as of June 30) | Name of Director | Capacity/Nature of Interest | Number of Ordinary Shares Held | Long/Short Position | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | :--- | | Chan Cho Chak | Personal | 1,051,850 | Long Position | 0.061% | | Cheng Mo Chi | Personal | 1,037,724 | Long Position | 0.061% | Directors' Interests in Ordinary Shares of Guangdong Guangnan (Holdings) Limited (as of June 30) | Name of Director | Capacity/Nature of Interest | Number of Ordinary Shares Held | Long/Short Position | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | :--- | | Tsang Hon Nam | Personal | 300,000 | Long Position | 0.033% | [Major Shareholders' and Other Persons' Interests](index=63&type=section&id=Major%20Shareholders'%20and%20Other%20Persons'%20Interests) This section outlines the interests of major shareholders and other relevant parties in the company's shares [Major Shareholders' Interests in Shares of the Company](index=63&type=section&id=Major%20Shareholders'%20Interests%20in%20Shares%20of%20the%20Company) As of June 30, 2025, Guangdong Holdings Limited and its wholly-owned subsidiary, Hong Kong (Holdings), were major shareholders of the Company, holding 58.26% of the shares Major Shareholders' Interests in Ordinary Shares of the Company (as of June 30) | Name of Shareholder | Capacity/Nature of Interest | Number of Ordinary Shares Held | Long/Short Position | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | :--- | | Guangdong Holdings Limited | Interest of controlled corporation | 3,809,237,546 | Long Position | 58.26% | | Guangdong Holdings Limited (Hong Kong (Holdings)) | Beneficial owner | 3,809,237,546 | Long Position | 58.26% | - Guangdong Holdings Limited holds its attributable interest in the Company through its direct wholly-owned subsidiary, Hong Kong (Holdings)[127](index=127&type=chunk) [Corporate Governance and Other Information](index=64&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section covers the company's adherence to corporate governance codes, changes in director information, review of interim results, securities transactions, loan financing disclosures, and interim dividend announcements [Corporate Governance Code and Directors' Securities Transactions](index=64&type=section&id=Corporate%20Governance%20Code%20and%20Directors'%20Securities%20Transactions) The Company consistently complied with the Corporate Governance Code's provisions during the reporting period and required directors to adhere to the Model Code for Securities Transactions by Directors of Listed Issuers - The Company has complied with the code provisions of the Corporate Governance Code throughout the six months ended June 30, 2025[128](index=128&type=chunk) - All Directors confirmed their compliance with the required standards of dealing as set out in the Model Code for Securities Transactions by Directors of Listed Issuers during the period[129](index=129&type=chunk) [Changes in Directors' Information and Interim Results Review](index=64&type=section&id=Changes%20in%20Directors'%20Information%20and%20Interim%20Results%20Review) Dr. Cheng Mo Chi was appointed Chairman of the Hong Kong Maritime and Port Board. The Audit Committee reviewed the interim financial report, which was also reviewed by KPMG - Dr. Cheng Mo Chi was appointed Chairman of the Hong Kong Maritime and Port Board by the Government of the Hong Kong Special Administrative Region[130](index=130&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim financial report for the six months ended June 30, 2025, which was also reviewed by KPMG[131](index=131&type=chunk) [Listed Securities Transactions and Loan Financing Disclosure](index=64&type=section&id=Listed%20Securities%20Transactions%20and%20Loan%20Financing%20Disclosure) Neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities during the period. The company disclosed two loan facilities, both with covenants regarding the Guangdong Provincial Government's ultimate control over Hong Kong (Holdings) and Hong Kong (Holdings)'s equity interest in the Company - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on The Stock Exchange of Hong Kong Limited during the six months ended June 30, 2025[132](index=132&type=chunk) - The Company accepted term loan facilities of HKD **3 billion** and HKD **2 billion** on September 4 and October 8, 2024, respectively, with covenants that Hong Kong (Holdings) will not cease to be ultimately controlled by and majority-owned by the Guangdong Provincial Government, and Hong Kong (Holdings) will not cease to directly and/or indirectly beneficially own at least **51%** of the Company's equity interest[133](index=133&type=chunk)[136](index=136&type=chunk) Outstanding Principal of Loan Facilities (as of June 30) | Loan Facility | Outstanding Principal (HKD billion) | | :--- | :--- | | September 2024 Loan Facility | 16.70 | | October 2024 Loan Facility | 19.30 | [Interim Dividend and Share Transfer Registration](index=65&type=section&id=Interim%20Dividend%20and%20Share%20Transfer%20Registration) The Board declared an interim dividend of HKD 26.66 cents per ordinary share for the six months ended June 30, 2025, and share transfer registration will be suspended on October 10, 2025 - The Board resolved to declare an interim dividend of HKD **26.66 cents** per ordinary share for the six months ended June 30, 2025[138](index=138&type=chunk) - The interim dividend is expected to be paid around October 23, 2025, and share transfer registration will be suspended on October 10, 2025[138](index=138&type=chunk)[139](index=139&type=chunk)

Key Points - The top three stocks with net inflows from southbound funds are Yingfu Fund (02800) with 1.487 billion, Meituan-W (03690) with 1.413 billion, and Pop Mart (09992) with 1.208 billion [1] - The top three stocks with net outflows are Huahong Semiconductor (01347) with -1.173 billion, Tencent Holdings (00700) with -409 million, and Jingtai Holdings (02228) with -315 million [1] - In terms of net inflow ratio, Huaxia Heng ESG (03403) leads with 92.52%, followed by Shenzhen Expressway (00548) with 55.45%, and Kunlun Energy (00135) with 47.40% [1] - The stocks with the highest net outflow ratios include Yuehai Investment (00270) at -59.10%, China State Construction International (03311) at -54.66%, and Qingdao Port (06198) at -53.49% [1] Net Inflow Rankings - Yingfu Fund (02800) had a net inflow of 1.487 billion, representing a 7.88% increase in its closing price [2] - Meituan-W (03690) saw a net inflow of 1.413 billion, with a closing price increase of 0.29% [2] - Pop Mart (09992) experienced a net inflow of 1.208 billion, with a closing price increase of 4.62% [2] Net Outflow Rankings - Huahong Semiconductor (01347) had the largest net outflow of -1.173 billion, with a closing price increase of 8.62% [2] - Tencent Holdings (00700) faced a net outflow of -409 million, with a closing price decrease of 2.95% [2] - Jingtai Holdings (02228) had a net outflow of -315 million, with a closing price increase of 7.49% [2] Net Inflow Ratio Rankings - Huaxia Heng ESG (03403) had a net inflow ratio of 92.52%, with a closing price of 56.860 [3] - Shenzhen Expressway (00548) had a net inflow ratio of 55.45%, with a closing price of 7.230 [3] - Kunlun Energy (00135) had a net inflow ratio of 47.40%, with a closing price of 7.400 [3] Net Outflow Ratio Rankings - Yuehai Investment (00270) had a net outflow ratio of -59.10%, with a closing price of 7.260 [3] - China State Construction International (03311) had a net outflow ratio of -54.66%, with a closing price of 9.900 [3] - Qingdao Port (06198) had a net outflow ratio of -53.49%, with a closing price of 7.290 [3]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Views - The report highlights that in August 2025, the average daily power generation exceeded 30 billion kilowatt-hours for the first time, with a total industrial power generation of 936.3 billion kilowatt-hours, reflecting a year-on-year growth of 1.6% [4][7][53] - The report emphasizes the continuous improvement in the power generation structure, with significant contributions from clean energy sources such as wind and solar power, amidst ongoing dual carbon policies and the development of a new power system [8][9][12] Summary by Sections 1. Power Generation - In August 2025, the total power generation reached 936.3 billion kilowatt-hours, with a daily average of 30.2 billion kilowatt-hours, marking a 1.6% increase year-on-year [4][7] - The breakdown of power generation types shows that thermal power generation increased by 1.7%, nuclear power by 5.9%, wind power by 20.2%, and solar power by 15.9%, while hydropower decreased by 10.1% [9][12] - Wind power contributed the most to the increase in power generation, adding 12.4 billion kilowatt-hours compared to the same month last year [8][9] 2. Natural Gas - The report indicates a stable supply-demand balance in the natural gas market, with global gas prices experiencing slight fluctuations [18][19] - As of September 19, 2025, the Henry Hub spot price was $2.89/mmBtu, reflecting a weekly decrease of 1.80% [19][21] - The report suggests that the LNG prices in Northeast Asia remained stable at $11.50/mmBtu, with expectations of a further decline in prices as summer heat waves end [18][35] 3. Investment Analysis - Recommendations for investment include: - Hydropower: Favorable financial conditions due to interest rate cuts, with suggested companies being Guotou Power, Chuan Investment Energy, and Yangtze Power [16] - Green Energy: Increased stability in returns for renewable energy operators, with a focus on companies like Xintian Green Energy and Longyuan Power [16] - Nuclear Power: Continued approval of new units, with recommendations for China Nuclear Power and China General Nuclear Power [16] - Thermal Power: Improved profitability due to falling coal prices, with recommendations for Guodian Power and Huaneng International [16] - Gas Utilities: Favorable conditions for city gas companies, with recommendations for Kunlun Energy and New Hope Energy [40]

Investment Rating - The report maintains a positive outlook on the power and gas sectors, indicating a favorable investment environment for these industries [4]. Core Insights - In August, the average daily power generation exceeded 30 billion kilowatt-hours for the first time, with total industrial power generation reaching 936.3 billion kilowatt-hours, a year-on-year increase of 1.6% [9][57]. - The report highlights the continued growth of thermal power and the significant contribution of renewable energy sources, particularly wind and solar power, to the overall power generation increase [10][11]. - Global gas prices are experiencing narrow fluctuations, with a stable supply-demand balance in the market, particularly in the U.S. and Europe [20][29]. Summary by Sections 1. Power Generation - In August, the total power generation was 936.3 billion kilowatt-hours, with a daily average of 30.2 billion kilowatt-hours, marking a 1.6% increase year-on-year [9][57]. - The breakdown of power generation types shows thermal power at 6,274 billion kilowatt-hours (up 1.7%), hydropower at 1,479 billion kilowatt-hours (down 10.1%), nuclear power at 645 billion kilowatt-hours (up 5.9%), wind power at 738 billion kilowatt-hours (up 20.2%), and solar power at 538 billion kilowatt-hours (up 15.9%) [11][58]. - The report emphasizes the strong growth of renewable energy, with wind and solar power showing significant year-on-year increases of 20.2% and 15.9%, respectively [10][11]. 2. Natural Gas - As of September 19, the Henry Hub spot price was $2.89/mmBtu, reflecting a weekly decrease of 1.80%, while the TTF spot price in Europe remained stable at €32.00/MWh [20][21]. - The report notes that U.S. natural gas production remains high, contributing to a stable supply-demand balance and low price fluctuations [23][29]. - The LNG ex-factory price in China was 4,019 yuan/ton, with a weekly decrease of 0.84%, indicating a softening market due to weak domestic demand [41][44]. 3. Investment Recommendations - For hydropower, the report recommends companies like Guotou Power, Chuan Investment Energy, and Yangtze Power due to stable growth and financial benefits from interest rate cuts [18]. - In the renewable energy sector, companies such as Xintian Green Energy and Funi Co. are highlighted for their stable returns and high profitability [18]. - The report suggests focusing on integrated natural gas traders like New Hope Energy and Shenzhen Gas, as well as city gas companies benefiting from cost reductions [44].

Investment Rating - The industry investment rating is "Positive" and maintained [10] Core Viewpoints - The Ministry of Finance's comprehensive debt reduction measures have been effectively implemented since the fourth quarter of last year, with a focus on accelerating the issuance of local government special bonds and improving cash flow for environmental sectors [2][4][20] - The report highlights that the average interest cost of replaced debts has decreased by over 2.5 percentage points, saving more than 450 billion yuan in interest expenses [4][19] - The report anticipates that the early allocation of part of the 2026 new local government debt limit will further enhance cash flow for various environmental sectors [4][20] Summary by Sections Debt Issuance Progress - As of August 2025, 40% of the 60 billion yuan special debt limit for 2024-2026 has been issued, with 27.8 billion yuan of new local government special bonds issued this year [4][19] - The issuance of special refinancing bonds for debt replacement has accelerated, with 99% of the 2 trillion yuan quota for 2025 already in place [6][21] Cash Flow Improvement - The report suggests that the acceleration of debt reduction will benefit multiple environmental sectors, particularly those with significant government receivables [7][36] - The focus on debt reduction is expected to lead to a substantial improvement in cash flow for To G enterprises, as the government is committed to resolving hidden debt risks [5][20] Investment Logic - Two recommended investment strategies are identified: 1. Value side: Focus on sectors with large absolute receivables and low risk, such as waste incineration and water operations [7][38] 2. Elasticity side: Pay attention to sectors with low price-to-book ratios and high government receivables, where performance is significantly affected by credit impairment losses [7][38] Special Debt Utilization - The report notes that the use of special bonds for clearing government debts has become a new purpose for local government special bonds, with a focus on addressing overdue payments to enterprises [6][35]

Investment Rating - The report maintains an "Overweight" rating for the environmental protection industry [1] Core Insights - The Ministry of Ecology and Environment held a press conference on "High-Quality Completion of the 14th Five-Year Plan," indicating ongoing progress in the "dual carbon" policy [1] - Solid waste management and water governance policies are expected to strengthen the fundamentals of hazardous waste and water-related companies [13] - The demand for environmental monitoring equipment is anticipated to continue growing due to the ongoing "dual carbon" policy [13] Summary by Sections Industry Trends - Since the beginning of the 14th Five-Year Plan, the capacity for hazardous waste utilization and disposal has increased by 58.8%, and the capacity for municipal solid waste incineration has increased by 72.4% compared to the end of the 13th Five-Year Plan [10] - Over 3000 solid waste management projects have been implemented across 113 cities, with an investment of approximately 560 billion yuan [10] Solid Waste Management - The solid waste sector has seen a significant improvement in cash flow and dividend payouts, with a focus on operational efficiency and cost reduction [14] - The average revenue growth for the solid waste sector was 1%, with net profit increasing by 8% in the first half of 2025 [14] Water Management - The water sector is expected to experience a cash flow turnaround similar to that of the waste incineration sector, with a projected increase in free cash flow starting in 2026 [18] - Water pricing reforms are being implemented in cities like Guangzhou and Shenzhen, which may lead to a new round of price adjustments [18] Sanitation Equipment - The penetration rate of electric sanitation vehicles increased by 6.53 percentage points to 16.71% in the first eight months of 2025, with sales of electric sanitation vehicles rising by 69.34% year-on-year [22] - The total sales of sanitation vehicles reached 49,577 units, reflecting a year-on-year increase of 3.2% [22] Bio-Diesel - The average price of waste cooking oil increased to 6,713 yuan per ton, while the average price of biodiesel remained stable at 8,400 yuan per ton, resulting in a decrease in profit margins [34] Lithium Battery Recycling - The prices of metals and discounts on ternary battery materials have increased, leading to improved profitability in lithium battery recycling [39]

Group 1 - Southbound funds reduced their holdings in Yuehai Investment (00270.HK) by 5.502 million shares on September 19, 2025, marking a decrease of 1.08% [1][2] - Over the past five trading days, southbound funds have reduced their holdings for five consecutive days, with a total net reduction of 14.162 million shares [1][2] - In the last 20 trading days, there have been 16 days of reductions, totaling a net decrease of 47.276 million shares [1][2] Group 2 - As of now, southbound funds hold 504 million shares of Yuehai Investment, which represents 7.7% of the company's total issued ordinary shares [1][2] - Yuehai Investment Co., Ltd. primarily engages in water supply and wastewater treatment as an investment holding company, operating through seven divisions [2] - The company's divisions include water resources, property investment and development, department store operations, power generation, hotel management, and toll road operations [2]

Investment Highlights - The report highlights significant acceleration in national subsidies recovery for the environmental sector in July-August 2025, with Everbright receiving 2.064 billion yuan, surpassing the 1.534 billion yuan received in the same period of 2024 [1][4] - The solid waste sector has shown improvements in return on equity (ROE) and cash flow, with a 1% increase in revenue and an 8% increase in net profit for the first half of 2025 [5][6] - The report recommends several companies for investment, including Hanlan Environment, Green Power, and Everbright Environment, among others [2] Solid Waste Sector Insights - The solid waste sector's performance in the first half of 2025 includes a 9% increase in operating cash flow, reaching 6.9 billion yuan, and a 24% increase in free cash flow compared to the first half of 2024 [5][6] - The average waste incineration companies saw a 1.8% increase in tonnage output and a 1.2% increase in grid-connected output in the first half of 2025 [5][6] - Companies are expanding their operations and improving efficiency, with notable increases in heating supply rates for several firms [5][6] Water Sector Analysis - The water sector is expected to experience a cash flow turnaround, with a projected increase in free cash flow for companies like Xingrong and Shouchuang starting in 2026 [6] - Price reforms in water services are anticipated to enhance growth and valuation, with recent price adjustments in cities like Guangzhou and Shenzhen [6] Sanitation Sector Developments - The penetration rate of electric sanitation vehicles is accelerating, with a 77.6% increase in sales of new energy sanitation vehicles in the first seven months of 2025 [7][8] - The report notes a significant rise in the number of automated sanitation projects, indicating a growing trend towards automation in the sector [7][8] Industry Tracking - The report tracks the performance of various sectors, including the increase in sales of sanitation vehicles and the profitability of biodiesel production, with a notable rise in the price of used cooking oil [8] - Lithium battery recycling is also highlighted, with improvements in profitability due to changes in pricing for lithium and cobalt [8]

Investment Rating - The report maintains a positive outlook on the power and gas sectors, recommending various companies within these industries for investment [5][14]. Core Insights - The report highlights the competitive results of the electricity pricing mechanism in Shandong, indicating that wind power is favored over solar power, with wind power pricing at 0.319 CNY/kWh and solar at 0.225 CNY/kWh [9][10]. - A new pricing mechanism for nearby consumption of renewable energy has been established, clarifying economic responsibilities and allowing renewable projects to pay for supply reliability [12][13]. - Global gas prices are showing mixed trends, with European and Asian prices rising while U.S. prices are declining, reflecting varying supply and demand dynamics [15][20]. Summary by Sections 1. Electricity: Shandong Pricing Mechanism and New Renewable Energy Policies - Shandong's first competitive pricing results show wind power projects with a total capacity of 3.5911 GW and a mechanism electricity price of 0.319 CNY/kWh, while solar projects have a capacity of 1.265 GW and a price of 0.225 CNY/kWh [9][11]. - The new pricing mechanism for nearby consumption aims to enhance the utilization of renewable energy and reduce the pressure on the power system [12][13]. 2. Gas: Global Price Variations - As of September 12, U.S. Henry Hub spot prices are at $2.94/mmBtu, down 3.61% week-on-week, while European TTF prices are at €32.00/MWh, up 1.27% [15][16]. - The report notes that U.S. gas production remains high despite a slight decline, while European prices are influenced by supply constraints and increased heating demand due to cooler temperatures [15][20]. 3. Weekly Market Review - The gas sector outperformed the Shanghai and Shenzhen 300 index, while the public utilities, power, and environmental sectors underperformed [36]. 4. Company and Industry Dynamics - Recent announcements include the implementation of market-oriented pricing reforms for renewable energy in Jiangxi province, effective from October 2025 [40]. - The report also discusses various company announcements, including operational updates and financial instruments [43]. 5. Key Company Valuation Tables - The report provides valuation metrics for key companies in the public utility sector, highlighting buy and hold recommendations for several firms based on their earnings and price-to-earnings ratios [45][46].