Core Viewpoint - The establishment of the world's first plateau hydropower unit research and development base by Dongfang Electric in Linzhi, Tibet, is significant for advancing the country's southwestern hydropower base construction and promoting the independent research and engineering application of high-head, large-capacity hydraulic impact hydropower units [1] Group 1 - Dongfang Electric's new research and development base aims to enhance service for national hydropower initiatives [1] - The base is expected to play a crucial role in the development of large-capacity hydropower units [1] - The facility's opening aligns with the strategic push for hydropower development in southwestern China [1]

Core Viewpoint - The establishment of the first plateau hydropower unit research and development base in Linzhi, Tibet, by Dongfang Electric is significant for advancing the independent research and engineering application of high-head, large-capacity hydraulic turbines, supporting China's clean energy initiatives and local talent development [1][2]. Group 1: Research and Development Base - The Linzhi R&D base covers approximately 48,000 square meters and includes advanced facilities such as a sediment erosion testing platform for hydraulic turbines, which simulates long-term operation in sandy water flows [1]. - The base aims to integrate research, manufacturing, maintenance, and talent training, focusing on key technologies for hydraulic turbines to meet national strategic needs [2]. Group 2: Technological Innovations - Since 2019, Dongfang Electric has been conducting research on key technologies for high-head, large-capacity hydraulic turbines, collaborating with research institutions and enterprises to address over 70 technical challenges across various disciplines [4]. - The company has developed proprietary software that reduces water bucket modeling time from two weeks to 15 minutes and has implemented advanced testing technologies, achieving over 30 patents in the process [4]. Group 3: Milestones in Production - In May 2023, Dongfang Electric successfully produced a 150 MW hydraulic turbine with complete domestic intellectual property rights, marking a historic breakthrough in the localization of key technologies [5]. - The turbine was successfully applied in the Jinwo Hydropower Station, which is now a testament to the company's innovation and manufacturing capabilities [5]. Group 4: Future Goals - Dongfang Electric is now focused on developing a 500 MW hydraulic turbine, with the first unit being manufactured for the Zala Hydropower Station, which is recognized as the most challenging hydropower project currently under construction [6][8]. - The company aims to lead the industry in the development of higher head and larger capacity hydraulic turbines, transitioning from a follower to a leader in technology [11].

Core Viewpoint - New materials are the cornerstone of modern technological revolution and industrial transformation, with significant achievements in China's new materials sector, although gaps remain in high-end and frontier areas compared to developed countries [1] Group 1: Company Strategy and Development - China Dongfang Electric Group is accelerating the development of strategic emerging industries, including new materials, with a focus on multi-industry synergy and tailored support policies for subsidiaries [1] - Sichuan Dongshu New Materials Co., Ltd. is committed to high-end transformation in the new materials industry, emphasizing domestic substitution and the development of high-value, competitive new materials [1][2] Group 2: Operational Performance - Dongshu New Materials has achieved significant sales growth, with wind energy materials sales increasing by 18.58% and international sales of basic epoxy resin rising by 274% [2] - The company has successfully transformed its photovoltaic silver paste product line, achieving a 15-fold increase in sales of TOPCon main grid silver paste [2] - The acquisition of Dongfang Feiyuan has strengthened the epoxy resin supply chain, producing over 130,000 tons of basic epoxy resin and maintaining a strong market position in the wind energy resin sector [2] Group 3: Innovation and Technology - Dongshu New Materials has enhanced its innovation capabilities, holding 54 invention patents and participating in the formulation of 11 national standards [3] - The company has established multiple innovation platforms and is actively collaborating with universities and research institutes on over 10 technology projects [3][4] - Key technological breakthroughs include the development of lightweight infusion resin for blades and advanced processes for high-purity tellurium [4] Group 4: Future Goals and Industry Positioning - Dongshu New Materials aims to cultivate specialized and innovative enterprises, focusing on high-end epoxy resins and advanced semiconductor materials, with a goal to form a competitive new materials industry cluster by the end of the 14th Five-Year Plan [5][6] - The company plans to implement precise support for potential projects in R&D investment, talent acquisition, and market expansion [6]

Core Insights - In the first half of 2025, the company achieved a net profit attributable to shareholders of 1.91 billion yuan, representing a year-on-year increase of 12.9% [1] - The company reported a revenue of 38.15 billion yuan in the first half of 2025, up 14% year-on-year, with a gross margin of 15.5% and a net margin of 5.5% [1] - The company faced asset impairment losses totaling 667 million yuan in the first half of 2025, which negatively impacted net profit [1] Financial Performance - For Q2 2025, the company recorded a revenue of 21.6 billion yuan, a year-on-year increase of 17.4% and a quarter-on-quarter increase of 30.6% [1] - The net profit for Q2 2025 was 756 million yuan, down 3.8% year-on-year and down 34.5% quarter-on-quarter [1] - The gross margin for Q2 2025 was 14.6%, up 1.9% year-on-year but down 2% quarter-on-quarter [1] Order and Market Development - The company signed new orders worth 65.49 billion yuan in the first half of 2025, a year-on-year increase of 17% [2] - Renewable energy equipment orders accounted for 20.18 billion yuan, up 44% year-on-year, while clean and efficient energy equipment orders based on coal power were 24.62 billion yuan, down 3% [2] - The company aims to achieve a power generation equipment output of 73 GW in 2025, a 26% increase from 58.1 GW in 2024 [2]

Group 1 - The Chinese wind power market continues to grow in the first half of 2025, with new wind turbine orders reaching 80GW, including approximately 73GW for onshore turbines, a year-on-year increase of 6% [1] - Major contributors to onshore wind turbine orders include Xinjiang, Hebei, and Inner Mongolia, which together accounted for over 40% of the new orders [1] - The offshore wind market achieved its best performance since 2023, with new orders of about 6GW [1] Group 2 - Goldwind Technology leads the Chinese wind power market in new order volume with a market share of approximately 18.2%, followed by Envision Energy (16.6%), Mingyang Smart Energy (16.2%), and Yunda Co. (16%), all exceeding 10GW in order volume [1] - Several wind turbine manufacturers made breakthroughs in the offshore wind market, with Dongfang Electric ranking first in offshore turbine orders, securing 1.5GW for its DEW-D16000-262 model [1] - China CRRC followed with 1GW in offshore orders, while SANY Heavy Energy received its first offshore turbine order [1] Group 3 - Chinese wind turbine manufacturers achieved overseas orders of 7.7GW across 20 countries, marking a 51% year-on-year increase, with Envision Energy leading at 4.9GW [1] - The Indian market remains strong, with Chinese wind turbine manufacturers securing over 2GW in orders for three consecutive quarters [1] Group 4 - Wood Mackenzie reported that over half of the 166GW of onshore wind turbine orders signed in 2024 have already transitioned into construction projects, supporting growth in the onshore wind market for 2025 [2] - The report indicates a structural adjustment in the trend of wind turbine size, with orders for onshore turbines above 10MW decreasing by 14% year-on-year, while the share of mid-speed models between 7MW and 10MW has significantly increased [2] - The demand for low-wind-speed models is rising due to the scarcity of high-quality wind resource sites, while the slowdown in the trend of onshore wind turbine size has led to a price increase for onshore turbines for three consecutive quarters, with a 4% rise in Q2 2025 compared to the lowest point in 2024 [2] Group 5 - The trend of offshore wind turbine size continues, with orders for turbines above 16MW increasing by 60% year-on-year [2] - However, weak market demand has intensified competition among manufacturers, and challenging site conditions have increased cost pressures for developers, resulting in record low prices for offshore wind turbines in Q1 2025 [2] - Wood Mackenzie anticipates that strong domestic demand growth for onshore wind, rising prices for onshore turbines, and successful execution of overseas orders will drive revenue levels for Chinese wind turbine manufacturers to historical highs, with profitability further improving [2]

Investment Rating - The investment rating for the company is "Outperform the Market" [4][6][35] Core Views - The company achieved a net profit of 1.91 billion yuan in the first half of 2025, representing a year-on-year increase of 12.9%. Revenue for the same period was 38.15 billion yuan, up 14% year-on-year, with a gross margin of 15.5% [1][8] - New orders signed in the first half of 2025 totaled 65.49 billion yuan, a year-on-year increase of 17%. Renewable energy equipment orders increased by 44% year-on-year, while clean and efficient energy equipment orders decreased by 3% [3][28] - The company is expected to reach a peak in coal power and other industry deliveries in 2025, with a forecasted production capacity of 73 GW, up 26% from 58.1 GW in 2024 [4][28] Financial Performance - In the second quarter of 2025, the company reported revenue of 21.6 billion yuan, a year-on-year increase of 17.4% and a quarter-on-quarter increase of 30.6%. The net profit for Q2 was 756 million yuan, down 3.8% year-on-year and down 34.5% quarter-on-quarter [1][8] - The company recorded a total of 667 million yuan in impairment losses in the first half of 2025, an increase of 422 million yuan compared to the same period in 2024 [2][16] - The company maintained a period expense ratio of 9.0% in the first half of 2025, a decrease of 1.3 percentage points year-on-year [2][16] Order and Production Outlook - The company has a robust order backlog, with a target to complete a production capacity of 73 GW in 2025. The order quality in hydropower has significantly improved, and the company maintains the top market share in nuclear and gas power [3][4][28] - The company successfully passed assembly acceptance for the 500MW hydropower generator components and achieved breakthroughs in overseas orders for heavy-duty gas turbines [2][15] Profit Forecast - The profit forecast for 2025-2027 is maintained at 4.34 billion, 5.52 billion, and 6.09 billion yuan, respectively, with year-on-year growth rates of 48.5%, 27%, and 10.3% [4][5][28] - The current stock price corresponds to a PE ratio of 15.2 for 2025, 11.9 for 2026, and 10.8 for 2027 [4][5][28]

Core Viewpoint - Dongfang Electric experienced a stock price decline of 2.00% on September 9, 2023, with a current price of 19.07 CNY per share and a total market capitalization of 646.54 billion CNY [1] Company Overview - Dongfang Electric, established on December 28, 1993, and listed on October 10, 1995, is located in Chengdu, Sichuan Province. The company specializes in the research, manufacturing, sales, and service of various power generation equipment, including thermal, hydro, wind, nuclear, and gas power generation [2] - The company's revenue composition includes: 40.69% from clean and efficient energy equipment, 23.82% from renewable energy equipment, 16.00% from emerging growth industries, 10.85% from modern manufacturing services, and 8.64% from engineering and supply chain [2] - Dongfang Electric is classified under the "Electric Equipment - Other Power Source Equipment II - Comprehensive Power Equipment Manufacturers" sector and is associated with concepts such as hydropower, pumped storage, state-owned enterprise reform, nuclear power, and clean energy [2] Financial Performance - For the first half of 2025, Dongfang Electric reported a revenue of 38.151 billion CNY, reflecting a year-on-year growth of 14.03%, and a net profit attributable to shareholders of 1.910 billion CNY, which is a 12.91% increase compared to the previous year [2] - The company has distributed a total of 8.575 billion CNY in dividends since its A-share listing, with 3.892 billion CNY distributed over the last three years [3] Shareholder Structure - As of June 30, 2025, Dongfang Electric had 92,000 shareholders, a decrease of 10.68% from the previous period. The average circulating shares per person remained at 0 [2] - The top circulating shareholders include Hong Kong Central Clearing Limited with 338 million shares, and various ETFs such as Huatai-PB CSI 300 ETF, E Fund CSI 300 ETF, and others, showing changes in their holdings [3]

Investment Rating - The report maintains a "Buy" rating for both A and H shares of the company [4][6]. Core Insights - The company achieved a revenue of 37.624 billion yuan in H1 2025, a year-on-year increase of 14.26%, with a net profit attributable to shareholders of 1.910 billion yuan, up 12.91% year-on-year [1]. - The clean and efficient energy equipment segment is driving revenue growth, with H1 revenue from this segment reaching 16.767 billion yuan, marking a historical high for the same period [1]. - New effective orders increased to 65.485 billion yuan in H1 2025, a 16.78% year-on-year growth, with significant contributions from clean energy and renewable energy equipment [2]. - The company is solidifying its traditional advantages while accelerating the implementation of strategic emerging industries, including significant orders in hydropower, nuclear power, and hydrogen energy projects [3]. Summary by Sections Financial Performance - In H1 2025, the company reported a gross margin of 15.46%, slightly higher than the same period last year, with the highest revenue contributions from clean efficient power generation equipment, new energy, and emerging growth industries [1]. - The company’s revenue growth is supported by a strong performance in the clean and efficient energy equipment sector, with gross margins for key products increasing by 1.10, 1.28, and 0.94 percentage points respectively [1]. Order Growth - The company’s new effective orders in H1 2025 reached 65.485 billion yuan, with clean efficient energy equipment and renewable energy equipment accounting for 37.59% and 30.82% of the total orders respectively [2]. - The clean efficient power generation equipment segment saw a year-on-year order growth of 32.57%, while renewable energy equipment orders grew by 38.74% [2]. Strategic Development - The company is enhancing its market position in traditional sectors such as hydropower and nuclear power, while also making strides in emerging industries like offshore wind power and hydrogen energy [3]. - The establishment of new manufacturing bases for renewable energy equipment and successful project implementations in hydrogen energy demonstrate the company's commitment to diversifying its portfolio [3].

Core Viewpoint - Dongfang Electric (600875) reported a certain degree of growth in revenue and profit for the first half of 2025, but its performance in financial investments lagged behind its stable industrial operations [1] Financial Performance - The company experienced a year-on-year increase in both revenue and profit during the reporting period [1] - The financial investment performance was weaker compared to its operational stability [1] Investment Losses - Dongfang Electric faced unrealized losses on multiple stock investments, including a significant investment in Chuaneng Power (000155) [1] - The investment cost in Chuaneng Power was 1.158 billion yuan, with a book value of 856 million yuan at the end of the period [1] - Chuaneng Power executed capital operations in 2024, purchasing 20% equity of Chuaneng Wind Power from Dongfang Electric for 1.294 billion yuan, with a share issuance price of 14.84 yuan per share [1] - By the end of last year, the fair value change loss for this equity investment was 228 million yuan, with a book value of 991 million yuan [1] - As of September 4, the stock price of Chuaneng Power was 10.12 yuan per share, leading to a slight recovery in the market value of Dongfang Electric's holdings to 882 million yuan [1] Other Investments - The company also incurred unrealized losses on its investment in Nanfang Energy Storage (600995) [1] - In December 2022, Dongfang Electric's subsidiary invested 540 million yuan to subscribe for 42.5532 million shares in a private placement of Nanfang Energy Storage [1] - By the end of the first half, the book value of this investment was approximately 416 million yuan, but the stock price has since rebounded, reducing the unrealized loss [1]

Investment Rating - The report maintains a "Strong Buy" rating for the company [4] Core Views - The company reported a revenue of 38.151 billion yuan in the first half of 2025, representing a year-on-year growth of 14.03% [1] - The sales gross margin improved to 15.46%, an increase of 0.1 percentage points year-on-year [1] - The net profit attributable to shareholders reached 1.910 billion yuan, up 12.91% year-on-year, while the net profit excluding non-recurring items was 1.806 billion yuan, reflecting a growth of 10.52% [1] - The company experienced a decline in Q2 profits due to impairment losses, with a net profit of 755.6 million yuan, down 3.79% year-on-year [7] - The company has seen significant growth in wind and hydropower orders, with a total of 65.485 billion yuan in new effective orders in the first half of 2025, a year-on-year increase of 16.78% [7] - The company is positioned as a leader in high-end energy equipment, with a focus on technological innovation and quality improvement in its orders [7] Financial Data and Valuation - The projected total revenue for 2025 is 76.665 billion yuan, with a year-on-year growth of 10% [3] - The expected net profit attributable to shareholders for 2025 is 4.034 billion yuan, representing a year-on-year increase of 38% [3] - The company's price-to-earnings (PE) ratio is projected to be 15.8 for 2025, indicating a favorable valuation compared to historical levels [3][20] - The return on equity (ROE) is expected to be 9.5% in 2025, reflecting a recovery in profitability [20] Order and Revenue Growth - The company has seen a notable increase in revenue from coal power, nuclear power, and hydropower, with coal power revenue reaching 11.3 billion yuan, a 33% increase year-on-year [7] - Wind power revenue grew by 22% year-on-year to 8.14 billion yuan, with significant improvements in gross margin [7] - The company has maintained its leading market share in nuclear power despite a 40% decline in bidding volume [7] Cash Flow and Financial Health - The company reported a net operating cash flow of -556 million yuan in the first half of 2025, indicating challenges in cash generation [8] - The debt ratio increased to 71% in Q2 2025, reflecting a higher leverage position [10] - The company holds cash reserves of 31.259 billion yuan, providing a buffer for operational needs [10]