Core Viewpoint - The company aims to enhance liquidity by selling its entire stake in several wholly-owned subsidiaries engaged in rooftop photovoltaic power generation projects in China for approximately RMB 470 million [1] Group 1: Transaction Details - The company entered into an agreement on June 3, 2025, to sell its stake and outstanding loans related to the rooftop photovoltaic projects [1] - The total consideration for the sale is approximately RMB 470 million [1] - The company will also subscribe to part of the equity-level asset-backed securities issued under the second phase of the asset-backed special plan, amounting to RMB 24 million, which represents about 5.1% of the total principal amount of the asset-backed securities [1] Group 2: Use of Proceeds - The net proceeds from the sale will be used to invest in rooftop photovoltaic and energy storage projects, repay bank loans, and serve as general working capital [1]

Investment Rating - The report maintains an "Overweight" rating for the gas industry [1] Core Viewpoints - Weak demand has led to a decline in domestic gas prices, while storage levels are pushing down European gas prices [1][5] - The report highlights the ongoing adjustments in pricing mechanisms and the gradual recovery of demand, with a focus on cost optimization for gas companies [5][48] Price Tracking - As of May 30, 2025, the weekly price changes for various gas markets are as follows: US HH +0.6%, European TTF -7%, East Asia JKM -2.6%, China LNG ex-factory -1.1%, and China LNG CIF -4.2% [10][11] - Domestic gas prices have slightly decreased by 1.1% due to slow demand recovery and the upcoming Dragon Boat Festival [24] Supply and Demand Analysis - In the US, total gas supply increased by 0.6% week-on-week to 1,125 billion cubic feet per day, while total demand decreased by 0.8% to 973 billion cubic feet per day [15] - European gas consumption for January-February 2025 was 1,155 billion cubic meters, up 11% year-on-year, but supply decreased by 10.8% week-on-week [16] Pricing Progress - Nationwide, 63% of cities have implemented residential pricing adjustments, with an average increase of 0.21 yuan per cubic meter [34] - The report indicates that there is still a 10% room for price gap recovery in city gas companies [34] Important Events - The US LNG import tariff has been reduced from 140% to 25%, enhancing the economic viability of US gas imports [41][43] - The European Commission has voted to introduce more flexible natural gas storage filling targets to avoid supply shortages [46][47] Investment Recommendations - The report suggests focusing on companies that can optimize costs and benefit from the ongoing pricing adjustments, recommending companies like Xinao Energy and China Gas [48] - It also highlights the importance of companies with quality long-term contracts and flexible scheduling capabilities, such as Jiufeng Energy and Xinao [48]

Core Viewpoint - The article discusses the recent developments in the commercial energy storage sector in Anhui, highlighting significant projects and collaborations aimed at enhancing energy storage capabilities and integrating renewable energy solutions [2][5]. Group 1: Project Developments - A 37.5MW/100.5MWh energy storage station has been successfully connected to the grid in He County, Anhui, marking it as the largest user-side energy storage project in the region [3][5]. - The total investment for the He County project is 115 million yuan, and it employs a lithium iron phosphate storage system [5]. - As of now, there are 23 publicly announced user-side energy storage projects in Anhui since 2025, with a total capacity of 484.874MW/1451.319MWh [6][8]. Group 2: Project Distribution and Collaboration - The projects are primarily located in cities such as Hefei, Anqing, and Wuhu, with Hefei accounting for 32% of the total projects [6]. - The collaboration between Tianneng and Honghua Smart Energy aims to deepen strategic partnerships focusing on multi-scenario applications and virtual power plant construction [5]. - The largest tender project announced is a 300MW/600MWh user-side energy storage project in Woyang County [8]. Group 3: Future Prospects - The article indicates a growing trend in the energy storage market, with various companies like China Power Construction and Sunshine Power involved in the development of these projects [6][11]. - The integration of energy storage with renewable energy sources is emphasized as a key strategy for future energy solutions [5][6].

Financial Performance - The company reported a revenue of HKD 21,314 million for 2024, representing an increase from HKD 19,842 million in 2023, marking a growth of approximately 7.4%[36] - The company achieved a net profit attributable to shareholders of HKD 1,606 million in 2024, slightly down from HKD 1,575 million in 2023, indicating a decrease of around 1.5%[36] - The group’s overall revenue increased by 7.4% to HKD 21.314 billion, while core business profit rose by 34.5% to HKD 1.601 billion (up 37.2% in RMB) [42] - The group’s revenue for 2024 was 19.626 billion RMB, up 9.6%, while revenue in HKD increased by 7.4% to 21.314 billion HKD[139] - Total operating expenses for 2024 amounted to 19.420 billion HKD, reflecting a year-on-year increase of 6.8%[141] - The net profit attributable to shareholders for 2024 rose by 2.0% to 1.606 billion HKD, while core business profit surged by 34.5% to 1.601 billion HKD (up 37.2% in RMB) before non-operating gains and losses[147] User and Project Growth - The number of users across all enterprises reached 1,606, an increase from 1,575 in 2023, reflecting a growth of about 2%[34] - The company has secured a total of 749 projects across 27 provincial regions in mainland China, up from 536 projects at the end of 2023, representing an increase of approximately 39.7%[32] - The total number of urban gas projects reached 191, with 4 new projects added during the year, covering 19 provincial regions, and the total customer base reached 17.64 million, with 870,000 new customers added[72] - In 2024, the group's overall gas sales volume increased by 5% to 17.201 billion cubic meters, with a total customer base reaching 17.64 million, adding 870,000 new customers during the year[138] Renewable Energy Initiatives - The company aims to enhance its renewable energy business, which accounted for 20% of gas consumption in 2024, up from 19% in 2023[35] - The renewable energy business achieved a net profit of HKD 479 million in the year, representing a fivefold increase year-on-year, with over 1,000 renewable energy projects constructed across 24 provinces[95] - The renewable energy business is expected to enter a growth phase in 2024, aligning with the national target of exceeding 1.5 billion tons of standard coal in renewable energy consumption by 2030[94] - The group is actively exploring the application of hydrogen blending in natural gas, with a goal to cover 100,000 household customers in the "Hydrogen into Ten Thousand Homes" project in Weifang, Shandong[90] - The group aims to develop biomass natural gas projects and explore hydrogen blending opportunities in natural gas pipelines by 2025[47] Financial Management and Investments - The group maintains a prudent financial management policy, ensuring adequate cash and credit levels to support operations and business development[148] - The financing cost for 2024 decreased by 5.4% to 729 million HKD, attributed to strict capital expenditure control and successful low-interest loans[146] - The group has issued medium-term notes totaling RMB 1.8 billion with an average interest rate of 4.2% and an average term of 4.4 years as of December 31, 2024[151] - The group raised a total of RMB 1.5 billion through the issuance of 1-year and 3-year panda bonds in June 2023, with an average interest rate of 3.27%[151] - The group successfully established and issued a green asset-backed securities program with an initial issuance scale of RMB 515 million, part of a total shelf of RMB 5 billion[169] Sustainability and ESG Efforts - The company has been recognized as one of the "Best 1%" Chinese enterprises in gas utilities by S&P Global CSA, highlighting its commitment to sustainability[11] - The group has received multiple awards for its ESG disclosures and sustainable practices, reinforcing its reputation in the industry[19] - The group has reduced greenhouse gas emissions by approximately 26% compared to 2023, demonstrating its commitment to sustainability[110] - The group has engaged over 5,000 participants in a biodiversity and new energy summit, highlighting the global focus on renewable energy and biodiversity issues[119] - The group has received recognition for its ESG efforts, maintaining a strong position in the S&P Global ESG ratings[46] Strategic Initiatives and Future Plans - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[36] - The group plans to enhance its resource pool and strengthen international trade business, including the import of liquefied natural gas[48] - The group will continue to expand energy storage projects and actively promote Energy as a Service (EaaS) business development[48] - The group is focusing on the "Gas+" business model, targeting public institutions, industrial, and construction sectors to provide comprehensive energy services[47] - The group has initiated a strategic cooperation with national pipeline networks and major oil companies to ensure diverse and sufficient gas supply[45] Board and Management - Dr. Zheng Mu Zhi has been an independent non-executive director since May 2007 and is currently the chairman of the remuneration committee and a member of the audit and risk committee[55] - Mr. Li Min Bin has served as an independent non-executive director since May 2007 and is the co-CEO of East Asia Bank, overseeing overall operations and management[57] - Dr. Lu Gong Hui has been an independent non-executive director since April 2022 and is a member of multiple committees including audit and risk, nomination, and remuneration[59] - Mr. Liao Ji Li has been a non-executive director since November 2021, with over 20 years of experience in private equity investments across various sectors in Greater China[62] - Mr. Huang Wei Yi has been the executive director and CEO since March 2007, recognized as one of Forbes' "Best CEOs of Chinese Listed Companies" in 2012 and 2013[64]

Investment Rating - The report maintains an "Accumulate" rating for the gas industry [1] Core Views - Concerns over economic recession due to tariffs have led to a significant drop in US gas prices, while tariffs have temporarily halted the recovery of European gas prices, with domestic prices remaining stable [1][10] - The report highlights a supply-demand analysis indicating a 2.1% week-on-week increase in total gas supply in the US, while total demand increased by 7% week-on-week [15][17] - The report emphasizes the ongoing adjustments in pricing mechanisms and the gradual recovery of demand in the domestic market [50][51] Price Tracking - As of April 17, 2025, US HH gas prices decreased by 20.6%, European TTF prices increased by 6.8%, and domestic LNG prices remained stable with a week-on-week change of -0.5% [10][12] - The average total supply of natural gas in the US reached 1,124 billion cubic feet per day, with a year-on-year increase of 6.3% [15] Supply and Demand Analysis - The report notes that the US gas market is experiencing a week-on-week price drop of 20.6% due to tariff-induced inflation concerns, while total demand has increased by 7% [15][17] - In Europe, gas consumption for March 2025 was 60.5 billion cubic meters, reflecting a year-on-year increase of 1.8% [17] Pricing Progress - The report indicates that 61% of cities have implemented residential pricing adjustments, with an average increase of 0.20 yuan per cubic meter [39] - The pricing mechanism is expected to continue evolving, with potential for further adjustments in the future [39] Important Events - The report details the increase of tariffs on US LNG to 140%, noting that the impact on supply is limited due to the small proportion of US LNG in China's total imports [46] - Ongoing negotiations regarding the Russia-Ukraine conflict are highlighted as a significant factor influencing European gas supply dynamics [49] Investment Recommendations - The report recommends focusing on companies that can optimize costs and benefit from the evolving pricing mechanisms, particularly highlighting New Energy and China Gas as key players [50][51] - It suggests monitoring companies with strong long-term contracts and flexible scheduling capabilities, such as Jiufeng Energy and Xin'ao [51]

Core Viewpoint - Honghua Smart Energy (01083) has demonstrated strong performance in revenue and core profit growth, reflecting positive market sentiment and expectations for future development [1][2]. Financial Performance - In 2024, Honghua Smart Energy achieved revenue of HKD 21.314 billion, a year-on-year increase of 7.4%, while core profit surged by 34.5% to HKD 1.601 billion [2]. - The company declared a final dividend of HKD 0.16 and a special dividend of HKD 0.03, totaling HKD 0.19 [2]. Market Reaction - Following the earnings report, the company's stock price rose by over 9% on March 17, ultimately closing with a gain of 7.93%, reflecting a cumulative increase of nearly 15% since the beginning of March [1]. Analyst Ratings - Various domestic and international brokerages, including CICC, Citigroup, and Huatai Securities, have issued positive reports on the company, indicating strong recognition of its value [1][2]. - Target prices from analysts range from HKD 3.45 to HKD 4.99, with ratings such as "Outperform" and "Buy" [2][10]. Business Growth and Strategy - The company is focusing on its gas business, with gas sales volume expected to increase by 5% to 17.201 billion cubic meters in 2024, supported by the implementation of a pricing mechanism [3][4]. - The comprehensive gas price difference improved to HKD 0.56 per cubic meter, with expectations for further growth in 2025 [3]. Renewable Energy Development - Honghua Smart Energy's renewable energy segment reported a significant profit increase of 514% to HKD 479 million in 2024, with solar power generation capacity reaching 2.3 GW [5][6]. - The company is adopting a light-asset model, which is expected to drive further growth in its renewable energy business, contributing to overall profitability [6][7]. Future Outlook - Analysts anticipate that the company's renewable energy business will continue to be a key driver of growth, with projections for new installations of 0.6 GW and 0.5 GW in 2025 and 2026, respectively [6][10]. - The ongoing implementation of the pricing mechanism and the light-asset strategy are expected to enhance the company's performance and cash flow stability in the long term [10][11].

Summary of Conference Call Notes Industry Overview - The conference call primarily discusses the **natural gas industry** and specifically focuses on **Hong Kong and mainland China's gas companies** such as **Hong Kong and China Gas**, **Towngas**, and **New World Energy** [2][3][6][7]. Key Points and Arguments - **Revenue Growth**: Towngas reported a **7.3% year-on-year increase** in overall revenue for 2025, attributed to increased gas volume and improved gross margins. Core profit reached **1.6 billion HKD**, a **34.5% increase** [2]. - **Renewable Energy Contribution**: The renewable energy segment, particularly distributed solar photovoltaic business, contributed over **400 million HKD** in net profit, highlighting its profitability in the renewable sector [2]. - **Gas Margin Improvement**: The gas sales gross margin improved from **0.54 HKD** in 2023 to **0.56 HKD** in 2024, with expectations for further growth in 2025 [2]. - **Impact of LNG Prices**: The decline in international LNG prices since 2023 has reduced costs for coastal gas companies like New World Energy and China Resources Gas, while central and western regions benefit less [3][6]. - **Natural Gas Pricing Strategy**: China National Petroleum Corporation (CNPC) adjusted its pricing strategy by modifying the ratio of regulated to non-regulated periods and increasing the weight of spot LNG prices, affecting coastal and inland pricing differently [5]. - **Performance Elasticity**: Companies with a higher proportion of residential gas sales, such as China Resources Gas, benefit more from price adjustments, while those with a higher industrial gas sales ratio, like New World Energy, benefit from cost reductions [6]. - **Valuation Potential**: Towngas has a low valuation with a **price-to-book (PB) ratio of 0.5**, indicating potential for valuation recovery through investments in Shanghai Gas and distributed solar photovoltaic projects [7]. - **Global Gas Supply and Demand**: The global gas supply-demand balance remains stable, with demand growth around **2%**. High gas prices have constrained some demand, while countries like Japan and Germany are adjusting their energy mix, potentially reducing LNG imports [8]. - **Future LNG Capacity**: The U.S. and Qatar are expected to increase LNG export capacity significantly by 2025-2026, which will contribute to global gas supply [10]. - **Market Confidence**: Recent declines in Asian gas prices, attributed to seasonal factors, indicate a non-tight supply situation, enhancing market confidence in a downward price trend [12]. Other Important Insights - **Dividend Strategies**: Hong Kong and China Gas offers a dividend of **0.35 HKD per share**, with a yield of approximately **5%**, while China Gas provides **0.50 HKD per share** [11]. - **Investment Opportunities**: Companies with low valuations and strong growth potential, such as Towngas and China Gas, are seen as having good recovery potential, while growth companies like China Resources Gas and New World Energy are attracting attention due to their growth prospects [11].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company reported a significant increase in core profits, driven by its renewable energy business, which saw a net profit increase of over 400 million HKD year-on-year [6] - The company plans to distribute a total dividend of 0.19 HKD per share, resulting in a dividend yield of 5.79% based on the closing price on March 14 [6] - The gas sales volume is expected to grow steadily, with total gas sales projected to reach 17.2 billion cubic meters in 2025, reflecting a year-on-year increase of 4.5% [6] - The renewable energy segment, particularly solar power, is expected to continue its rapid expansion, with plans to achieve 6 GW of solar assets on the balance sheet by 2030 [6] Financial Data and Profit Forecast - Revenue (million HKD): - 2023: 19,842 - 2024: 21,314 (7.4% YoY growth) - 2025E: 21,861 (2.6% YoY growth) - 2026E: 22,739 (4.0% YoY growth) - 2027E: 23,499 (3.3% YoY growth) [2][7] - Net Profit (million HKD): - 2023: 1,575 - 2024: 1,606 (2.0% YoY growth) - 2025E: 1,809 (12.7% YoY growth) - 2026E: 1,928 (6.5% YoY growth) - 2027E: 2,029 (5.3% YoY growth) [2][7] - Earnings per Share (HKD/share): - 2023: 0.48 - 2024: 0.47 - 2025E: 0.52 - 2026E: 0.55 - 2027E: 0.58 [2][7] Market Data - Closing Price (HKD): 3.28 [3] - Market Capitalization (billion HKD): 114.17 [3] - 52-week High/Low (HKD): 3.67/2.69 [3]

上 市 公 司 公 司 点 评 / 公 司 点 公用事业 2025 年 03 月 17 日 港华智慧能源 (01083) ——核心利润大幅增长 光伏添成长动力 报告原因：有业绩公布需要点评 | 投资要点： | | --- | 财务数据及盈利预测 资料来源：Bloomberg 证券分析师 | | 2023 | 2024 | 2025E | 2026E | 2027E | | --- | --- | --- | --- | --- | --- | | 营业收入（百万港元） | 19,842 | 21,314 | 21,861 | 22,739 | 23,499 | | 同比增长率（%） | -1.2 | 7.4 | 2.6 | 4.0 | 3.3 | | 归母净利润（百万港元） | 1,575 | 1,606 | 1,809 | 1,928 | 2,029 | | 同比增长率（%） | 63.2 | 2.0 | 12.7 | 6.5 | 5.3 | | 每股收益（港元/股） | 0.48 | 0.47 | 0.52 | 0.55 | 0.58 | | 净资产收益率（%） | 6.89 | 6.85 | 6.86 ...

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 4.00 [7][25][8] Core Insights - The company reported a revenue of HKD 21.314 billion for 2024, representing a year-on-year increase of 7%, and a core net profit of HKD 1.601 billion, which is up 35% year-on-year, exceeding the forecast of HKD 1.45 billion [1][2] - The natural gas sales volume for 2024 increased by 5% year-on-year, with the city gas gross margin rising by RMB 0.02 per cubic meter [1][2] - The company plans to maintain a dividend payout ratio of 41%, with expected dividend yields of 6.2%, 6.5%, and 6.8% for 2025-2027 [1][4] Summary by Sections Revenue and Profitability - The company achieved a core net profit of HKD 1.601 billion in 2024, a 35% increase from the previous year, and revenue reached HKD 21.314 billion [1][6] - The forecast for core net profit for 2025 and 2026 has been raised to HKD 1.71 billion and HKD 1.81 billion, respectively [1][4] Natural Gas Sales - The total gas sales volume for 2024 is projected to be 17.2 billion cubic meters, with industrial, commercial, and residential sales increasing by 2.5%, 4.5%, and 5.2% respectively [2][4] - The forecast for gas sales growth for 2025 and 2026 has been adjusted to 4.8% and 4.6% [2][4] Renewable Energy - The company’s distributed photovoltaic capacity reached 2.3 GW by the end of 2024, with a projected increase to 2.5 GW and 3.0 GW in 2025 and 2026, respectively [3][4] - The renewable energy segment is expected to contribute significantly to profit growth, with net profit estimates for this segment raised by 70% and 66% for 2025 and 2026 [3][4] Valuation and Target Price - The target market capitalization for the company is set at HKD 13.9 billion, with a target price of HKD 4.00 based on a valuation of 7x PE for the city gas business and 11x PE for the renewable energy business [4][25] - The previous target price was HKD 3.85, indicating a positive outlook for the company's valuation [4][25]