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]

Financial Performance - The company's revenue increased by 7.4% to HKD 21.314 billion, with a core profit growth of 34.5% to HKD 1.601 billion[4] - The net profit for the year was HKD 1,796,494 thousand, slightly down from HKD 1,811,324 thousand in 2023, reflecting a decrease of 0.8%[21] - The total operating expenses for 2024 were HKD 19,419,838 thousand, up from HKD 18,177,618 thousand in 2023, indicating a rise of 6.8%[19] - The total comprehensive income for the year was HKD 936,186 thousand, a significant decrease from HKD 1,630,696 thousand in 2023[21] - The operating profit for the year ended December 31, 2024, was HKD 2,205,148,000, compared to HKD 2,196,434,000 in 2023, showing a slight increase of 0.4%[46] - Financing costs decreased to HKD 728,603,000 in 2024 from HKD 769,839,000 in 2023, a reduction of about 5.4%[46] - The company recognized a net other income of HKD 179,587,000 in 2024, down from HKD 426,559,000 in 2023, representing a decline of approximately 57.9%[44] - The profit attributable to shareholders for 2024 was HKD 1.606 billion, a 2.0% increase, with core business profit rising by 34.5% to HKD 1.601 billion[76] Revenue and Sales Growth - The net profit from renewable energy business surged fivefold to HKD 479 million, with cumulative photovoltaic grid connection reaching 2.3 GW and annual power generation doubling to 1.83 billion kWh[4] - The total gas sales volume rose by 5% to 17.201 billion cubic meters, with an improved gas price margin of RMB 0.56 per cubic meter, up RMB 0.02 from the previous year[4] - The number of urban gas customers reached 17.64 million, an increase from 16.77 million in the previous year[5] - Total revenue for the year ended December 31, 2024, reached HKD 21,314,027,000, an increase from HKD 19,841,511,000 in 2023, representing a growth of approximately 7.4%[39] - In 2024, the group's total sales volume reached 5.087 billion cubic meters, an increase of 5.5% year-on-year, with revenue of RMB 19.626 billion, up 9.6%[67] Dividends and Shareholder Returns - The company plans to distribute a final dividend of HKD 0.16 per share and a special dividend of HKD 0.03 per share, totaling HKD 0.19 per share[4] - The company declared a final dividend of HKD 661,319,000 for the year ended December 31, 2024, compared to HKD 536,717,000 in 2023, marking an increase of about 23.2%[50] - The board proposed a final dividend of HKD 0.16 per share and a special dividend of HKD 0.03 per share, totaling HKD 0.19 per share, subject to shareholder approval at the annual general meeting[86] - The cash dividends will be payable, with shareholders having the option to receive new shares instead of cash under the scrip dividend scheme[86] Strategic Initiatives and Business Development - The company is focusing on optimizing core business and enhancing competitiveness through new growth models in renewable energy and smart energy systems[10] - The company is actively developing virtual power plants and energy-as-a-service (EaaS) projects, providing integrated energy management services[12] - The company aims to leverage national policies promoting renewable energy and distributed photovoltaic systems to create growth opportunities[8] - The group aims to expand its renewable energy projects and actively promote Energy as a Service (EaaS) to adapt to changing electricity pricing policies and the rapid integration of new energy sources[16] - The company has initiated a strategic merger of two gas companies in Jinan, Shandong, to optimize resource allocation and enhance asset value[13] Operational Efficiency and Cost Management - The group is committed to cost reduction and efficiency improvement while embracing technology to enhance resilience and contribute to national carbon neutrality goals[17] - Employee costs rose to HKD 1,421,232,000 in 2024 from HKD 1,306,363,000 in 2023, an increase of about 8.8%[43] - The company's tax expenses for 2024 were HKD 408,654,000, compared to HKD 385,110,000 in 2023, indicating an increase of approximately 6.1%[48] Financial Position and Liabilities - As of December 31, 2024, the group's current liabilities exceed current assets by approximately HKD 5.598 billion, with borrowings of about HKD 3.696 billion due within one year[27] - The group has a funding capacity of approximately HKD 13.452 billion through its medium-term note program and HKD 15.432 billion remaining under Panda bonds, along with unused credit facilities of about HKD 10.248 billion from banks and its parent company[27] - The reclassification of convertible bonds resulted in HKD 1.867 billion being moved from non-current to current liabilities as of December 31, 2024[34] - As of December 31, 2024, the group's borrowings totaled HKD 15.427 billion, down from HKD 16.282 billion in 2023[79] Governance and Compliance - The company has complied with all applicable code provisions of the Corporate Governance Code during the year[90] - An audit and risk committee has been established to review and monitor the group's financial reporting, risk management, and internal control systems[90] - The audit and risk committee met with internal auditors and external auditors on February 27, 2025, to review the audited consolidated financial statements for the year ending December 31, 2024[90] Market and Credit Ratings - Moody's and S&P maintained stable credit ratings of Baa1 and BBB+, respectively, reflecting the group's solid business and credit history[83]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 3.85 [7][19]. Core Views - The company's urban gas business is expected to achieve moderate growth despite a downward adjustment in natural gas sales growth due to industrial demand pressure. The gross margin is anticipated to continue recovering due to pricing adjustments and cost reductions [2][3]. - The renewable energy segment is transitioning to a light-asset model, with stable contributions expected from distributed photovoltaic rights installations. Changes in distributed photovoltaic policies are expected to have limited impact [4][5]. - The company is characterized by high dividend yields, with projected dividend rates of 6.3%/6.6%/7.4% for 2024-2026 if the payout ratio remains at 47% [2][5]. Summary by Sections Profit Forecast Adjustments - The forecast for core net profit for 2024-2026 has been adjusted downwards by 6%/6%/3% to HKD 14.5 billion, HKD 15.3 billion, and HKD 17.0 billion respectively [2][5]. - The sales volume growth for natural gas has been revised down to +6.6%/5.8%/5.2% for 2024-2026, reflecting a decrease from previous estimates [3][5]. Revenue and Profitability Metrics - The company's revenue for 2024 is projected at HKD 20.372 billion, with a slight increase expected in subsequent years [6][26]. - The gross profit margin is expected to improve, with urban gas sales gross margin projected at RMB 0.57/0.59/0.61 per cubic meter for 2024-2026 [3][4]. Valuation Methodology - The valuation approach assigns an 8x PE ratio to the urban gas business and a 12x PE ratio to the renewable energy business, resulting in a target market value of HKD 134 billion [5][19]. - The target price reflects a slight decrease from the previous estimate of HKD 3.93, based on the adjusted PE ratios [5][19].

Financial Performance - The group's revenue for the first half of 2024 reached HKD 10,501 million, representing a 6.3% increase compared to the same period last year[6]. - Core business profit surged by 57.5% to HKD 707 million, with a year-on-year increase of 63.3% when calculated in RMB[7]. - The group's net profit for the same period was HKD 846,188, down 31.2% from HKD 1,231,015 in the previous year[14]. - Basic earnings per share decreased to HKD 22.14 from HKD 34.33, while diluted earnings per share fell to HKD 19.32 from HKD 30.20[14]. - The attributable profit for the first half of 2024 was HKD 743 million, a decline of 33.4% year-on-year, while core business profit rose significantly by 57.5% to HKD 707 million[92]. - The total revenue for the six months ended June 30, 2024, was HKD 9,646,660,000, compared to HKD 9,882,711,000 for the same period in 2023, representing a decrease of approximately 2.4%[34]. - The net profit for the period was HKD 1,231,015,000, down from HKD 1,115,411,000 in the previous year, indicating a decline of about 10.5%[34][41]. - The total operating expenses for the six months ended June 30, 2024, were HKD 9,550,931,000, an increase from HKD 9,032,066,000 in 2023, reflecting a rise of approximately 5.8%[35]. Revenue Segments - The number of urban gas customers increased by 450,000 to 17.22 million, with gas sales volume growing approximately 6% to 8,741 million cubic meters[7]. - The company's gas connection segment achieved a profit of HKD 313,569 thousand, reflecting strong operational performance[32]. - The renewable energy segment generated revenue of HKD 754,780 thousand, contributing to the overall growth in the energy sector[32]. - The group’s total sales from pipeline gas business was HKD 8.672 billion, up from HKD 8.256 billion in the previous year[86]. - The renewable energy business revenue increased to HKD 755 million from HKD 443 million year-on-year[86]. Cash Flow and Financial Position - The net cash generated from operating activities for the six months ended June 30, 2024, was HKD 919,456,000, compared to HKD 455,491,000 for the same period in 2023, representing an increase of 102%[20]. - The net cash used in investing activities amounted to HKD 1,587,575,000 for the six months ended June 30, 2024, compared to HKD 1,741,085,000 in the previous year, indicating a decrease of 8.8%[20]. - The net cash generated from financing activities was HKD 1,705,275,000 for the six months ended June 30, 2024, compared to a net cash outflow of HKD 3,172,000 in the same period of 2023[20]. - The group reported a decrease in cash and cash equivalents of HKD 170,078,000, ending the period with HKD 3,824,245,000 compared to HKD 4,185,323,000 at the end of the previous period[20]. - As of June 30, 2024, the group's borrowings amounted to HKD 1,670.1 million, with HKD 902.4 million due within one year[93]. - The group's cash and cash equivalents totaled HKD 397.7 million, with a debt ratio of 37.1% as of June 30, 2024[94]. Strategic Initiatives - The company aims to optimize asset structure and improve capital efficiency through a light asset strategy and partnerships[7]. - The establishment of a gas source business segment has enhanced collaboration with major upstream natural gas companies[8]. - The company is actively developing zero-carbon smart industrial parks to provide green energy solutions for industrial clients[8]. - The "Energy as a Service" (EaaS) model is being promoted to facilitate energy management for industrial customers, creating stable revenue streams[8]. - The group plans to continue expanding its renewable energy projects, with expectations of more new projects contributing to profit growth in the second half of the year[11]. ESG and Risk Management - The group has established an ESG committee at the board level, enhancing its commitment to environmental, social, and governance standards[10]. - The group's ESG risk management has improved, with a risk score reduction to 23.7, reflecting effective management practices[10]. - The group aims to maintain stability and control investment risks amid complex geopolitical situations and high interest rates[11]. - The group is actively promoting low-carbon living among employees through various environmental activities[10]. Shareholder Information - The board decided not to declare an interim dividend for 2024, consistent with the previous year[98]. - The total number of shares held by Dr. Li Ka Kit in the company is approximately 2,379,921,776, representing about 70.95% of the total issued shares[103]. - Mr. Wong Wai Yi holds 9,332,000 shares, which accounts for approximately 0.27% of the total issued shares as of the report date[103]. - The company issued 124,440,353 new shares under the scrip dividend scheme, resulting in a reduction of the subsidiary's shareholding in the company to approximately 68.38%[103]. Employee and Operational Metrics - The company employed 24,171 employees as of June 30, 2024, reflecting a slight increase from the previous year[97]. - The company experienced a decrease in employee costs to HKD 694,415,000 from HKD 677,884,000, reflecting an increase of about 2.2%[35].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong performance relative to the market [5]. Core Views - The company reported a 6.3% year-on-year increase in revenue for the first half of 2024, reaching HKD 10.501 billion, while operating profit grew by 26.0% to HKD 935 million. However, net profit attributable to shareholders decreased by 33.4% to HKD 743 million due to a non-operating gain of HKD 600 million from exiting a project in Shanghai last year. Excluding this factor, core profit increased by 57.5% [5]. - The company is seeing steady improvement in gas sales margins, with a total gas sales margin of HKD 0.52/m³, benefiting from timely pricing adjustments for industrial and residential gas [5][6]. - The photovoltaic (PV) business is showing significant growth potential, with a 143% increase in PV generation to 680 million kWh in the first half of 2024, contributing to a net profit increase of HKD 148 million in the renewable energy segment [5][6]. Summary by Sections Financial Performance - Revenue (million HKD): 20,073 in 2022, 19,842 in 2023, projected 21,517 in 2024, 23,731 in 2025, and 25,715 in 2026 [4][7]. - Net Profit (million HKD): 965 in 2022, 1,575 in 2023, projected 1,728 in 2024, 1,873 in 2025, and 1,982 in 2026 [4][7]. - Earnings per Share (HKD/share): projected 0.30 in 2024, 0.47 in 2025, 0.51 in 2026 [4]. Business Segments - Gas sales volume increased by 6.2% to 8.74 billion m³ in the first half of 2024, with industrial gas volume growing by 4.6% and commercial gas volume by 9.4% [6]. - The company added three new city gas projects, bringing the total to 190, and increased its user base by 450,000 to 17.22 million [6]. Valuation - The current stock price corresponds to a PE ratio of 5.8 for 2024, 5.3 for 2025, and 5.0 for 2026, with a PB ratio of 0.5, indicating significant valuation upside potential [5].

Investment Rating - The report does not explicitly state an investment rating for the company Core Insights - The company has shown significant growth in core profits, with a 57.5% increase in mid-2024 core profits to HKD 707 million, despite a 33.4% decline in shareholder profit [2] - The renewable energy sector has experienced strong growth, with net profits rising to HKD 164 million in H1 2024, compared to HKD 3 million in H1 2023 [3] - The urban gas business has demonstrated steady growth, with gas sales volume increasing by 6% to 8.741 billion cubic meters in H1 2024 [4] Financial Performance Summary - Total revenue for the company in 2023 was HKD 19,842 million, reflecting a slight decrease of 1.15% from 2022 [1] - The net profit attributable to shareholders for 2023 was HKD 1,575 million, marking a significant increase of 63.2% compared to 2022 [1] - Earnings per share (EPS) for 2023 was HKD 0.4774, up from HKD 0.3017 in 2022 [1] - The return on equity (ROE) for 2023 was 6.89%, an improvement from 4.49% in 2022 [1] - The price-to-earnings (PE) ratio for 2023 was 6.81, down from 12.99 in 2022 [1]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 （於開曼群島註冊成立的有限公司） （股份代號：1083） 2024 年中期業績公布 財務及經營摘要 | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ...

Financial Performance - The total revenue for 2023 was HKD 19,841,511, a decrease of 1.16% compared to HKD 20,073,010 in 2022[195] - The profit before tax increased to HKD 2,196,434, representing a growth of 38.73% from HKD 1,583,706 in the previous year[195] - The net profit attributable to shareholders was HKD 1,574,623, up 63.36% from HKD 964,855 in 2022[195] - Basic earnings per share for 2023 were HKD 47.74, an increase of 58.66% compared to HKD 30.17 in 2022[195] - In 2023, the total revenue of Honghua Smart Energy Co., Ltd. was HKD 53,464.703 million, a slight increase from HKD 52,943.976 million in 2022, representing a growth of approximately 1%[196] - The company reported a profit attributable to shareholders of HKD 28,234.213 million in 2023, compared to HKD 29,080.883 million in 2022, indicating a decrease of about 3%[196] - The overall equity attributable to shareholders was HKD 22,847.212 million in 2023, showing stability in shareholder equity[196] User Growth and Market Expansion - The company reported a significant increase in user data, reflecting a growing customer base and enhanced service adoption[4] - The user base across all enterprises increased to 16.8 million in 2023, up from 15.9 million in 2022, reflecting a growth rate of approximately 5%[197] - The company achieved a gas connection rate of 82% in 2023, with 51% of the connections being industrial users, while residential users accounted for 19%[198] Strategic Initiatives - The company aims to expand its pipeline gas projects across various regions, including Anhui, Guangdong, and Sichuan[187] - The company is focusing on developing smart energy solutions to enhance service quality and ensure sustainable growth[4] - The company aims to expand its market presence through new strategies, focusing on enhancing renewable energy offerings and increasing gas connections[197] - The company plans to enhance its market presence through strategic partnerships and collaborations in the energy sector[4] - The company is exploring potential mergers and acquisitions to strengthen its market position and expand its operational capabilities[4] Future Outlook - Future outlook includes continued investment in renewable energy projects and technology advancements to meet market demands[4] - Future guidance indicates a target revenue growth of 4% for the upcoming fiscal year, driven by increased user adoption and market expansion efforts[197] - The company plans to invest in new product development and technology to enhance operational efficiency and customer service[197] Renewable Energy Performance - Renewable energy business revenue for 2023 was HKD 198.42 billion, with a gas distribution volume of 164.58 billion cubic meters, marking an increase from HKD 200.73 billion and 152.46 billion cubic meters in 2022 respectively[198]

Financial Performance - Revenue for the year was RMB 17.915 billion, up 4.2%, but due to exchange rate effects, revenue in HKD slightly decreased by 1.2% to HKD 19.842 billion[5] - Shareholders' profit attributable to the company surged by 63.2% to HKD 1.575 billion, while core profit rose by 16.3% to HKD 1.190 billion (an increase of 22.6% in RMB terms)[5] - The company reported a net profit of HKD 1,811,324,000 for the year ended December 31, 2023, compared to HKD 1,201,039,000 in 2022, representing a year-over-year increase of approximately 50.8%[17] - Total comprehensive income for the year was HKD 1,630,696,000, a significant recovery from a loss of HKD 1,089,091,000 in the previous year[18] - Basic earnings per share increased to HKD 47.74 in 2023 from HKD 30.17 in 2022, reflecting significant growth in profitability[16] - The profit attributable to shareholders for 2023 was HKD 1.575 billion, an increase of 63.2% year-on-year[49] - The core profit, excluding non-operating gains and losses, was HKD 1.190 billion, up 16.3% year-on-year[49] - The diluted earnings per share for 2023 was HKD 0.4774, an increase of 58.2% year-on-year[49] Dividends and Shareholder Returns - The company plans to distribute a final dividend of HKD 0.16 per share, representing a 6.7% increase from the previous year[6] - The group plans to maintain a final dividend of 16 HKD cents per share, up from 15 HKD cents in the previous year[16] - The board proposed a final dividend of HKD 0.16 per share for the year, an increase from HKD 0.15 per share in 2022, subject to shareholder approval[54] Operational Highlights - The group's overall gas sales volume increased by 8% to 16.458 billion cubic meters in 2023, with a total of 1.677 million urban gas customers, adding 840,000 new customers during the year[7] - The industrial gas sales volume recorded a growth of 6.1%, while commercial gas sales increased by 9.0%[7] - The group has a total of 536 projects across 25 provinces, autonomous regions, and municipalities in mainland China, an increase of 173 projects compared to the previous year[5] - The total sales volume for 2023 was 4.823 billion cubic meters, representing a year-on-year increase of 7.4%[43] - The number of new residential gas connection users decreased by 23.0% year-on-year to 411,000[43] Renewable Energy Initiatives - The group has developed 124 zero-carbon smart parks, with a cumulative signed photovoltaic installed capacity of 2.96 GW and grid-connected capacity of 1.8 GW[2] - The renewable energy business achieved profitability in 2023, with the group implementing 124 zero-carbon smart parks and over 1,000 renewable energy projects across 23 provinces, covering areas such as photovoltaics, energy storage, and charging stations[9] - The company is focusing on renewable energy development through a light-asset model to reduce leverage and provide stable returns to shareholders[4] - In Guangdong province, the group facilitated renewable energy power trading, achieving an agency electricity volume of 1 billion kWh in 2023, with expectations to reach 10 billion kWh nationwide by 2025[10] - The company’s renewable energy business generated revenue of HKD 1,056,327,000 for the year[28] Financial Position and Liquidity - The company has a liquidity position with available funding of approximately HKD 132.37 billion through its medium-term note program and HKD 148.51 billion in Panda bond capacity, alongside unused credit lines of about HKD 79.11 billion[23] - The company’s total assets less current liabilities stood at HKD 39,026,999,000 in 2023, up from HKD 35,282,021,000 in 2022, indicating improved asset management[20] - The debt-to-equity ratio as of December 31, 2023, was 35.8%, down from 39.7% in 2022, indicating improved financial stability[51] - The group successfully issued RMB 1.5 billion in Panda bonds in June 2023, with a weighted average interest rate of 3.27% and an oversubscription rate of 1.6 times[50] - The group has unutilized credit facilities amounting to approximately HKD 79.11 billion from banks and its parent company, ensuring sufficient liquidity for operational needs[51] Strategic Partnerships and Market Expansion - The group exited a 25% stake in Shanghai Gas, recovering RMB 4.663 billion in funds during the year, while establishing a strategic partnership in natural gas resources and low-carbon energy[5] - A new strategic partnership has been established, expected to generate $30 million in additional revenue[60] - The company is exploring potential acquisitions to further strengthen its market position, with a budget of $100 million allocated for this purpose[59] Employee and Corporate Governance - The group employed 24,220 staff as of December 31, 2023, with a focus on performance-based compensation and employee welfare[53] - The group has no significant contingent liabilities as of December 31, 2023, indicating a strong financial position[53] - Moody's and S&P maintained the group's credit ratings at Baa1 and BBB+, respectively, reflecting stable outlooks[52] Future Outlook - The group anticipates steady growth in residential gas demand in 2024, driven by national policies aimed at stabilizing the economy and promoting energy conservation[12] - The company provided an optimistic outlook for the next quarter, projecting a revenue growth of 10% to 12%[59] - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[60] - Market expansion efforts have led to a 25% increase in market share in the Asia-Pacific region[60]

Stock Performance - The closing price of the company's shares on November 24, 2022, was HKD 3.42 per share[1] Stock Options - The number of stock options authorized for grant under the stock option plan as of January 1, 2022, was zero, and as of December 31, 2022, it was 304,326,534[1] - The number of shares that can be issued under the stock option plan for the fiscal year ended December 31, 2022, was 11,663,000, representing approximately 0.36% of the weighted average number of shares issued by the company during that fiscal year[1]