Core Viewpoint - Harbin Electric (01133) has seen its stock price increase by over 360% year-to-date, with a current rise of 13.69% to HKD 10.55, supported by a report from UBS recommending the stock as a "buy" and raising its target price from HKD 9.6 to HKD 18 [1] Financial Performance - UBS has adjusted its earnings per share forecast for Harbin Electric for the years 2025 to 2027 upwards by 27% to 31% [1] - The net profit margin forecast has been increased from 4% in 2024 to a range of 6% to 7% for 2025 to 2027, driven by improved revenue and enhanced cost control [1] Market Position - The stock is expected to have the potential to be included in the Southbound Trading Stock Connect, which could provide additional upward momentum [1] - The ongoing strong approval cycle for nuclear power projects in mainland China is anticipated to further enhance growth opportunities for the company [1]

Core Viewpoint - UBS has included Harbin Electric in its key recommendations for the Asia-Pacific region, upgrading the rating to "Buy" and raising the target price from HKD 9.6 to HKD 18 [1] Group 1: Earnings Forecasts - UBS has increased its earnings per share (EPS) forecasts for 2025 to 2027 by 27% to 31% [1] - The expected compound annual growth rate (CAGR) for EPS from 2024 to 2029 is projected to be 27% [1] Group 2: Dividend and Payout Ratios - The forecasted dividend yields for 2025, 2026, and 2027 are 5.9%, 8.7%, and 10.2% respectively [1] - The payout ratios are revised upwards from 34%, 35%, and 36% to 41%, 50%, and 50% for the same years [1] Group 3: Revenue and Profitability - Revenue growth is expected to accelerate, with increases of 5%, 5%, and 7% for 2025, 2026, and 2027 respectively [1] - The net profit margin forecast has been raised from 4% in 2024 to 6% to 7% for 2025 to 2027 due to improved revenue and enhanced cost control [1]

[Interim Board Report 2025](index=3&type=section&id=%E4%BA%8C%E9%9B%B6%E4%BA%94%E4%BA%94%E5%B9%B4%E4%B8%AD%E6%9C%9F%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A%E6%9B%B8) [Report Introduction](index=3&type=section&id=Introduction) The company's board announces unaudited operating results for the six months ended June 30, 2025, reviewed by Shinewing Certified Public Accountants, with all monetary figures in RMB - The company released its unaudited operating results for the six months ended June 30, 2025, reviewed by **Shinewing Certified Public Accountants**[3](index=3&type=chunk) - All monetary figures in the report are in **RMB**, unless otherwise specified[4](index=4&type=chunk) [Industry Development and Business Review](index=3&type=section&id=%E8%A1%8C%E6%A5%AD%E7%99%BC%E5%B1%95%E8%88%87%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A0%A7) China's economy grew steadily in H1 2025, with the power industry operating safely and transitioning to green energy, leading to significant year-on-year increases in the company's revenue, profit, and contract value - In the first half of 2025, China's economy operated steadily and improved, with the power industry maintaining safe and stable operations and continuing its green and low-carbon transformation[5](index=5&type=chunk) - National newly installed power generation capacity reached **293.32 million kilowatts**, a year-on-year increase of **140.56 million kilowatts**, with wind and solar power accounting for **89.9%** of the total new capacity[5](index=5&type=chunk) - As of June 30, 2025, the national total installed power generation capacity was **3.65 billion kilowatts**, including **1.47 billion kilowatts** of thermal power, **440 million kilowatts** of hydropower, **60.91 million kilowatts** of nuclear power, **573 million kilowatts** of grid-connected wind power, and **1.1 billion kilowatts** of grid-connected solar power[5](index=5&type=chunk) - In the first half of 2025, the company's operating revenue, profit, and formal contract signing value all significantly increased year-on-year, demonstrating stable and progressive business development[6](index=6&type=chunk) [Operating Performance](index=4&type=section&id=%E7%B6%93%E7%87%9F%E6%A5%AD%E7%B8%BE) For the six months ended June 30, 2025, the company's operating revenue grew by 31.86% to 22.47 billion yuan, net profit attributable to parent company owners increased by 101.06% to 1.05 billion yuan, with earnings per share of 0.47 yuan Key Financial Data for H1 2025 | Metric | H1 2025 (Billion Yuan) | Year-on-Year Growth | | :--- | :--- | :--- | | Operating Revenue | 22.47 | 31.86% | | Net Profit Attributable to Parent Company Owners | 1.05 | 101.06% | | Earnings Per Share | 0.47 yuan | Increased by 0.24 yuan | | Total Equity Attributable to Parent Company Owners (Period-end) | 16.12 | Increased by 639.94 million yuan (vs. year-start) | | Net Asset Value Per Share (Period-end) | 7.21 yuan | Increased by 0.29 yuan (vs. year-start) | [Order Status](index=5&type=section&id=%E8%A8%82%E5%96%AE%E6%83%85%E6%B3%81) As of June 30, 2025, the company's formal contract signing value increased by 36.64% to 35.56 billion yuan, with export orders surging by 945.25% to 11.87 billion yuan, mainly due to a large EPC project in Saudi Arabia - Formal contract signing value: **35.56 billion yuan**, a year-on-year increase of **36.64%**[8](index=8&type=chunk) - New power equipment contract value: **19.19 billion yuan**, a year-on-year decrease of **1.39%** (including **4.17% growth** in coal power equipment, **34.26% growth** in hydropower equipment, and **71.64% decrease** in nuclear power equipment)[8](index=8&type=chunk) - Engineering, Procurement, and Construction (EPC) and trade contract value: **10.48 billion yuan**, a year-on-year increase of **3,618.09%**, primarily due to the activation of a large EPC project in Saudi Arabia[8](index=8&type=chunk) - Export orders: **11.87 billion yuan**, a year-on-year increase of **945.25%**[8](index=8&type=chunk) [Product Output](index=6&type=section&id=%E7%94%A2%E5%93%81%E7%94%A2%E9%87%8F) In H1 2025, the company's total power generation equipment output increased by 39.05% to 20.12 million kilowatts, with significant growth in steam turbine generator output but a decline in power station boiler output - Total power generation equipment output: **20.12 million kilowatts**, a year-on-year increase of **39.05%**[9](index=9&type=chunk) - Hydro turbine generator sets: **4.64 million kilowatts**, a year-on-year increase of **13.45%**[9](index=9&type=chunk) - Steam turbine generators: **15.48 million kilowatts**, a year-on-year increase of **49.13%**[9](index=9&type=chunk) - Power station boilers: **1.30 million kilowatts**, a year-on-year decrease of **58.20%**[9](index=9&type=chunk) [Operating Revenue and Costs](index=6&type=section&id=%E7%B6%93%E7%87%9F%E6%94%B6%E5%85%A5%E5%8F%8A%E6%88%90%E6%9C%AC) In H1 2025, the company's operating revenue reached 22.47 billion yuan, a 31.86% year-on-year increase, with new power equipment revenue growing by 50.54%; export revenue accounted for 17.83% of total revenue, mainly from Asia, while operating costs increased by 30.82% - Operating revenue: **22.47 billion yuan**, a year-on-year increase of **31.86%**[10](index=10&type=chunk) - New power equipment revenue: **14.46 billion yuan**, a year-on-year increase of **50.54%** (including **61.87% growth** in coal power equipment, **23.57% growth** in hydropower equipment, and **68.68% growth** in nuclear power equipment)[10](index=10&type=chunk) - Green and low-carbon driven equipment revenue: **170.76 million yuan**, a year-on-year decrease of **65.87%**[10](index=10&type=chunk) - Export revenue: **4.01 billion yuan**, accounting for **17.83%** of operating revenue, primarily from Asia (accounting for **92.36%** of export revenue)[11](index=11&type=chunk) - Operating costs: **19.77 billion yuan**, a year-on-year increase of **30.82%**[12](index=12&type=chunk) [Gross Profit and Gross Profit Margin](index=7&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) In H1 2025, the company's gross profit increased by 40.03% to 2.71 billion yuan, with the gross profit margin rising by 0.70 percentage points to 12.05%, driven by higher margins in nuclear and hydropower products, while EPC and trade gross profit margin significantly declined due to project losses - Gross profit: **2.71 billion yuan**, a year-on-year increase of **40.03%**[13](index=13&type=chunk) - Gross profit margin: **12.05%**, an increase of **0.70 percentage points** year-on-year[13](index=13&type=chunk) - New power equipment gross profit margin: **16.84%**, an increase of **7.08 percentage points** year-on-year, primarily due to improved gross profit margins for nuclear and hydropower products[13](index=13&type=chunk)[14](index=14&type=chunk) - EPC and trade gross profit margin: **-9.20%**, a year-on-year decrease of **13.48 percentage points**, mainly due to losses incurred from delays in individual projects[13](index=13&type=chunk) [Period Expenses](index=8&type=section&id=%E6%9C%9F%E9%96%93%E8%B2%BB%E7%94%A8) Total period expenses in H1 2025 amounted to 1.58 billion yuan, an increase of 117.68 million yuan year-on-year, with higher administrative and R&D expenses, and slight reductions in selling and financial expenses - Total period expenses: **1.58 billion yuan**, a year-on-year increase of **117.68 million yuan**[15](index=15&type=chunk) - Administrative expenses: **758.39 million yuan**, a year-on-year increase of **99.94 million yuan**[15](index=15&type=chunk) - Research and development expenses: **432.06 million yuan**, a year-on-year increase of **18.82 million yuan**[15](index=15&type=chunk) [Assets and Liabilities](index=8&type=section&id=%E8%B3%87%E7%94%A2%E8%88%87%E8%B2%A0%E5%82%B5) As of June 30, 2025, total assets were 80.41 billion yuan, up 11.76% year-on-year; total liabilities were 63.59 billion yuan, up 14.05%, mainly due to increases in notes payable, accounts payable, and contract liabilities, resulting in a debt-to-asset ratio of 79.08%, a 0.49 percentage point decrease from the prior year - Total assets: **80.41 billion yuan**, an increase of **8.46 billion yuan** from the beginning of the period, representing an **11.76%** growth[16](index=16&type=chunk) - Total liabilities: **63.59 billion yuan**, an increase of **7.83 billion yuan** from the beginning of the period, representing a **14.05%** growth, primarily due to business expansion and increases in notes payable, accounts payable, and contract liabilities[16](index=16&type=chunk) - Debt-to-asset ratio: **79.08%**, a decrease of **0.49 percentage points** compared to the same period last year[16](index=16&type=chunk) [Capital and Debt Ratios](index=9&type=section&id=%E8%B3%87%E6%9C%AC%E8%88%87%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) As of June 30, 2025, the company's capital gearing ratio (non-current liabilities to total shareholders' equity) was 0.13:1, a decrease from 0.16:1 at the beginning of the period - Capital gearing ratio (non-current liabilities to total shareholders' equity): **0.13:1**, compared to **0.16:1** at the beginning of the period[17](index=17&type=chunk) [Cash and Cash Flows](index=9&type=section&id=%E8%B2%A8%E5%B9%A3%E8%B3%87%E9%87%91%E5%8F%8A%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) As of June 30, 2025, the company's cash and cash equivalents increased by 11.62% to 17.91 billion yuan, with a significant increase in net cash flow from operating activities due to enhanced collection efforts - Cash and cash equivalents: **17.91 billion yuan**, an increase of **1.86 billion yuan** from the beginning of the period, representing an **11.62%** increase[18](index=18&type=chunk) - Net cash flow from operating activities: **3.19 billion yuan**, a significant increase compared to the same period last year, primarily due to the company's intensified efforts in collecting payments[18](index=18&type=chunk) - Net cash flow from investing activities: **-1.05 billion yuan**[18](index=18&type=chunk) - Net cash flow from financing activities: **-398.95 million yuan**[18](index=18&type=chunk) [Funding Sources and Borrowings](index=9&type=section&id=%E8%B3%87%E9%87%91%E4%BE%86%E6%BA%90%E5%8F%8A%E5%80%9F%E6%AC%BE%E6%83%85%E6%B3%81) The company's working capital primarily comes from shareholder funds, customer payments, bank loans, and entrusted loans from state appropriations; as of June 30, 2025, total borrowings were 5.01 billion yuan, with 4.36 billion yuan due within one year, and contract liabilities amounted to 29.06 billion yuan - Funding sources for operations and development: **shareholder funds, customer payments, bank loans, and entrusted loans from state appropriations**[19](index=19&type=chunk) - Total borrowings: **5.01 billion yuan**[19](index=19&type=chunk) - Borrowings repayable within one year: **4.36 billion yuan**, a decrease of **496.77 million yuan** from the beginning of the period[19](index=19&type=chunk) - Contract liabilities: **29.06 billion yuan**, an increase of **2.57 billion yuan** from the beginning of the period[19](index=19&type=chunk) [Major Investments and Subsidiary Changes](index=10&type=section&id=%E6%8C%81%E6%9C%89%E7%9A%84%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E3%80%81%E9%97%9C%E6%96%BC%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E9%87%8D%E8%A6%81%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE%EF%BC%8C%E4%BB%A5%E5%8F%8A%E6%9C%AA%E4%BE%86%E4%BD%9C%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E6%88%96%E8%B3%BC%E5%85%A5%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E7%9A%84%E8%A8%88%E5%8A%83) In H1 2025, the company completed 478.31 million yuan in fixed asset investments for nuclear power, pumped-storage, and technical upgrade projects, and increased capital in Dongzhuang Company, resulting in a 9.58% reduction in its equity holding - Completed fixed asset investments of **478.31 million yuan**, primarily for nuclear power industry layout capacity assurance projects, pumped-storage capacity enhancement projects, and technical renovation investments to maintain normal production operations of subsidiaries[20](index=20&type=chunk) - Entered into capital increase agreements with Jiadian Co., Ltd. and Dongzhuang Company, with the company agreeing to inject **RMB 140 million** into Dongzhuang Company, resulting in a **9.58% reduction** in the company's equity holding in Dongzhuang Company after the capital increase[20](index=20&type=chunk) - No other major investments were held during the period, nor were there any significant acquisitions or disposals of subsidiaries, or plans for other major investments or capital asset purchases approved[20](index=20&type=chunk) [Exchange Rate Fluctuation Risk and Hedging](index=10&type=section&id=%E5%BD%99%E7%8E%87%E6%B3%A2%E5%8B%95%E9%A2%A8%E9%9A%AA%E5%8F%8A%E7%9B%B8%E9%97%9C%E5%B0%8D%E6%96%9D) The company faces exchange rate risks from export and foreign currency settlement businesses, with foreign currency deposits totaling approximately 543.11 million yuan as of June 30, 2025, and has entered into forward foreign exchange contracts to mitigate these risks - The company's export and foreign currency-settled businesses, as well as its foreign currency deposits, are exposed to **exchange rate risks**[21](index=21&type=chunk) - As of June 30, 2025, the company's foreign currency deposits amounted to approximately **543.11 million yuan** in RMB equivalent[21](index=21&type=chunk) - To effectively control exchange rate fluctuation risks in the foreign exchange market, the company has signed **forward foreign exchange contracts** with banks for a portion of future foreign currency receivables from overseas projects[21](index=21&type=chunk) [Use of Raised Funds](index=11&type=section&id=%E5%8B%9F%E9%9B%86%E8%B3%87%E9%87%91%E9%81%8B%E7%94%A8) The 500 million yuan raised in 2023 for working capital was fully utilized by June 30, 2025, completing the planned use of all 2023 raised funds - The **RMB 500 million** of funds raised in 2023 for supplementing working capital was fully utilized as planned by June 30, 2025[22](index=22&type=chunk)[23](index=23&type=chunk) - All funds raised in 2023 have been fully utilized according to their planned purposes and schedule[22](index=22&type=chunk)[23](index=23&type=chunk) - The company had no new fundraising activities during the reporting period[23](index=23&type=chunk) [Tax Policies](index=12&type=section&id=%E7%A8%85%E6%94%B6%E6%94%BF%E7%AD%96) The company and several subsidiaries are recognized as high-tech enterprises, enjoying a 15% corporate income tax preferential rate, with export product tax refund rates primarily at 13%, and benefit from full refund policies for VAT input tax credits Main Tax Types and Rates | Tax Type | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Based on sales of goods and taxable services calculated as per tax laws, after deducting deductible input VAT for the current period, the difference is the VAT payable | 3%, 6%, 9%, 10%, 13% | | Urban Maintenance and Construction Tax | Actual amount of turnover tax paid | 7% | | Corporate Income Tax | Taxable income | 15%, 25% | - Harbin Electric Company Limited and several subsidiaries have been re-certified as high-tech enterprises, applying a **15% income tax rate**[216](index=216&type=chunk)[217](index=217&type=chunk) - Harbin Electric International Engineering Co., Ltd. has been designated a technologically advanced service enterprise, applying a **15% income tax rate**[217](index=217&type=chunk) - Some advanced manufacturing enterprises enjoy a **5% preferential policy for VAT input tax credit deduction**[219](index=219&type=chunk) [Technological Innovation](index=13&type=section&id=%E7%A7%91%E6%8A%80%E5%89%B5%E6%96%B0) The company prioritizes technological innovation, increasing R&D investment by 62.87% in H1 2025 to 4.41% of revenue, achieving significant breakthroughs in gas turbines, hydro turbines, nuclear power upgrades, waste incineration boilers, and energy storage power stations - The company insists on placing **technological innovation at the core** of its overall development, driving industrial innovation through technology to accelerate the development of new quality productive forces[25](index=25&type=chunk) - R&D investment in the first half increased by **62.87%** year-on-year, with R&D intensity reaching **4.41%**, and **12 provincial and ministerial-level scientific and technological awards** were received[25](index=25&type=chunk) - The domestically developed first **16-megawatt gas turbine prototype (HGT16)** successfully achieved first ignition and full-load operation[26](index=26&type=chunk) - The world's first **500-megawatt impulse hydro turbine runner** with the largest single unit capacity and largest size of **6.23 meters**, independently developed, was successfully shipped[26](index=26&type=chunk) - The "Energy Storage No. 1" project, the world's first **300-megawatt-class compressed air energy storage power station** in Yingcheng, Hubei, in which the company participated, successfully achieved full-capacity grid connection for power generation[26](index=26&type=chunk) [Employees, Remuneration, Share Option Scheme, and Training](index=14&type=section&id=%E5%93%A1%E5%B7%A5%E3%80%81%E9%85%AC%E9%87%91%E3%80%81%E8%AA%8D%E8%82%A1%E6%9C%9F%E6%AC%8A%E8%A8%88%E5%8A%83%E8%88%87%E5%9F%B9%E8%A8%93) As of June 30, 2025, the company had 11,143 employees with total remuneration of 1.03 billion yuan, is implementing the third batch of its 2023 share appreciation rights incentive plan, and conducted 1,298 training sessions for 33,056 participants in H1 - As of June 30, 2025, the company had **11,143 active employees**, with total remuneration of **1.03 billion yuan**[27](index=27&type=chunk) - The company's 2023 annual performance has met the performance targets for the third exercise period of the share appreciation rights, and the company is organizing eligible participants to exercise their rights for the third batch[27](index=27&type=chunk) - In the first half of 2025, the company organized a total of **1,298 training sessions**, training **33,056 participants**[29](index=29&type=chunk) [Interim Dividend](index=15&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025[30](index=30&type=chunk) [Outlook](index=15&type=section&id=%E5%B1%95%E6%9C%9B) National new power generation capacity is projected to exceed 500 million kilowatts in 2025, with new energy accounting for approximately 400 million kilowatts; the company plans to focus on national strategies, high-quality manufacturing development, efficiency improvements, profitability, market share, and continuous R&D investment in H2 - According to the China Electricity Council's forecast, national newly installed power generation capacity is expected to exceed **500 million kilowatts** in 2025, setting a new historical record, with new energy installed capacity reaching approximately **400 million kilowatts**[31](index=31&type=chunk) - By the end of 2025, national installed power generation capacity is projected to reach approximately **3.9 billion kilowatts**, a year-on-year increase of about **16.5%**, with non-fossil energy installed capacity at approximately **2.4 billion kilowatts**, accounting for about **61%** of the total installed capacity[31](index=31&type=chunk) - In the second half of 2025, the company will continue to focus on serving national strategies to promote high-quality manufacturing development, adhere to efficiency and effectiveness as its core to strengthen the foundation for high-quality development, continuously deepen quality and efficiency improvements, and steadily enhance corporate profitability and cost competitiveness[32](index=32&type=chunk) - The company will persist in fostering new quality productive forces through technological innovation, comprehensively enhance the overall effectiveness of its innovation system, continuously increase funding, and advance breakthroughs in key core technologies[32](index=32&type=chunk) [Major Shareholders' Equity Interests](index=17&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E8%82%A1%E6%9C%AC%E6%AC%8A%E7%9B%8A) As of June 30, 2025, the company's total share capital was 2,236,276,000 shares, with Harbin Electric Group Co., Ltd. holding 1,560,705,000 state-owned legal person shares, representing 69.79% of the total share capital - As of June 30, 2025, the company's total share capital was **2,236,276,000 shares**[33](index=33&type=chunk) - Harbin Electric Group Co., Ltd. held **1,560,705,000 state-owned legal person shares**, representing **100%** of the relevant class of shares and **69.79%** of the total share capital[33](index=33&type=chunk) [Equity Interests of Directors, Supervisors, and Senior Management](index=18&type=section&id=%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E4%BA%BA%E5%93%A1%E4%B9%8B%E8%82%A1%E6%9C%AC%E6%AC%8A%E7%9B%8A) As of June 30, 2025, none of the company's directors, supervisors, senior management, or their associates held any interests or short positions in the shares of the company or its associated corporations - As of June 30, 2025, none of the company's directors, supervisors, senior management, or their associates held any interests or short positions in the shares of the company or its associated corporations[34](index=34&type=chunk) [Compliance with the Model Code](index=18&type=section&id=%E9%81%B5%E5%AE%88%E3%80%8A%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87%E3%80%8B) For the six months ended June 30, 2025, the company's directors complied with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules - For the six months ended June 30, 2025, the company adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix C3 of the Listing Rules as the standard for its directors' securities transactions, and inquiries confirmed that all directors complied with the code's provisions during the period[35](index=35&type=chunk) [Purchase, Sale, or Redemption of the Company's Listed Securities](index=18&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B9%8B%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[36](index=36&type=chunk) [Contingent Liabilities](index=18&type=section&id=%E6%88%96%E6%9C%89%E8%B2%A0%E5%82%B5) As of June 30, 2025, the company's total guarantees to subsidiaries and among subsidiaries amounted to 303 million yuan, with no external guarantees - As of June 30, 2025, the company's total guarantees to its subsidiaries and among its subsidiaries amounted to **303 million yuan**[37](index=37&type=chunk) - There were no external guarantees provided by the company[37](index=37&type=chunk) [Asset Pledges](index=18&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the company had 289.84 million yuan in pledged assets for working capital loans, a significant increase compared to the same period in 2024 - As of June 30, 2025, the company had **289.84 million yuan** in pledged assets for working capital loans[38](index=38&type=chunk) - As of June 30, 2024, this figure was **84.88 million yuan**, indicating a significant increase in pledged assets[38](index=38&type=chunk) [Compliance with the Corporate Governance Code](index=19&type=section&id=%E9%81%B5%E5%AE%88%E3%80%8A%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87%E3%80%8B) For the six months ended June 30, 2025, the company complied with the Corporate Governance Code in Appendix C1 of the Listing Rules, despite multiple board member changes during the period, which were subsequently rectified to meet company articles - For the six months ended June 30, 2025, the company complied with the provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules[39](index=39&type=chunk) - The Board of Directors experienced multiple changes in membership during the reporting period, including the resignation and new appointment of independent non-executive directors, as well as changes in executive director and chairman positions[39](index=39&type=chunk)[40](index=40&type=chunk) - The number of board members temporarily fell below the minimum required by the company's Articles of Association during the changes but was subsequently replenished[40](index=40&type=chunk) [Audit Committee](index=20&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The company's Audit Committee has reviewed and approved the interim results report for the six months ended June 30, 2025 - The company's Audit Committee has reviewed and approved the company's interim results report for the six months ended June 30, 2025[41](index=41&type=chunk) - The members of the Audit Committee are: Mr. Gao Yibin, Mr. He Yu, Mr. Pan Qilong, and Ms. Niu Xiangchun[41](index=41&type=chunk) [Auditor](index=20&type=section&id=%E6%A0%B8%E6%95%B8%E5%B8%AB) Shinewing Certified Public Accountants (Special General Partnership) reviewed the company's unaudited interim results report for the six months ended June 30, 2025, in accordance with relevant review standards - The company's auditor, Shinewing Certified Public Accountants (Special General Partnership), reviewed the company's unaudited interim results report for the six months ended June 30, 2025, in accordance with the provisions of "China Review Standards for Certified Public Accountants No. 2101 - Review of Financial Statements"[42](index=42&type=chunk) [Shareholder Meeting Status](index=21&type=section&id=%E8%82%A1%E6%9D%B1%E6%9C%83%E8%AD%B0%E6%83%85%E6%B3%81) The company held its Annual General Meeting, H Share Class Meeting, and Domestic Share Class Meeting on May 23, 2025, with the results announced subsequently - On May 23, 2025, the company held its Annual General Meeting, H Share Class Meeting, and Domestic Share Class Meeting in Harbin, China[43](index=43&type=chunk) - The results of the relevant meetings can be found in the company's announcement dated May 23, 2025[43](index=43&type=chunk) [Other Disclosable Information](index=21&type=section&id=%E5%85%B6%E4%BB%96%E9%A0%88%E4%BA%88%E6%8A%AB%E9%9C%B2%E7%9A%84%E8%B3%87%E6%96%99) As of June 30, 2025, the company had no other information required to be disclosed under paragraphs (a) to (j) of Rule D2.40.3 of the Listing Rules - As of June 30, 2025, the company had no information required to be disclosed under paragraphs (a) to (j) of Rule D2.40.3 of the Listing Rules[44](index=44&type=chunk) [Documents Available for Inspection](index=21&type=section&id=%E5%82%99%E6%9F%A5%E6%96%87%E4%BB%B6) The company's Articles of Association and the original interim report and reviewed financial statements for the six months ended June 30, 2025, are available for inspection - The company's Articles of Association and the original interim report and reviewed financial statements for the six months ended June 30, 2025, are available for inspection at the company's headquarters at No. 1399 Chuangxin 1st Road, Songbei District, Harbin, Heilongjiang Province, China[45](index=45&type=chunk) [Review Report](index=22&type=section&id=%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) Shinewing Certified Public Accountants (Special General Partnership) reviewed Harbin Electric Company Limited's consolidated and parent company financial statements for June 30, 2025, finding no material misstatements and concluding they fairly reflect the financial position, operating results, and cash flows in all material respects according to enterprise accounting standards - Shinewing Certified Public Accountants reviewed Harbin Electric Company Limited's consolidated and parent company balance sheets as of June 30, 2025, consolidated and parent company income statements, consolidated and parent company cash flow statements, consolidated and parent company statements of changes in shareholders' equity, and notes to the financial statements for January-June 2025[47](index=47&type=chunk) - The review was conducted in accordance with "China Review Standards for Certified Public Accountants No. 2101 - Review of Financial Statements," providing a lower level of assurance than an audit[47](index=47&type=chunk) - Based on the review, no matters were noted that would lead to a belief that the financial statements were not prepared in all material respects in accordance with enterprise accounting standards, or that they failed to fairly reflect Harbin Electric Company Limited's financial position as of June 30, 2025, and its operating results and cash flows for January-June 2025[47](index=47&type=chunk) [Consolidated Balance Sheet](index=23&type=section&id=%E5%90%88%E4%BD%B5%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) As of June 30, 2025, the company's total consolidated assets were 80.41 billion yuan, total liabilities were 63.59 billion yuan, and total equity attributable to parent company shareholders was 16.12 billion yuan, with both assets and liabilities increasing from year-end 2024 Consolidated Balance Sheet Overview | Metric | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Total Current Assets | 67,682,918,516.57 | 60,208,795,230.03 | | Total Non-current Assets | 12,727,114,472.85 | 11,737,359,924.14 | | **Total Assets** | **80,410,032,989.42** | **71,946,155,154.17** | | Total Current Liabilities | 61,406,117,639.53 | 53,192,396,798.99 | | Total Non-current Liabilities | 2,182,366,983.38 | 2,563,897,126.46 | | **Total Liabilities** | **63,588,484,622.91** | **55,756,293,925.45** | | Total Equity Attributable to Parent Company Owners | 16,122,704,764.35 | 15,482,762,134.00 | | Non-controlling Interests | 698,843,602.16 | 707,099,094.72 | | **Total Shareholders' Equity** | **16,821,548,366.51** | **16,189,861,228.72** | [Parent Company Balance Sheet](index=28&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) As of June 30, 2025, the parent company's total assets were 18.04 billion yuan, total liabilities were 9.32 billion yuan, and total shareholders' equity was 8.71 billion yuan Parent Company Balance Sheet Overview | Metric | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Total Current Assets | 7,274,701,871.77 | 7,101,976,714.38 | | Total Non-current Assets | 10,762,316,924.56 | 10,863,197,796.97 | | **Total Assets** | **18,037,018,796.33** | **17,965,174,511.35** | | Total Current Liabilities | 9,209,721,367.26 | 9,130,464,483.15 | | Total Non-current Liabilities | 115,020,919.82 | 101,906,698.12 | | **Total Liabilities** | **9,324,742,287.08** | **9,232,371,181.27** | | Total Shareholders' Equity | 8,712,276,509.25 | 8,732,803,330.08 | [Consolidated Income Statement](index=33&type=section&id=%E5%90%88%E4%BD%B5%E5%88%A9%E6%BD%A4%E8%A1%A8) In H1 2025, the company's total operating revenue was 22.70 billion yuan, a 31.49% year-on-year increase; net profit was 1.06 billion yuan, up 95.23%; net profit attributable to parent company owners was 1.05 billion yuan, with basic earnings per share of 0.47 yuan Consolidated Income Statement Overview | Metric | Jan-Jun 2025 (RMB) | Jan-Jun 2024 (RMB) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 22,696,104,178.47 | 17,260,636,497.03 | 31.49% | | Total Operating Costs | 21,442,004,500.37 | 16,640,870,337.70 | 28.85% | | Operating Profit | 1,222,779,847.09 | 694,868,031.09 | 75.98% | | Net Profit | 1,056,332,627.14 | 541,073,632.84 | 95.23% | | Net Profit Attributable to Parent Company Owners | 1,050,891,055.16 | 522,667,422.32 | 101.06% | | Basic Earnings Per Share (yuan/share) | 0.47 | 0.23 | 104.35% | [Parent Company Income Statement](index=36&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E5%88%A9%E6%BD%A4%E8%A1%A8) In H1 2025, the parent company's operating revenue was 1.46 billion yuan, and net profit was 489.46 million yuan, a significant increase from the prior year Parent Company Income Statement Overview | Metric | Jan-Jun 2025 (RMB) | Jan-Jun 2024 (RMB) | | :--- | :--- | :--- | | Operating Revenue | 1,455,048,614.10 | 2,512,758,683.27 | | Operating Profit | 489,458,420.91 | 55,197,964.81 | | Net Profit | 489,460,420.91 | 55,197,964.81 | | Total Comprehensive Income | 487,107,831.17 | 55,197,964.81 | [Consolidated Cash Flow Statement](index=38&type=section&id=%E5%90%88%E4%BD%B5%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In H1 2025, the company's net cash flow from operating activities significantly improved to 3.19 billion yuan, while net cash flow from investing activities was -1.05 billion yuan, and from financing activities was -398.95 million yuan Consolidated Cash Flow Statement Overview | Metric | Jan-Jun 2025 (RMB) | Jan-Jun 2024 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 3,192,093,533.31 | -1,430,147,768.73 | | Net Cash Flow from Investing Activities | -1,051,156,166.95 | -2,326,470.95 | | Net Cash Flow from Financing Activities | -398,946,560.54 | -676,024,063.22 | | Net Increase in Cash and Cash Equivalents | 1,668,743,579.33 | -2,165,912,507.45 | | Cash and Cash Equivalents at Period-End | 16,842,496,950.52 | 15,198,319,600.90 | [Parent Company Cash Flow Statement](index=42&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In H1 2025, the parent company's net cash flow from operating activities was -69.07 million yuan, from investing activities was 811.78 million yuan, and from financing activities was -408.70 million yuan Parent Company Cash Flow Statement Overview | Metric | Jan-Jun 2025 (RMB) | Jan-Jun 2024 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -69,066,825.74 | 72,966,252.16 | | Net Cash Flow from Investing Activities | 811,777,991.81 | 168,538,472.24 | | Net Cash Flow from Financing Activities | -408,704,114.68 | -668,392,921.73 | | Net Increase in Cash and Cash Equivalents | 334,007,051.39 | -426,888,197.33 | | Cash and Cash Equivalents at Period-End | 1,679,293,448.99 | 1,657,017,901.91 | [Consolidated Statement of Changes in Shareholders' Equity](index=46&type=section&id=%E5%90%88%E4%BD%B5%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) As of June 30, 2025, total equity attributable to parent company shareholders was 16.12 billion yuan, an increase of 639.94 million yuan from the beginning of the year, primarily due to an increase in total comprehensive income Consolidated Shareholders' Equity Changes Overview | Metric | Jan-Jun 2025 (RMB) | Jan-Jun 2024 (RMB) | | :--- | :--- | :--- | | Total Equity Attributable to Parent Company Owners (Period-end) | 16,122,704,764.35 | 14,257,828,523.06 | | Change in Amount for the Year (Attributable to Parent Company Owners' Equity) | 639,942,630.35 | 393,126,373.99 | | Total Comprehensive Income (Attributable to Parent Company Owners) | 1,133,298,098.08 | 504,875,133.08 | | Distribution to Shareholders | -507,634,652.00 | -116,286,352.00 | [Parent Company Statement of Changes in Shareholders' Equity](index=48&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) As of June 30, 2025, the parent company's total shareholders' equity was 8.71 billion yuan, a slight decrease from the beginning of the year, mainly due to profit distribution Parent Company Shareholders' Equity Changes Overview | Metric | Jan-Jun 2025 (RMB) | Jan-Jun 2024 (RMB) | | :--- | :--- | :--- | | Total Shareholders' Equity (Period-end) | 8,712,276,509.25 | 8,708,683,800.37 | | Change in Amount for the Year | -20,526,820.83 | -61,088,387.19 | | Total Comprehensive Income | 487,107,831.17 | 55,197,964.81 | | Distribution to Shareholders | -507,634,652.00 | -116,286,352.00 | [Notes to the Financial Statements](index=50&type=section&id=%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) This section provides detailed explanations for the financial statements, covering company background, consolidation scope, accounting policies, tax information, major balance sheet and income statement items, related parties, contingencies, and supplementary financial data [I. Company Overview](index=50&type=section&id=%E4%B8%80.%20%E5%85%AC%E5%8F%B8%E7%9A%84%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) Harbin Electric Company Limited was established on October 6, 1994, listed in Hong Kong on December 16, 1994, primarily engaged in power generation equipment manufacturing and EPC, with total share capital of 2,236,276,000 shares as of June 30, 2025, and ultimately controlled by SASAC - Harbin Electric Company Limited was registered in Harbin on October 6, 1994, and listed on the Hong Kong Stock Exchange on December 16, 1994[94](index=94&type=chunk) - Primarily engaged in the production and sale of power generation equipment and undertaking power station EPC projects, including the manufacturing of large-scale thermal, hydro, nuclear power, and their auxiliary complete sets of equipment[99](index=99&type=chunk) - As of June 30, 2025, the company's total accumulated share capital was **2,236,276,000.00 shares**, with a registered capital of **2,236,276,000.00 yuan**[99](index=99&type=chunk) - The company's parent company is Harbin Electric Group Co., Ltd., with the ultimate controlling party being the **State-owned Assets Supervision and Administration Commission (SASAC)**[100](index=100&type=chunk) [II. Scope of Consolidated Financial Statements](index=53&type=section&id=%E4%BA%8C.%20%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E7%AF%84%E5%9C%8D) This period's consolidated financial statements include 41 subsidiaries, comprising 14 second-tier, 24 third-tier, and 3 fourth-tier subsidiaries - A total of **41 subsidiaries** are included in the scope of consolidated financial statements for this period, comprising **14 second-tier, 24 third-tier, and 3 fourth-tier subsidiaries**[102](index=102&type=chunk) - Key second-tier subsidiaries include Harbin Electric Group Finance Co., Ltd., Harbin Boiler Co., Ltd., and Harbin Turbine Co., Ltd[102](index=102&type=chunk)[103](index=103&type=chunk) [III. Basis of Preparation of Financial Statements](index=55&type=section&id=%E4%B8%89.%20%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E7%9A%84%E7%B7%A8%E8%A3%BD%E5%9F%BA%E7%A4%8E) The Group's financial statements are prepared on a going concern basis, in accordance with Chinese Enterprise Accounting Standards, and relevant provisions of the CSRC and Hong Kong Stock Exchange Listing Rules - The Group's financial statements are prepared on a **going concern basis**[105](index=105&type=chunk) - The preparation is based on the "Enterprise Accounting Standards" issued by the Ministry of Finance, their application guidelines, interpretations, and other relevant regulations, as well as the disclosure requirements of the China Securities Regulatory Commission's "Rules for Information Disclosure by Companies Issuing Securities to the Public No. 15" and the Hong Kong Stock Exchange's "Listing Rules"[105](index=105&type=chunk) [IV. Significant Accounting Policies and Accounting Estimates](index=56&type=section&id=%E5%9B%9B.%20%E9%87%8D%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E5%8F%8A%E6%9C%83%E8%A8%88%E4%BC%B0%E8%A8%88) This section details the company's accounting policies and estimation methods, including statements of compliance with enterprise accounting standards, accounting period, operating cycle, functional currency, basis of accounting, measurement principles, financial instruments, revenue recognition, and significant changes in accounting policies - The financial statements prepared by the company comply with the requirements of enterprise accounting standards, truly, accurately, and completely reflecting the financial position of the company and the Group as of June 30, 2025, and relevant information on operating results and cash flows for January-June 2025[106](index=106&type=chunk) - The Group's accounting period is from **January 1 to December 31** of the Gregorian calendar, with an operating cycle of **12 months**[106](index=106&type=chunk) - The company and its other subsidiaries use **RMB as their functional currency**, while some overseas subsidiaries use **USD**[106](index=106&type=chunk) - The company uses the **accrual basis of accounting**, with accounting elements generally measured at **historical cost**, and in special cases, at replacement cost, net realizable value, present value, or fair value[108](index=108&type=chunk) [4.1 Financial Instruments](index=57&type=section&id=4.1%20%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7) This section details accounting policies for financial instruments, including recognition, derecognition, classification, measurement, impairment, transfer, and distinction between financial liabilities and equity instruments, with financial assets categorized based on business model and contractual cash flow characteristics - The Group recognizes a financial asset or financial liability when it becomes a party to a financial instrument contract, and derecognizes it when specific conditions are met[109](index=109&type=chunk)[111](index=111&type=chunk) - Financial assets are classified upon initial recognition, based on the business model for managing financial assets and their contractual cash flow characteristics, as measured at **amortized cost**, at **fair value through other comprehensive income**, or at **fair value through profit or loss**[114](index=114&type=chunk) - Financial liabilities are classified upon initial recognition as measured at **fair value through profit or loss** or at **amortized cost**[132](index=132&type=chunk) - The Group performs impairment testing and recognizes loss provisions for financial assets measured at amortized cost, debt investments measured at fair value through other comprehensive income, contract assets, and lease receivables, based on **expected credit losses**[139](index=139&type=chunk) - For accounts receivable, notes receivable, and other receivables arising from daily operating activities such as sales of goods and provision of services that do not contain significant financing components, the Group applies a simplified measurement approach, measuring loss provisions at an amount equal to the **expected credit losses over the entire lifetime**[145](index=145&type=chunk) [4.2 Revenue Recognition Principles and Measurement Methods](index=82&type=section&id=4.2%20%E6%94%B6%E5%85%A5%E7%A2%BA%E8%AA%8D%E5%8E%9F%E5%88%B0%E5%92%8C%E8%A8%88%E9%87%8F%E6%96%B9%E6%B3%95) The company recognizes revenue when customers obtain control of goods or services, using different methods based on whether performance obligations are satisfied over time or at a point in time, and allocates transaction prices for contracts with multiple performance obligations based on relative standalone selling prices - The Group recognizes revenue when it satisfies a performance obligation in a contract, which is when the customer obtains control of the related goods or services[184](index=184&type=chunk) - Performance obligations are categorized as satisfied **over time** or **at a point in time**, with different revenue recognition methods applied accordingly[184](index=184&type=chunk)[186](index=186&type=chunk) - For sales of boilers, steam turbines, gas turbines, steam turbine generators, and other equipment below **600MW**, revenue is recognized at a **point in time** when all relevant equipment is signed off by the customer[200](index=200&type=chunk) - For units of **600MW and above**, hydro turbines, nuclear main pumps, nuclear generators, and engineering construction projects, these are classified as performance obligations satisfied **over time**, and revenue is recognized using the **input method**[204](index=204&type=chunk) - Financial service income is recognized based on the **time over which the right to use funds is transferred** and the **effective interest rate**[207](index=207&type=chunk) [4.3 Significant Changes in Accounting Policies and Accounting Estimates](index=92&type=section&id=4.3%20%E9%87%8D%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E5%92%8C%E6%9C%83%E8%A8%88%E4%BC%B0%E8%A8%88%E8%AE%8A%E6%9B%B4) The Ministry of Finance issued Interpretation No. 18 in December 2024, leading to accounting policy changes effective January 1, 2024, where estimated liabilities for guarantee-type quality assurance are now recorded in cost of sales, with no significant impact on the Group's profit - The Ministry of Finance issued "Interpretation No. 18 of Enterprise Accounting Standards" in December 2024, leading to a change in the company's accounting policies effective **January 1, 2024**[209](index=209&type=chunk) - When accounting for estimated liabilities arising from guarantee-type quality assurance that do not constitute a single performance obligation, the determined estimated liability amount should be recorded in "Cost of Sales," "Other Operating Costs," and other relevant accounts[209](index=209&type=chunk) - The implementation of Interpretation No. 18 has **no significant impact on the Group's profit**[209](index=209&type=chunk) Impact of Accounting Policy Changes on Relevant Items in the Consolidated Income Statement for Jan-Jun 2024 | Affected Item | Before Change (RMB) | Impact Amount (RMB) | After Change (RMB) | | :--- | :--- | :--- | :--- | | Operating Costs | 15,095,612,044.43 | 14,158,094.21 | 15,109,770,138.64 | | Selling Expenses | 253,579,762.53 | -14,158,094.21 | 239,421,668.32 | [V. Taxation](index=94&type=section&id=%E4%BA%94.%20%E7%A8%85%E9%A0%85) This section lists the company's main tax types and rates, including VAT, urban maintenance and construction tax, and corporate income tax; the company and several subsidiaries enjoy a 15% preferential corporate income tax rate as high-tech enterprises, with some advanced manufacturing enterprises also benefiting from a 5% VAT input tax credit deduction policy Main Tax Types and Rates | Tax Type | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Based on sales of goods and taxable services calculated as per tax laws, after deducting deductible input VAT for the current period, the difference is the VAT payable | 3%, 6%, 9%, 10%, 13% | | Urban Maintenance and Construction Tax | Actual amount of turnover tax paid | 7% | | Corporate Income Tax | Taxable income | 15%, 25% | - Harbin Electric Company Limited and several subsidiaries have been re-certified as high-tech enterprises, applying a **15% income tax rate**[216](index=216&type=chunk)[217](index=217&type=chunk) - Harbin Electric International Engineering Co., Ltd. has been designated a technologically advanced service enterprise, applying a **15% income tax rate**[217](index=217&type=chunk) - Some advanced manufacturing enterprises enjoy a **5% preferential policy for VAT input tax credit deduction**[219](index=219&type=chunk) [VI. Notes to Major Items in Consolidated Financial Statements](index=98&type=section&id=%E5%85%AD.%20%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E4%B8%BB%E8%A6%81%E9%A0%85%E7%9B%AE%E8%A8%BB%E9%87%8B) This section provides detailed notes on major consolidated financial statement items, including cash and cash equivalents, accounts receivable, prepayments, other receivables, inventories, contract assets, other current assets, changes in long-term assets, short-term borrowings, accounts payable, contract liabilities, non-current liabilities due within one year, share capital, operating revenue and costs, period expenses, credit and asset impairment losses, restricted assets, EBITDA, and dividends - Cash and cash equivalents balance at period-end: **17.91 billion yuan**, of which **300.12 million yuan** is deposited overseas[220](index=220&type=chunk) - Accounts receivable book value at period-end: **5.34 billion yuan**, with bad debt provision of **4.05 billion yuan**[222](index=222&type=chunk) - Inventory book value at period-end: **16.85 billion yuan**, with inventory impairment provision and contract performance cost impairment provision totaling **622.60 million yuan**[263](index=263&type=chunk) - Contract liabilities balance at period-end: **29.06 billion yuan**, primarily for advance receipts for equipment and engineering projects[281](index=281&type=chunk) - Total assets with restricted ownership and use rights: **1.38 billion yuan**, mainly comprising acceptance bill deposits, statutory deposits with the central bank, and pledged buildings, land, and construction in progress[297](index=297&type=chunk) - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025[302](index=302&type=chunk) [VII. Related Parties and Related Party Transactions](index=136&type=section&id=%E4%B8%83.%20%E9%97%9C%E8%81%AF%E6%96%B9%E5%8F%8A%E9%97%9C%E8%81%AF%E4%BA%A4%E6%98%93) This section discloses the company's related party relationships, including its parent company Harbin Electric Group Co., Ltd. and its subsidiaries, along with ongoing related party transactions and period-end balances of receivables and payables, all at agreed-upon prices - The company's parent company is Harbin Electric Group Co., Ltd., with a registered capital of **2 billion yuan**, a shareholding ratio of **69.79%**, and the ultimate controlling party being **SASAC**[303](index=303&type=chunk) - Other related parties include subsidiaries of the controlling shareholder Harbin Electric Group, such as Harbin Electric Power Equipment Co., Ltd. and Jiamusi Electric Machine Co., Ltd[306](index=306&type=chunk)[308](index=308&type=chunk) - Related party transactions include sales of goods, purchases of goods, service fee expenses, interest payable on deposits, entrusted loan interest income and expenses, and entrusted management fees, with transaction prices determined by **mutual agreement**[310](index=310&type=chunk)[313](index=313&type=chunk)[315](index=315&type=chunk)[319](index=319&type=chunk)[321](index=321&type=chunk) - Period-end receivables from related parties totaled **238.39 million yuan**, and payables to related parties totaled **4.80 billion yuan**[331](index=331&type=chunk)[347](index=347&type=chunk) [VIII. Contingencies](index=157&type=section&id=%E5%85%AB.%20%E6%88%96%E6%9C%89%E4%BA%8B%E9%A0%85) As of June 30, 2025, the company had no contingent liabilities or contingent assets requiring disclosure - As of June 30, 2025, the company had no contingent liabilities requiring explanation[349](index=349&type=chunk) - As of June 30, 2025, the company had no contingent assets requiring explanation[349](index=349&type=chunk) [IX. Events After the Balance Sheet Date](index=157&type=section&id=%E4%B9%9D.%20%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8%E6%97%A5%E5%BE%8C%E4%BA%8B%E9%A0%85) As of the date of approval for issuance of the financial report, the Group had no un-disclosed events after the balance sheet date - As of the date of approval for issuance of the financial report, the Group had no un-disclosed events after the balance sheet date[350](index=350&type=chunk) [X. Supplementary Financial Information](index=158&type=section&id=%E5%8D%81.%20%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E8%A3%9C%E5%85%85%E8%B3%87%E6%96%99) This section provides a statement of non-recurring gains and losses and earnings per share information, with net non-recurring gains and losses attributable to the parent company totaling 177.33 million yuan, and basic and diluted earnings per share both at 0.47 yuan - Net non-recurring gains and losses attributable to the parent company: **177.33 million yuan**[356](index=356&type=chunk) - Total net profit attributable to parent company owners after deducting non-recurring gains and losses: **873.56 million yuan**[356](index=356&type=chunk) - Basic earnings per share: **0.47 yuan**[358](index=358&type=chunk) - Diluted earnings per share: **0.47 yuan**[358](index=358&type=chunk) [Company Information](index=164&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides essential company details for Harbin Electric Company Limited, including its legal name, registered and office addresses, contact information, legal representative, authorized representatives, company secretary, auditor, legal counsel, and H-share listing information - Company legal name: **Harbin Electric Company Limited** (Chinese name: 哈爾濱電氣股份有限公司)[360](index=360&type=chunk) - Company registered and office address: **No. 1399 Chuangxin 1st Road, Songbei District, Harbin, Heilongjiang Province, People's Republic of China**[360](index=360&type=chunk) - Legal representative: **Mr. Huang Wei** (appointed on July 9, 2025)[360](index=360&type=chunk) - Auditor: **Shinewing Certified Public Accountants (Special General Partnership)**[360](index=360&type=chunk) - H-share listing information: **The Stock Exchange of Hong Kong Limited, Stock Code: 1133**[360](index=360&type=chunk)

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].

Core Viewpoint - Harbin Electric (01133) has seen a significant stock price increase of over 325% year-to-date, with a recent rise of 5.2% to HKD 9.71, driven by strong financial performance and positive market sentiment towards nuclear power and the company's order execution capabilities [1][2]. Financial Performance - The company reported total revenue of approximately CNY 22.696 billion, representing a year-on-year growth of 31.49% [1]. - Net profit attributable to the parent company was about CNY 1.051 billion, showing a substantial year-on-year increase of 101.06% [1]. Market Outlook - UBS forecasts an average annual growth rate of 25% for gross profit from nuclear equipment in China between 2025 and 2028, with each new small modular reactor (SMR) potentially contributing around CNY 620 million in revenue for Harbin Electric [1]. - The market's confidence in the nuclear power outlook and the company's order execution capabilities suggests potential for further re-rating [1]. Business Segments - Coal Power: The company has a robust order book with improved order quality compared to the previous cycle, which is expected to enhance profits [2]. - Hydropower: Orders from pumped storage projects are entering execution phases, and new capacity is being released, with large hydropower projects benefiting from increased demand due to the Yarlung Tsangpo River hydropower project [2]. - Nuclear Power: The approval rate for nuclear projects has increased from about 5 units per year (2019-2021) to approximately 10 units per year (2022-2025), with related orders gradually entering execution phases [2]. - Modern Manufacturing Services: New policies emphasize improving operational efficiency of existing coal power units, which may drive growth in related business areas [2].

Group 1 - Harbin Electric's stock has increased nearly 7%, with a year-to-date gain exceeding 325% [1] - The company reported total revenue of approximately 22.696 billion yuan, a year-on-year increase of 31.49%, and a net profit attributable to shareholders of about 1.051 billion yuan, up 101.06% [1] - UBS forecasts an average annual growth rate of 25% for nuclear equipment gross profit from 2025 to 2028, estimating that each new small modular reactor (SMR) could bring an additional revenue potential of approximately 620 million yuan to Harbin Electric [1] Group 2 - Guoyuan International's report indicates that Harbin Electric has a robust order backlog in its coal power business, with improved order quality compared to the previous cycle, which will continue to enhance the company's profits [2] - In hydropower, orders from pumped storage projects are entering the execution phase, and new capacity is beginning to be released, with large hydropower projects expected to benefit from demand growth driven by the Yarlung Tsangpo River hydropower project [2] - The market's approval of nuclear power projects has increased from about 5 units per year from 2019 to 2021 to around 10 units per year from 2022 to 2025, with related orders for the company gradually entering the execution phase [2]

Group 1 - The company announced the appointment of Mr. Liu Qingyong as an executive director and chairman of the Strategic Development Committee, effective from September 4, 2025, until the conclusion of the next annual general meeting [1] - Mr. Liu has also been appointed as the president of the company, transitioning from his previous role as senior vice president, with the new position effective immediately [1] - Mr. Liu will not receive any salary for his roles as both executive director and president [1]

Group 1 - The company Harbin Electric (01133) announced the appointment of Mr. Liu Qingyong as an executive director and chairman of the Strategic Development Committee, effective from the date of the announcement until the conclusion of the next annual general meeting [1] - Mr. Liu was also appointed as the president of the company, transitioning from his previous role as senior vice president, with the new appointment effective immediately [1] - Mr. Liu will not receive any director or president remuneration from the company [1]

Group 1 - The company announced the appointment of Liu Qingyong as the executive director and chairman of the strategic development committee, effective from the date of the announcement [1] - The term of Liu Qingyong will last until the conclusion of the next annual general meeting of the company [1] - The board meeting to make this decision was held on September 4, 2025 [1]

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