山西安装(02520) - 2025 - 中期业绩

Financial Summary During the reporting period, the company's operating revenue decreased by 6.6% year-on-year, net profit and net profit attributable to owners of the parent decreased by 21.9% and 29.3% respectively, basic earnings per share was RMB 0.05, and gross profit margin slightly increased to 10.7% | Indicator | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 5,614,375 | 6,012,233 | –6.6% | | Gross Profit | 598,678 | 601,753 | –0.5% | | Net Profit | 90,348 | 115,743 | –21.9% | | Net Profit Attributable to Owners of the Parent | 63,283 | 89,474 | –29.3% | | Gross Profit Margin | 10.7% | 10.0% | 7.0% | | Net Sales Margin | 1.6% | 1.9% | –15.8% | | Basic Earnings Per Share | 0.05 | 0.07 | –28.6% | Interim Consolidated Financial Statements This section presents the unaudited consolidated balance sheet and income statement for the six months ended June 30, 2025, along with comparative data for the corresponding period or year-end of 2024, illustrating the Group's financial position and operating results Interim Consolidated Balance Sheet As of June 30, 2025, the Group's total assets increased to RMB 25,143,796 thousand, with both current and non-current assets growing; total liabilities also increased, with both current and non-current liabilities rising; total equity attributable to owners of the parent amounted to RMB 2,840,790 thousand | Indicator | Jun 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Assets | | | | Total Current Assets | 17,850,872 | 17,189,428 | | Total Non-current Assets | 7,292,924 | 6,934,733 | | Total Assets | 25,143,796 | 24,124,161 | | Liabilities | | | | Total Current Liabilities | 17,873,952 | 17,501,970 | | Total Non-current Liabilities | 3,866,496 | 3,278,835 | | Total Liabilities | 21,740,448 | 20,780,805 | | Shareholders' Equity | | | | Total Equity Attributable to Owners of the Parent | 2,840,790 | 2,764,218 | | Non-controlling Interests | 562,558 | 579,138 | | Total Equity | 3,403,348 | 3,343,356 | | Total Liabilities and Shareholders' Equity | 25,143,796 | 24,124,161 | Interim Consolidated Income Statement For the six months ended June 30, 2025, the Group's operating revenue was RMB 5,614,375 thousand, a year-on-year decrease of 6.6%; net profit was RMB 90,348 thousand, a year-on-year decrease of 21.9%; and net profit attributable to owners of the parent was RMB 63,283 thousand, a year-on-year decrease of 29.3% | Indicator | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | | :--- | :--- | :--- | | Operating Revenue | 5,614,375 | 6,012,233 | | Cost of Sales | 5,015,697 | 5,410,480 | | Operating Profit | 103,649 | 113,632 | | Total Profit | 103,534 | 113,455 | | Income Tax Expense | 13,186 | –2,288 | | Net Profit | 90,348 | 115,743 | | Net Profit Attributable to Owners of the Parent | 63,283 | 89,474 | | Basic Earnings Per Share (RMB/share) | 0.05 | 0.07 | Notes to the Financial Statements This section details the basis of financial statement preparation, the composition and changes of key accounting items (such as accounts receivable, contract assets, accounts payable, employee benefits, taxes and fees), and specifics of operating revenue, costs, expenses, and income tax, along with applicable tax incentives Company Information Shanxi Installation Group Co., Ltd. was established in November 1989, restructured into a joint-stock company in 2021, and listed on the Main Board of the Hong Kong Stock Exchange (stock code: 2520) in November 2023; its primary business is construction, including professional industrial engineering, professional supporting engineering, other engineering contracting, and non-engineering businesses, with its ultimate controlling party being the State-owned Assets Supervision and Administration Commission of Shanxi Provincial People's Government - The company was listed on the Main Board of the Hong Kong Stock Exchange in November 2023, stock code 02520[15] - The company's main business is construction, including professional industrial engineering, professional supporting engineering, other engineering contracting, and non-engineering businesses[15] - The ultimate controlling party is the State-owned Assets Supervision and Administration Commission of Shanxi Provincial People's Government[15] Basis of Preparation of Financial Statements The financial statements are prepared in accordance with China Accounting Standards for Business Enterprises, complying with disclosure requirements of the China Securities Regulatory Commission and the Hong Kong Stock Exchange, on a going concern basis, using accrual accounting and historical cost measurement, with provisions for asset impairment - Financial statements are prepared in accordance with China Accounting Standards for Business Enterprises and comply with disclosure requirements of the China Securities Regulatory Commission and the Hong Kong Stock Exchange[17] - The statements are prepared on a going concern basis, using accrual accounting and historical cost measurement[18][19] Accounts Receivable As of June 30, 2025, the carrying value of accounts receivable increased to RMB 6,588,072 thousand from RMB 5,960,673 thousand on December 31, 2024; total impairment provision for bad debts was RMB 470,597 thousand, with an expected credit loss rate of 6.67%; accounts receivable within 1 year constituted the largest portion, but the loss rate for accounts over 5 years old was 100% | Indicator | Jun 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Carrying Value of Accounts Receivable | 6,588,072 | 5,960,673 | | Total Impairment Provision for Bad Debts | 470,597 | 443,672 | | Total Expected Credit Loss Rate | 6.67% | 6.93% | | Ageing | Jun 30, 2025 Carrying Amount (RMB thousands) | Jun 30, 2025 Impairment Provision (RMB thousands) | Jun 30, 2025 Expected Credit Loss Rate (%) | | :--- | :--- | :--- | :--- | | Within 1 year | 3,742,934 | 51,278 | 1.37 | | Over 5 years | 71,614 | 71,614 | 100.00 | Contract Assets As of June 30, 2025, total carrying value of contract assets increased to RMB 6,862,155 thousand from RMB 6,425,844 thousand on December 31, 2024, primarily comprising contract assets from construction contracts and retention money receivable | Item | Jun 30, 2025 Carrying Value (RMB thousands) | Dec 31, 2024 Carrying Value (RMB thousands) | | :--- | :--- | :--- | | Contract Assets from Construction Contracts | 7,388,956 | 6,766,924 | | Retention Money Receivable | 897,589 | 882,229 | | Receivables under Service Concession Arrangements | 3,469,631 | 3,357,395 | | Total | 6,862,155 | 6,425,844 | Accounts Payable As of June 30, 2025, total accounts payable increased to RMB 10,131,027 thousand from RMB 9,492,423 thousand on December 31, 2024, with accounts payable within 1 year being the largest portion, while amounts for 1-2 years and over 3 years also significantly increased | Ageing | Jun 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 4,961,438 | 6,451,451 | | 1–2 years | 2,993,790 | 1,716,576 | | 2–3 years | 1,146,104 | 675,729 | | Over 3 years | 1,029,695 | 648,667 | | Total | 10,131,027 | 9,492,423 | Employee Benefits Payable As of June 30, 2025, the closing balance of employee benefits payable was RMB 70,775 thousand, a decrease from RMB 82,075 thousand at the end of the previous year, with current period additions of RMB 325,650 thousand and reductions of RMB 336,950 thousand | Item | Balance at Previous Year-End (RMB thousands) | Current Period Additions (RMB thousands) | Current Period Reductions (RMB thousands) | Balance at Period-End (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Short-term Employee Benefits | 78,536 | 282,167 | 293,596 | 67,107 | | — Defined Contribution Plans Post-employment Benefits | 319 | 41,693 | 41,564 | 448 | | Termination Benefits | 3,220 | 1,790 | 1,790 | 3,220 | | Total | 82,075 | 325,650 | 336,950 | 70,775 | Taxes Payable As of June 30, 2025, total taxes payable decreased to RMB 51,667 thousand from RMB 57,554 thousand on December 31, 2024, with corporate income tax and urban maintenance and construction tax decreasing, while VAT and individual income tax increased | Tax Item | Jun 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Corporate Income Tax | 15,347 | 26,497 | | Value-Added Tax | 16,432 | 11,532 | | Individual Income Tax | 13,325 | 12,490 | | Urban Maintenance and Construction Tax | 2,125 | 2,293 | | Total | 51,667 | 57,554 | Other Payables As of June 30, 2025, total other payables decreased to RMB 522,992 thousand from RMB 583,394 thousand on December 31, 2024, with dividends payable remaining unchanged, while other payables (such as deposits received, amounts due to related parties, and amounts due to staff) varied | Item | Jun 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Dividends Payable | 71,678 | 71,678 | | Other Payables | 451,314 | 511,716 | | Total | 522,992 | 583,394 | Operating Revenue and Cost of Sales For January-June 2025, the Group's operating revenue was RMB 5,614,375 thousand and cost of sales was RMB 5,015,697 thousand, both decreasing year-on-year; main business revenue accounted for the majority, with professional industrial engineering revenue being the highest, but professional supporting engineering and other engineering revenues significantly decreased year-on-year; revenue recognition primarily occurs over time | Item | Jan-Jun 2025 Revenue (RMB thousands) | Jan-Jun 2025 Cost (RMB thousands) | Jan-Jun 2024 Revenue (RMB thousands) | Jan-Jun 2024 Cost (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Main Business | 5,588,041 | 5,005,369 | 6,000,273 | 5,408,819 | | Other Businesses | 26,334 | 10,328 | 11,960 | 1,661 | | Total | 5,614,375 | 5,015,697 | 6,012,233 | 5,410,480 | | Main Type | Jan-Jun 2025 Revenue (RMB thousands) | Jan-Jun 2024 Revenue (RMB thousands) | | :--- | :--- | :--- | | Professional Industrial Engineering | 4,069,822 | 3,996,675 | | Professional Supporting Engineering | 534,251 | 749,831 | | Other Engineering | 499,658 | 753,022 | | Non-engineering Business | 484,310 | 500,745 | - Revenue recognition primarily occurs over time, amounting to RMB 5,103,731 thousand for January-June 2025[39] Taxes and Surcharges For January-June 2025, total taxes and surcharges were RMB 14,559 thousand, an 11.6% increase year-on-year, primarily due to higher stamp duty and urban maintenance and construction tax | Item | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | | :--- | :--- | :--- | | Property Tax | 2,182 | 3,552 | | Stamp Duty | 3,666 | 2,481 | | Urban Maintenance and Construction Tax | 4,423 | 3,430 | | Education Surcharge | 3,040 | 2,776 | | Total | 14,559 | 13,047 | Finance Costs For January-June 2025, finance costs were RMB 38,729 thousand, a significant 37.9% decrease year-on-year, primarily due to reduced interest expenses on bank borrowings | Item | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest Expense | 173,971 | 197,531 | | Less: Interest Capitalized | 1,455 | 10,453 | | Bank Deposit Interest Income | 8,685 | 9,553 | | PPP Project Interest Income | 127,771 | 114,864 | | Total | 38,729 | 62,394 | - Finance costs decreased by 37.9% year-on-year, primarily due to reduced interest expenses on bank borrowings[94] Income Tax Expense For January-June 2025, income tax expense was RMB 13,186 thousand, a substantial increase from RMB -2,288 thousand in the prior year, primarily due to higher current income tax expense | Item | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Income Tax Calculated According to Tax Laws and Regulations | 18,123 | 4,418 | | Deferred Income Tax Expense | –4,937 | –6,706 | | Total | 13,186 | –2,288 | - Income tax expense increased by RMB 15,474 thousand year-on-year, primarily due to higher current income tax expense[102] Tax Incentives and Approvals The company and several subsidiaries (e.g., Shanxi Shan'an Lantian Energy Saving Technology, Gaoping Xinyangtian Photovoltaic Power Generation) obtained High-Tech Enterprise certificates, enjoying a 15% preferential corporate income tax rate; additionally, the company benefits from a 100% super deduction for R&D expenses (200% for intangible asset amortization) - The company and several subsidiaries obtained High-Tech Enterprise certificates, enjoying a 15% preferential corporate income tax rate[47] - The company enjoys a super deduction for R&D expenses at 100% (intangible asset amortization at 200%)[48] Dividends For the six months ended June 30, 2025, the company had no proposed interim dividends - For the six months ended June 30, 2025, no interim dividends were proposed[49] Earnings Per Share For January-June 2025, both basic and diluted earnings per share were RMB 0.05, a decrease from RMB 0.07 in the prior year | Item | Jan-Jun 2025 | Jan-Jun 2024 | | :--- | :--- | :--- | | Consolidated Net Profit Attributable to Owners of Ordinary Shares of the Parent (thousands) | 63,283 | 89,474 | | Weighted Average Number of Ordinary Shares Outstanding of the Parent (thousands) | 1,373,486 | 1,373,486 | | Basic Earnings Per Share | 0.05 | 0.07 | Applicable Tax Incentives for Small and Micro Enterprises Some of the company's subsidiaries (e.g., Chongqing Shan'an Construction Engineering Co., Ltd.) are eligible for tax incentives for small and micro enterprises, calculating taxable income at 25% and paying corporate income tax at a 20% rate - Some subsidiaries are eligible for tax incentives for small and micro enterprises, calculating taxable income at 25% and paying corporate income tax at a 20% rate[51] Segment Information The Group's operating businesses are divided into construction engineering contracting and non-engineering segments based on internal management requirements; this section discloses each segment's operating revenue, costs, profit, assets, and liabilities, noting the company's low reliance on any single customer Segment Profit or Loss, Assets and Liabilities In H1 2025, the construction engineering contracting segment reported operating revenue of RMB 5,243,585 thousand and operating profit of RMB 82,458 thousand; the non-engineering segment reported operating revenue of RMB 596,664 thousand and operating profit of RMB 109,953 thousand, with construction engineering segment's revenue and profit decreasing, while non-engineering segment's profit increased | Segment | Jan-Jun 2025 Operating Revenue (RMB thousands) | Jan-Jun 2025 Operating Profit (RMB thousands) | Jan-Jun 2024 Operating Revenue (RMB thousands) | Jan-Jun 2024 Operating Profit (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Construction Engineering Contracting Segment | 5,243,585 | 82,458 | 5,590,701 | 12,600 | | Non-engineering Segment | 596,664 | 109,953 | 595,887 | 100,089 | | Total | 5,614,375 | 103,649 | 6,012,233 | 113,632 | | Segment | Jun 30, 2025 Total Assets (RMB thousands) | Jun 30, 2025 Total Liabilities (RMB thousands) | Dec 31, 2024 Total Assets (RMB thousands) | Dec 31, 2024 Total Liabilities (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Construction Engineering Contracting Segment | 20,614,809 | 18,338,065 | 21,111,357 | 18,964,806 | | Non-engineering Segment | 8,454,332 | 5,908,412 | 8,640,990 | 6,207,312 | | Total | 25,143,796 | 21,740,448 | 25,786,513 | 22,525,394 | Reliance on Major Customers As of June 30, 2025, no single customer accounted for more than 10% of total revenue, indicating a diversified customer base and low reliance on any single customer - As of June 30, 2025, no single customer accounted for 10% or more of total revenue[56] Management Discussion and Analysis This section comprehensively reviews the Group's H1 2025 operating performance, analyzes market performance, strategic layout, and future development directions of each business segment, provides in-depth interpretation of financial conditions, and discusses policy, market, environmental, and compliance risks, along with the talent development system Overall Performance Summary In H1 2025, the Group focused on its 'Quality Empowerment Year' goal, steadily enhancing comprehensive strength, deepening reforms, executing effective market expansion strategies, and improving internal controls, achieving operating revenue of RMB 5,614,375 thousand and profit of RMB 90,348 thousand; new contract value in the new energy sector exceeded RMB 8 billion, with successful implementation of several major projects - In H1 2025, the Group focused on its "Quality Empowerment Year" goal, achieving operating revenue of RMB 5,614,375 thousand and profit of RMB 90,348 thousand[57] - New contract value in the new energy sector exceeded RMB 8 billion, with successful implementation of Shanxi Airport New Energy Zero-Carbon Airport Project and Changzhi High-tech Zone Green Power Direct Supply Project, among others[57] Business Operations Analysis The Group made progress in professional industrial engineering, professional supporting engineering, and overseas businesses; professional industrial engineering focused on new energy and chemical sectors, securing several major new contracts; professional supporting engineering actively expanded into clean heating, solid waste disposal, distributed photovoltaic, and water environment governance; overseas business continued to deepen presence in Asia and Africa, with new contract value exceeding RMB 800 million, and expanded cooperation with internationally renowned enterprises China Professional Industrial Engineering China's professional industrial engineering market experienced robust growth, driven by strong development in the new energy and chemical industries; the Group actively participated in wind power, photovoltaic, energy storage, and hydrogen energy projects, and made progress in coal chemical, natural gas chemical, petrochemical, and fine chemical sectors, with the petrochemical industry engineering market size expected to continue expanding New Energy Industry Engineering In H1 2025, China's new energy industry (wind, solar, storage, hydrogen, vehicles) rapidly developed; national wind power added 51.39 GW of grid-connected capacity, with cumulative capacity reaching 573 GW, a 22.7% year-on-year increase; photovoltaic added 212 GW of grid-connected capacity, with cumulative installed capacity of approximately 1,100 GW, a 54.1% year-on-year increase; new energy storage installed capacity grew rapidly, and Shanxi Province designated hydrogen energy as a leading future industry, planning to accelerate wind and photovoltaic project construction - In H1 2025, national wind power added 51.39 GW of grid-connected capacity, with cumulative capacity reaching 573 GW, a 22.7% year-on-year increase[65] - In H1 2025, national photovoltaic added 212 GW of grid-connected capacity, with cumulative installed capacity of approximately 1,100 GW, a 54.1% year-on-year increase[65] - Shanxi Province designated hydrogen energy as one of the 7 leading future industries, planning to achieve over 50% new energy and clean energy installed capacity by 2025[68] - On January 1, 2025, China's first Energy Law officially came into effect, explicitly including hydrogen energy and green certificates, supporting the development of new energy storage[69] Chemical Industry Engineering China's chemical industry engineering encompasses coal chemical, natural gas chemical, petrochemical, and fine chemical sectors; coal chemical capacity continued to expand in 2024, with total methanol output reaching 70 million tons and extending to high-end products; natural gas chemical and petrochemical industries are transitioning towards high-end refinement and low-carbon sustainable development; fine chemicals are accelerating deployment in high-performance materials; by 2027, China's petrochemical industry engineering market size is projected to reach RMB 2,688.4 billion, with Shanxi Province reaching RMB 103.1 billion - In 2024, China's coal chemical total capacity continued to expand, with total methanol output reaching 70 million tons, accounting for over 50% of the global total[70] - The petrochemical industry is shifting from bulk commodity capacity expansion to high-end refinement, with refining-chemical integration and downstream industrial chain extension as core pathways[71] - By 2027, China's petrochemical industry engineering market size is projected to reach RMB 2,688.4 billion, with Shanxi Province reaching RMB 103.1 billion[71] China Professional Supporting Engineering China's professional supporting engineering market continues to grow, driven by urbanization and sustained government investment in infrastructure; Shanxi Province faces significant development potential in clean heating, solid waste disposal, distributed photovoltaic, and water environment governance, with accelerating policy support and project construction Clean Heating Urbanization drives expanding heating market demand, with clean energy heating, industrial waste heat centralized heating, smart heating, and pipeline network upgrades being key future development areas for the heating industry, offering significant economic and environmental benefits - Urbanization drives heating demand, with clean energy heating, industrial waste heat centralized heating, smart heating, and pipeline network upgrades as key future development areas[73] Solid Waste Disposal China's annual construction waste generation exceeds 2 billion tons, with a recycling rate of only 10%-30%, significantly lower than developed countries; the Ministry of Housing and Urban-Rural Development aims for over 50% recycling rate by 2027; with improved legal standards and technological breakthroughs, construction waste recycling will enter a period of rapid, large-scale development, alongside the rapid growth of new solid waste disposal methods - China's annual construction waste generation exceeds 2 billion tons, with a recycling rate of only 10%-30%[74] - The Ministry of Housing and Urban-Rural Development aims for the average recycling rate of construction waste in prefecture-level and above cities nationwide to reach over 50% by 2027[74] Distributed Photovoltaic Developing renewable energy is a crucial global strategy for energy transition and climate change; the National Energy Administration issued the 'Measures for the Administration of Distributed Photovoltaic Power Generation Development and Construction' to regulate and promote high-quality distributed photovoltaic development; Shanxi Province plans to reach approximately 10 GW of total installed capacity for distributed renewable energy by 2025 - The National Energy Administration issued the "Measures for the Administration of Distributed Photovoltaic Power Generation Development and Construction" to promote high-quality development[76] - Shanxi Province plans to reach approximately 10 GW of total installed capacity for distributed renewable energy by 2025[76] Water Environment Governance The General Office of the CPC Central Committee and the General Office of the State Council issued 'Opinions on Comprehensively Advancing River Protection and Governance,' aiming by 2035 for a complete flood control and disaster reduction system, enhanced water supply security, and overall improvement in ecological environmental quality; Shanxi Province also plans to construct 50 township-level and 650 village-level standardized drinking water sources by 2025, indicating immense future potential in urban and rural water supply, watershed management, industrial wastewater treatment, and reclaimed water reuse projects - The "Opinions on Comprehensively Advancing River Protection and Governance" aim to achieve comprehensive improvements in flood control, water supply security, and ecological environment by 2035[77] - Shanxi Province plans to construct 50 township-level and 650 village-level standardized drinking water sources by 2025[77] Overseas Construction Market In H1 2025, China's overseas contracted engineering business completed operating revenue of RMB 561.21 billion, a 9.3% year-on-year increase, with new contract value of RMB 933.19 billion, a 13.7% increase; despite high global investment risks, Chinese enterprises enhanced their international influence by adjusting strategies, optimizing investment structures, and seizing green energy transition and digital transformation trends - In H1 2025, China's overseas contracted engineering business completed operating revenue of RMB 561.21 billion, a 9.3% year-on-year increase[78] - New contract value increased by 13.7% to RMB 933.19 billion[78] - Chinese enterprises are enhancing international influence by adjusting strategies, optimizing investment structures, and seizing green energy transition and digital transformation trends[79] Financial Performance Analysis In H1 2025, the Group's operating revenue decreased by 6.6% year-on-year, mainly due to reduced revenue from professional supporting engineering and other engineering; cost of sales decreased in line with revenue; gross profit margin slightly increased to 10.7%; various expenses (selling, administrative, R&D) showed changes, finance costs significantly decreased, and net profit decreased by 21.9% year-on-year Operating Revenue H1 2025 operating revenue was RMB 5,614,375 thousand, a 6.6% year-on-year decrease, primarily due to reduced revenue from professional supporting engineering (-28.8%) and other engineering (-33.6%); professional industrial engineering revenue slightly increased by 1.8%, while non-engineering business revenue decreased by 3.3% | Main Type | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | Change (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | 5,614,375 | 6,012,233 | –397,858 | –6.6% | | Professional Industrial Engineering | 4,069,822 | 3,996,675 | 73,147 | 1.8% | | Professional Supporting Engineering | 534,251 | 749,831 | –215,580 | –28.8% | | Other Engineering | 499,658 | 753,022 | –253,364 | –33.6% | | Non-engineering Business | 484,310 | 500,745 | –16,435 | –3.3% | Cost of Sales H1 2025 cost of sales was RMB 5,015,697 thousand, a 7.3% year-on-year decrease, primarily corresponding to the reduction in operating revenue - H1 2025 cost of sales was RMB 5,015,697 thousand, a 7.3% year-on-year decrease, primarily due to reduced revenue[88] Gross Profit and Gross Profit Margin H1 2025 gross profit was RMB 598,678 thousand, a slight 0.5% year-on-year decrease; gross profit margin was 10.7%, an increase from 10.0% in the prior year, mainly due to improved gross profit margins in professional supporting engineering and other engineering | Indicator | Jan-Jun 2025 (RMB thousands) | Jan-Jun 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 598,678 | 601,753 | –0.5% | | Gross Profit Margin | 10.7% | 10.0% | 7.0% | - Gross profit margin increased primarily due to improved gross profit margins in professional supporting engineering and other engineering[89] Taxes and Surcharges H1 2025 taxes and surcharges were RMB 14,559 thousand, an 11.6% year-on-year increase, primarily due to higher stamp duty and urban maintenance and construction tax - H1 2025 taxes and surcharges were RMB 14,559 thousand, an 11.6% year-on-year increase, primarily due to higher stamp duty and urban maintenance and construction tax[90] Selling Expenses H1 2025 selling expenses were RMB 650 thousand, a slight 1.1% year-on-year increase - H1 2025 selling expenses were RMB 650 thousand, a slight 1.1% year-on-year increase[91] Administrative Expenses H1 2025 administrative expenses were RMB 230,110 thousand, a 2.4% year-on-year increase, primarily due to higher employee benefits expenses - H1 2025 administrative expenses were RMB 230,110 thousand, a 2.4% year-on-year increase, primarily due to higher employee benefits expenses[92] Research and Development Expenses H1 2025 research and development expenses were RMB 172,876 thousand, a substantial 27.6% year-on-year increase, primarily due to a higher number of R&D projects and increased investment - H1 2025 research and development expenses were RMB 172,876 thousand, a 27.6% year-on-year increase, primarily due to a higher number of R&D projects and increased investment[93] Finance Costs H1 2025 finance costs were RMB 38,729 thousand, a 37.9% year-on-year decrease, primarily due to reduced interest expenses on bank borrowings - H1 2025 finance costs were RMB 38,729 thousand, a 37.9% year-on-year decrease, primarily due to reduced interest expenses on bank borrowings[94] Other Income H1 2025 other income was RMB 3,033 thousand, a 17.8% year-on-year decrease, mainly comprising government grants and individual income tax handling fee refunds - H1 2025 other income was RMB 3,033 thousand, a 17.8% year-on-year decrease[95] Investment Income H1 2025 investment income was RMB -2,228 thousand, a decrease of RMB 1,523 thousand from RMB -705 thousand in the prior year, primarily due to a reduced share of profits from associates - H1 2025 investment income was RMB -2,228 thousand, a year-on-year decrease of RMB 1,523 thousand, primarily due to a reduced share of profits from associates[96] Fair Value Change Income H1 2025 fair value change income was RMB 1,025 thousand, an increase of RMB 1,549 thousand from RMB -524 thousand in the prior year, primarily due to the revaluation gain on investment properties - H1 2025 fair value change income was RMB 1,025 thousand, a year-on-year increase of RMB 1,549 thousand, primarily due to the revaluation gain on investment properties[97] Credit Impairment Losses H1 2025 credit impairment losses were RMB -23,946 thousand, a decrease of RMB 10,752 thousand from RMB -34,698 thousand in the prior year, reflecting changes in expected credit loss provisions - H1 2025 credit impairment losses were RMB -23,946 thousand, a year-on-year decrease of RMB 10,752 thousand[98] Asset Impairment Losses H1 2025 asset impairment losses were RMB -16,424 thousand, a decrease of RMB 6,116 thousand from RMB -22,540 thousand in the prior year - H1 2025 asset impairment losses were RMB -16,424 thousand, a year-on-year decrease of RMB 6,116 thousand[99] Total Profit H1 2025 total profit was RMB 103,534 thousand, an 8.7% year-on-year decrease, primarily due to reduced construction engineering revenue - H1 2025 total profit was RMB 103,534 thousand, an 8.7% year-on-year decrease, primarily due to reduced construction engineering revenue[100] Income Tax Expense H1 2025 income tax expense was RMB 13,186 thousand, an increase of RMB 15,474 thousand from RMB -2,288 thousand in the prior year, primarily due to higher current income tax expense - H1 2025 income tax expense was RMB 13,186 thousand, a year-on-year increase of RMB 15,474 thousand, primarily due to higher current income tax expense[102] Net Profit H1 2025 net profit was RMB 90,348 thousand, a 21.9% year-on-year decrease - H1 2025 net profit was RMB 90,348 thousand, a 21.9% year-on-year decrease[103] Total Comprehensive Income Attributable to Owners of the Parent H1 2025 total comprehensive income attributable to owners of the parent was RMB 64,586 thousand, a year-on-year decrease of RMB 20,656 thousand - H1 2025 total comprehensive income attributable to owners of the parent was RMB 64,586 thousand, a year-on-year decrease of RMB 20,656 thousand[104] Liquidity and Capital Resources As of June 30, 2025, the Group's net current assets were RMB -23,080 thousand, with a current ratio of 1.0; cash and bank balances were approximately RMB 2,240,848 thousand; total borrowings increased to RMB 6,282,674 thousand, primarily to supplement cash for daily operating activities; the Board believes the Group has sufficient working capital and has secured funding support commitments from its controlling shareholder, Shanxi Construction Investment | Indicator | Jun 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Current Assets | –23,080 | –312,542 | | Current Ratio | 1.0 | 1.0 | | Cash and Bank Balances | 2,240,848 | 2,626,837 | | Total Borrowings | 6,282,674 | 6,118,923 | - Controlling shareholder Shanxi Construction Investment committed to providing continuous financial support for the Group's operations[106] Capital Expenditure As of June 30, 2025, the Group's total contracted but not yet incurred capital expenditure was RMB 2,127,303 thousand, a significant increase from December 31, 2024, primarily related to engineering and equity investments - As of June 30, 2025, total contracted but not yet incurred capital expenditure was RMB 2,127,303 thousand, an increase from December 31, 2024[107] Capital Gearing Ratio and Quick Ratio As of June 30, 2025, the capital gearing ratio was 55.92%, an increase from 53.96% on December 31, 2024, while the quick ratio remained at 1.0 | Indicator | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Capital Gearing Ratio | 55.92% | 53.96% | | Quick Ratio | 1.0 | 1.0 | Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[109] Long-term Equity Investments As of June 30, 2025, long-term equity investments were RMB 266,779 thousand, a 26.9% increase from December 31, 2024, primarily due to increased investments in associates; no single investment accounted for 5% or more of total assets - As of June 30, 2025, long-term equity investments were RMB 266,779 thousand, a 26.9% year-on-year increase, primarily due to increased investments in associates[110] Major Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures As of June 30, 2025, the Group had not undertaken any major acquisitions or disposals - As of June 30, 2025, the Group had not undertaken any major acquisitions or disposals[112] Discussion and Analysis of Future Development The company designated 2025 as the 'Quality Empowerment Year,' committed to steady progress, optimizing market layout, expanding into new energy and chemical engineering markets, deepening low-carbon environmental transformation, and actively developing overseas markets; concurrently, the company identified potential risks including policy regulation, market, environmental compliance, and listed company governance compliance Future Outlook The company designated 2025 as the 'Quality Empowerment Year,' committed to steady progress, optimizing market layout, and expanding its presence through government-enterprise collaboration, investment-driven initiatives, and equity partnerships; it will enhance 'specialization' and 'going global' development, focusing on new energy and chemical engineering, expanding into energy storage, offshore wind power, hydrogen-ammonia-alcohol, and strengthening overseas project management and market expansion - 2025 is designated as the "Quality Empowerment Year," focusing on steady progress, optimizing market layout, and expanding cooperation with high-quality resource partners[113][114] - Focus on new energy and chemical engineering, expanding into specialized markets such as energy storage, offshore wind power, and hydrogen-ammonia-alcohol[114] - Strengthen full-process management of ongoing overseas projects and steadfastly expand overseas markets, leveraging specialized expertise[114] - Expand into new businesses like low-carbon environmental protection and integrated clean energy, ensuring successful replication of experiences in clean heating, solid waste disposal, water environment governance, and distributed energy[115] Potential Risks The company faces risks including policy and regulatory risks (government policy changes affecting the engineering industry), market risks (reforms by major customers and suppliers, foreign exchange and interest rate fluctuations), environmental compliance risks (pollutant emission and treatment standards, environmental crime penalties), and listed company governance compliance risks (non-compliance with information disclosure and decision-making procedures potentially leading to regulatory penalties) - Policy and regulatory risks: Government policy changes may impact business and financial performance[115][116] - Market risks: Reforms by major customers and suppliers, as well as foreign exchange and interest rate fluctuations, may have an impact[117] - Environmental compliance risks: Compliance with various national and local environmental laws and regulations is required, with violations potentially leading to fines or administrative penalties[118] - Listed company governance compliance risks: Information disclosure and decision-making procedures must strictly adhere to the Listing Rules, otherwise regulatory penalties may be incurred[119] Employees As of June 30, 2025, the Group had 3,605 full-time employees, with staff costs of approximately RMB 336 million; the company established career development paths, research and assistance mechanisms, innovative talent cultivation methods, enhanced training effectiveness, upgraded its cloud learning platform, and built a learning roadmap for project management personnel to foster employee development and optimize human resources - As of June 30, 2025, the Group had 3,605 full-time employees, with staff costs of approximately RMB 336 million[120] - Established career development paths, research and assistance mechanisms, innovative talent cultivation methods, enhanced training effectiveness, and upgraded its cloud learning platform[120] Use of Proceeds from H Share Listing The net proceeds from the company's H share listing totaled approximately HKD 738.5 million; as of the end of the reporting period, approximately HKD 491.3 million remained unutilized; the Board has approved a change in the use of unutilized net proceeds, pending shareholder approval; funds are primarily allocated for centralized/distributed photovoltaic projects, wind power projects, equity investments in new energy projects, clean heating, distributed energy, water treatment, solid waste disposal, project company registered capital, construction costs for service concession projects, new energy upstream and downstream manufacturing industry projects, and working capital - Net proceeds from H share listing totaled approximately HKD 738.5 million[121] - As of the end of the reporting period, approximately HKD 491.3 million remained unutilized[125] - The Board has approved a change in the use of unutilized net proceeds, pending shareholder approval[125] | Project | Proposed Net Proceeds Allocation (Million HKD) | Unutilized Net Proceeds as of Jan 1, 2025 (Million HKD) | Actual Use During Reporting Period (Million HKD) | Unutilized Net Proceeds at Period-End (Million HKD) | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | | Future Centralized Photovoltaic Projects | 147.6 | 142.0 | — | 142.0 | Before end of 2026 | | Investment in Existing and Future Distributed Photovoltaic Projects | 73.9 | 73.9 | — | 73.9 | Before end of 2026 | | Funding Future Investments in Domestic or Overseas Wind Power Projects | 73.9 | 73.9 | 33.4 | 40.5 | Before end of 2027 | | Future Equity Investments and/or Construction of Other New Energy Projects | 73.9 | 57.7 | 40.4 | 17.3 | Before end of 2027 | | Existing and Future Clean Heating Projects | 29.5 | 27.7 | 15.8 | 11.9 | Before end of 2027 | | Future Distributed Energy Projects | 36.9 | 36.9 | — | 36.9 | Before end of 2027 | | Existing Water Treatment Projects | 36.9 | 36.9 | 14.9 | 22.0 | Before end of 2027 | | Future Solid Waste Disposal Projects | 29.5 | 24.1 | 8.8 | 15.3 | Before end of 2027 | | Paid-up Registered Capital for Project Companies and Construction Costs for Existing Service Concession Projects | 22.2 | 22.2 | — | 22.2 | Before end of 2025 | | Payment for Equipment Construction Costs for Existing Service Concession Projects | 36.9 | 0.5 | — | 0.5 | Before end of 2025 | | Current and Future Service Concession Projects | 44.3 | 44.3 | — | 44.3 | Before end of 2025 | | Funding New Energy Upstream and Downstream Manufacturing Industry Projects | 73.9 | 73.9 | 13.0 | 60.9 | Before end of 2026 | | Working Capital and Other General Corporate Purposes | 59.1 | 7.7 | 4.1 | 3.6 | Before end of 2027 | | Total | 738.5 | 621.7 | 130.4 | 491.3 | | Corporate Governance and Other Information The company is committed to maintaining high standards of corporate governance, complying with the Corporate Governance Code in Appendix C1 and the Model Code in Appendix C3 of the Listing Rules; the Audit Committee has reviewed the interim results; there were no significant post-reporting period events; this results announcement has been published on the HKEX and company websites, and the interim report will be dispatched to shareholders in due course Compliance with Corporate Governance Code The company has adopted the principles and code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules and believes it has complied with all code provisions and substantially met most recommended best practices during the reporting period - The company has adopted and complied with the principles and code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules[126] Standard Code for Securities Transactions The company has adopted the Model Code in Appendix C3 of the Listing Rules as the code of conduct for directors, supervisors, and senior management in dealing with the company's securities, and confirms that all directors complied with this code during the reporting period - The company has adopted the Model Code in Appendix C3 of the Listing Rules as the code of conduct for directors, supervisors, and senior management in dealing with the company's securities, and confirms that all directors complied during the reporting period[127] Purchase, Sale or Redemption of the Company's Listed Securities During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[128] Audit Committee Review of Interim Results The Audit Committee, comprising three members, has reviewed the Group's unaudited interim results for the reporting period with management - The Audit Committee has reviewed the Group's unaudited interim results for the reporting period with management[130] Post-Reporting Period Events Except for disclosed matters, there have been no significant events subsequent to the reporting period up to the announcement date that would materially affect the Group's operations and financial performance - Except for disclosed matters, there have been no significant events subsequent to the reporting period up to the announcement date that would materially affect the Group's operations and financial performance[131] Publication of Interim Results and Interim Report This results announcement has been published on the Hong Kong Stock Exchange website and the company's website; the 2025 interim report, containing all required information, will be dispatched to shareholders and published in due course - This results announcement has been published on the Hong Kong Stock Exchange website and the company's website[132]