Xin Lang Cai Jing·2025-08-01 08:25Core Viewpoint - The company reported a decline in revenue for the first half of 2025 but achieved a significant increase in net profit, driven by effective cost control and expansion in renewable energy capacity [1][2]. Financial Performance - In H1 2025, the company achieved operating revenue of 1120.32 billion yuan, a year-on-year decrease of 5.70% [1]. - The net profit attributable to shareholders was 92.62 billion yuan, reflecting a year-on-year increase of 24.26%, with earnings per share at 0.50 yuan [1]. Cost Management and Profit Growth - The decline in revenue was primarily due to a decrease in electricity volume and prices; however, the company managed to significantly reduce fuel costs by strategically balancing long-term coal contracts and spot purchases [2]. - The profit growth was supported by the expansion of the renewable energy sector, particularly in the photovoltaic segment, which contributed steadily to profits [2]. Renewable Energy Expansion - The company is actively pursuing a green and low-carbon transition, with installed capacity for wind and solar power reaching 152,992 megawatts by June 30, 2025, of which wind power accounts for 20,038 megawatts and solar power for 24,050 megawatts, together representing 29% of total capacity [3]. - The total electricity generated in China during H1 2025 was 2056.83 billion kilowatt-hours, a year-on-year decline of 2.37%, mainly due to a relaxed power supply-demand balance and rapid growth in renewable energy installations [3]. Long-term Profitability - The company's long-term profitability will increasingly depend on capacity revenue and auxiliary service market income, with net income from peak and frequency regulation services contributing approximately 24.58 billion yuan in 2024 and capacity revenue at 90.77 billion yuan [4]. - The company demonstrates profitability resilience through a combination of coal price benefits and a capacity pricing mechanism [4]. Investment Outlook - Revenue projections for 2025 to 2027 are 2383.74 billion yuan, 2414.50 billion yuan, and 2416.61 billion yuan, with growth rates of -2.9%, 1.3%, and 0.1% respectively [5]. - Net profit estimates for the same period are 123.89 billion yuan, 134.92 billion yuan, and 139.14 billion yuan, with growth rates of 22.2%, 8.9%, and 3.1% respectively [5]. - The current price-to-earnings ratio is projected at 9.3x, 8.5x, and 8.3x for the respective years, with a target price of 9.47 yuan and an initial buy-A investment rating [5].