GEPIC(SZ:000791) Xin Lang Cai Jing·2025-08-15 12:30Core Viewpoint - Gansu Energy reported a slight increase in revenue and a significant rise in net profit for the first half of 2025, driven by strong performance in the hydropower and thermal power sectors, despite challenges in renewable energy pricing [1][2][3][4]. Group 1: Financial Performance - In H1 2025, Gansu Energy achieved revenue of 3.931 billion yuan, a year-on-year increase of 0.19%, and a net profit attributable to shareholders of 825 million yuan, up 16.87% year-on-year [1]. - Q2 2025 revenue was 1.692 billion yuan, down 0.73% year-on-year and 24.40% quarter-on-quarter, with net profit of 345 million yuan, reflecting a year-on-year increase of 1.16% but a quarter-on-quarter decrease of 28.04% [1]. - The hydropower segment saw a significant increase in on-grid electricity prices, up 39.99% year-on-year to 0.376 yuan/kWh, with a gross margin increase of 6.07 percentage points to 31.17% [1]. Group 2: Segment Performance - The thermal power segment showed strong results with on-grid electricity volume increasing by 5.46% year-on-year to 8.879 billion kWh and on-grid electricity price rising by 2.30% to 0.369 yuan/kWh [2]. - The net profit from the thermal power segment increased by 57.59% year-on-year to 1 billion yuan, with a calculated net profit per kWh of 0.113 yuan, up 3.7 cents year-on-year [2]. - The company anticipates further profit growth from the thermal power segment with the commissioning of new coal-fired units in the second half of 2025 [2]. Group 3: Renewable Energy Challenges - The company faced significant pressure in the wind and solar segments, with on-grid electricity prices decreasing by 33.80% and 17.17% year-on-year to 0.365 yuan/kWh and 0.3 yuan/kWh, respectively [3]. - The gross margins for wind and solar energy dropped by 30.41 and 12.75 percentage points to 27.45% and 23.77% [3]. - No new renewable energy installations were added in H1 2025, with approved capacities for wind and solar at 1.25025 million kW and 3.85 million kW, respectively [3]. Group 4: Profit Forecast and Valuation - The company revised down its net profit forecasts for 2025-2027 by 0.22%, 6.13%, and 7.48% to 1.895 billion yuan, 2.247 billion yuan, and 2.317 billion yuan, respectively [4]. - The downward revision is attributed to significant pressure on wind and solar electricity prices, with reductions of 27.58%, 28.13%, and 28.71% for wind and 14.21%, 14.63%, and 15.54% for solar over the same period [4]. - The target price was adjusted to 8.18 yuan based on a 14.0x 2025E PE, maintaining a "buy" rating [4].