HTSC·2025-08-28 04:59Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's 1H25 revenue reached 55.7 billion RMB, a year-on-year increase of 2.0%, while the net profit attributable to shareholders was 2.429 billion RMB, down 5.6% year-on-year [1] - The core profit of 3.223 billion RMB was in line with expectations, with a slight year-on-year decline of 1.2% [1] - The company’s domestic core profit from its basic business grew by 0.7% year-on-year, supported by capital expenditure expansion in the energy sector and increased penetration and average spending in smart home services [1][3] - The interim dividend per share remained stable at 0.65 HKD, with a payout ratio of 21% [1] Summary by Sections Financial Performance - The company achieved a retail gas volume of 12.953 billion cubic meters in 1H25, up 1.9% year-on-year, outperforming the national natural gas consumption growth rate of -0.9% [2] - The industrial and commercial gas volume was 9.79 billion cubic meters, up 2.4% year-on-year, driven by new industrial gas connections and existing demand [2] - The company expects a 4% year-on-year increase in retail gas gross profit for 2025 [2] Energy Sales and Smart Home Services - The company’s energy sales volume reached 19.76 billion kWh in 1H25, a slight increase of 0.1% year-on-year, with efficiency improvements offsetting energy price declines [3] - The penetration rate of smart home services reached 10.4%, with an average spending of 649 RMB per household, and a projected 5% year-on-year increase in smart home gross profit for 2025 [3] Profit Forecast and Target Price - The profit forecast for 2025-27 has been slightly adjusted downwards by 3.0%, 2.6%, and 1.5% to 7.0 billion, 7.46 billion, and 7.92 billion RMB respectively, with an expected CAGR of 4% over three years [4] - The target price has been revised down to 68.0 HKD, based on a 10x 2025E PE ratio, reflecting a premium due to the smooth progress of the privatization process [4]