Henan Lantian Gas (SH:605368) HTSC·2025-09-02 07:18Investment Rating - The report maintains an "Overweight" rating for the company [7] Core Views - The company's revenue for 1H25 was 2.254 billion RMB, a year-on-year decrease of 14%, with net profit attributable to shareholders at 205 million RMB, down 40% year-on-year. The second quarter saw revenue of 858 million RMB, a 17% year-on-year decline and a 39% quarter-on-quarter decline, with net profit slightly below expectations due to lower gross margins [1][5] - The company continues to emphasize a high dividend strategy, proposing a mid-term dividend of 286 million RMB, corresponding to a dividend per share (DPS) of 0.40 RMB, with a payout ratio of 140%, indicating strong value [4] - The report anticipates continued pressure on pipeline and city gas margins, projecting a 14% year-on-year decline in pipeline gas gross profit for 2025 and a 28% decline for city gas gross profit, primarily due to weak demand and delayed pricing adjustments for residential gas [2][3] Summary by Sections Financial Performance - In 1H25, pipeline gas revenue decreased by 11.5% year-on-year to 1.047 billion RMB, with a gross margin of 9.1%, down 1.1 percentage points year-on-year. The city gas segment saw an 8.7% year-on-year revenue decline to 915 million RMB, with a gross margin of 9.8%, down 4.8 percentage points year-on-year [2][3] Dividend Policy - The company plans to distribute a mid-term dividend of 286 million RMB, reflecting a 10% decrease year-on-year, with a payout ratio significantly higher than the previous year's 93% [4] Profit Forecast Adjustments - The report revises the profit forecast for 2025-2027, reducing net profit estimates by 18% for 2025, 19% for 2026, and 18% for 2027, leading to an expected EPS of 0.63 RMB for 2025 [5][24] Valuation - The target price is adjusted to 10.63 RMB, down from 12.16 RMB, based on a 17x PE for 2025, while the current dividend yield of 8.1% is significantly higher than the industry average of 4.0% [5][25]