Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company has demonstrated significant growth in heating supply, with a year-on-year increase of 133% in Q2 2025, indicating a strong acceleration in performance [3][8] - The logic of improving Return on Equity (ROE) continues to be validated, with a weighted ROE of 2.27% in Q1 2025, an increase of 0.51 percentage points [8] - The company is entering a stable operational phase, with expectations for continued growth in free cash flow and potential for increased dividends [8] Financial Forecasts - Total revenue is projected to be 3,956 million in 2023, with a decline of 13.39% year-on-year, followed by a recovery in 2024 with a forecasted revenue of 3,399 million [1] - Net profit attributable to the parent company is expected to be 629.28 million in 2023, decreasing by 15.51% year-on-year, but is projected to grow to 649.61 million by 2025, reflecting an 11.03% increase [1] - The latest diluted EPS is forecasted to be 0.45 in 2023, with a gradual increase to 0.55 by 2027 [1] Operational Highlights - In H1 2025, the company achieved a total waste input of 715.43 million tons, a year-on-year increase of 2.10%, and a total power generation of 2.539 billion kWh, up 1.62% year-on-year [8] - The company has significantly increased its steam supply, with a total of 51.55 million tons in H1 2025, representing a 115.69% year-on-year increase [8] - The company has also signed a strategic cooperation agreement with Asian United Infrastructure in June 2025, which is expected to expand its overseas light asset business [8]

Group 1: Investor Relations Activities - The investor relations activity involved a specific audience survey with representatives from Invesco Great Wall Fund [2] - The meeting took place on July 7, 2025, in Shenzhen, with the company represented by Secretary Fang Lingling [2] Group 2: Impact of Tariff Policies - The impact of the latest U.S. tariff policies on the company's business remains unclear, pending further details [2] - Historically, tariff costs have been borne by brand clients (importers) and ultimately passed on to consumers [2] - The company is closely monitoring tariff policy developments and maintaining communication with clients [2] Group 3: Gross Margin Trends - In Q1 2025, the company experienced a significant increase in new customer orders year-on-year [2] - The construction and production pace of new factories has accelerated to meet rising capacity demands [2] - Initial inefficiencies in new factories due to untrained staff have impacted overall gross margins [2] - The company plans to enhance operational efficiency through improved training and deployment of smart production systems [2] Group 4: Dividend Policy - The company has a strong focus on shareholder returns, with cash dividends in 2021 accounting for approximately 89% of annual net profit [3] - Cash dividends for 2022 and 2023 were 43% and 44% of net profit, respectively, while the 2024 dividend is projected to be around 70% [3] - The company has accumulated a significant retained earnings balance of approximately 10.4 billion RMB by the end of 2024 [3] - Future dividends will balance shareholder interests with the company's development needs, especially during a peak capital expenditure period [3]

Core Viewpoint - The overall A-share market is expected to experience a decline in net profit for 2024, with a projected decrease of 3.0% for the entire market, 9.0% for the financial sector, and 14.2% for the non-financial sector, primarily due to significant impairment losses in the fourth quarter of 2024, particularly in the real estate and photovoltaic industries [1][2][3] Profit Growth - In 2024, the A-share market's net profit is forecasted to decline by 3.0%, with the financial sector showing a growth of 9.0% and the non-financial sector declining by 14.2%. The non-financial sector's revenue is expected to decrease slightly by 1%, with a significant drop in profit margins compared to 2023 [2][3] - The first quarter of 2025 shows a rebound in net profit for the A-share market, with a year-on-year growth of 3.5% for the entire market, 2.9% for the financial sector, and 4.2% for the non-financial sector, indicating a recovery in downstream industries [3][4] Profitability Analysis - The return on equity (ROE) for non-financial A-shares has remained stable, marking 15 consecutive quarters of decline since Q2 2021. The marginal improvement in net profit margins is offset by a significant decline in asset turnover rates [1][15] - Industries such as electronics, home appliances, non-bank financials, and agriculture have shown consecutive improvements in ROE over the past two quarters [15][23] Capital Expenditure and Cash Flow - Non-financial capital expenditure has been in negative growth for four consecutive quarters, but new economy sectors are seeing a rebound in capital expenditure growth. The total assets of non-financial enterprises have stabilized, with a notable increase in prepayments [2][16] - The free cash flow to equity ratio for non-financial companies has reached a historical high, supporting an increase in dividend payout ratios to 45% in 2024, with the dividend yield for the CSI 300 rising to 3.2% [2][18] Industry Performance - The first quarter of 2025 has highlighted strong performance in sectors such as non-ferrous metals, certain export chains, and TMT (Technology, Media, and Telecommunications), with significant year-on-year profit growth in these areas [3][4] - The agricultural sector has shown remarkable recovery, with a profit growth of 2541.6% due to low base effects, while non-bank financials have benefited from improved capital market conditions, achieving a profit growth of 48.7% [2][4] Market Outlook - The current economic environment suggests that the low point of the profit downturn cycle has been surpassed, but attention must be paid to the impact of tariff policies on corporate fundamentals in the second quarter of 2025 [2][38] - The market is advised to seek opportunities in sectors with recovering demand and low tariff impacts, particularly in AI-related industries and companies with strong cash flows that are less exposed to external demand [39][40]

Core Insights - The company's revenue growth has significantly declined in Q1 2025 compared to the same period last year, primarily due to the impact of one-time asset disposals in the previous year [1] - Credit growth continues to rebound, which may alleviate the pressure on net interest margins [2] - The company's projected net profit growth for the years 2025, 2026, and 2027 is modest, with estimates of 0.3%, 1.8%, and 1.6% respectively [3] Financial Performance - As of Q1 2025, the company's revenue, PPOP, and net profit attributable to shareholders showed year-on-year growth rates of 0.9%, -7.4%, and -3.6% respectively [1] - Net interest income decreased by 5.6% year-on-year, indicating ongoing pressure on net interest margins despite total assets growing by 6.8% [1] - The company experienced a significant decline in non-interest income, with a year-on-year decrease of 14.4% and a quarter-on-quarter drop of 44.8% [1] Credit and Asset Quality - Total assets and loan amounts grew by 6.8% and 6.0% year-on-year as of Q1 2025, with loan growth showing a continuous rebound over three consecutive quarters [2] - The non-performing loan (NPL) ratio remained stable, while the attention rate increased by 21 basis points [2] - The company’s provision coverage ratio and loan-to-deposit ratio decreased by 13.1 percentage points and 11 basis points respectively as of Q1 2025 [2] Valuation and Forecast - The projected book value per share (BVPS) for 2025, 2026, and 2027 is estimated at 13.37, 13.92, and 14.47 yuan respectively [3] - The current stock price corresponds to a price-to-book (PB) ratio of 0.65X, 0.62X, and 0.60X for the years 2025, 2026, and 2027 [3] - A valuation premium of 10% is applied due to the company's strong core tier one capital adequacy ratio and dividend rate, resulting in a reasonable value of 9.18 yuan per share for 2025 [3]

Core Insights - Qilu Bank's revenue growth for 2024 is projected at 4.6%, with a net profit growth of 17.8%, indicating strong financial performance [1] - The bank's asset quality continues to improve, with a non-performing loan (NPL) ratio of 1.19% at the end of 2024, down from the beginning of the year [1][5] Financial Performance - For 2024, interest income growth is at 1.7%, recovering from a decline of 2.1% in the first three quarters, while non-interest income growth is at 12.7% [2] - The bank's net interest margin for 2024 is reported at 1.51%, with a decrease of 23 basis points year-on-year [4] - The bank's total loans grew by 12.3% in 2024, with corporate loans increasing by 15.5% and retail loans by 3.2% [3] Asset Quality - The bank's NPL generation rate decreased to 0.63%, reaching a new low since its listing, indicating improved asset quality [5] - The corporate loan NPL ratio has decreased, while the real estate sector shows an increase in NPLs, although its impact is limited due to its small proportion of total loans [5] Capital and Dividends - The bank's dividend payout ratio for 2024 is set at 26%, with an expected dividend yield of 4.5% [5] - The bank's valuation is currently at 0.71x 2025 price-to-book ratio, suggesting potential for capital growth [5]