Core Viewpoint - The report highlights that China Nuclear Technology (000777) is experiencing steady revenue growth driven by its nuclear power valve business, accelerated domestic production, and overseas expansion [1][2]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 704 million yuan, a year-on-year increase of 9.43%, and a net profit attributable to shareholders of 77 million yuan, up 1.68% year-on-year [2][3]. - The nuclear power and nuclear chemical valve segment generated revenue of 311 million yuan, a significant year-on-year increase of 26.54%, contributing 46.57% to gross profit [3]. Business Segments - The oil and petrochemical valve segment reported revenue of 206 million yuan, a year-on-year increase of 13.92%, with a gross profit margin of 29.55% [3]. - Other valve revenues declined by 16.25%, indicating intensified competition in the traditional industrial valve sector [3]. Cost Management - The company’s expense ratio for the first half of 2025 was 17.22%, a decrease of 1.18 percentage points year-on-year [4]. - Research and development investment increased to 28 million yuan, up 7.24% year-on-year, focusing on key equipment like ultra-large nuclear power valves [4]. Market Strategy - The domestic replacement and high-end development of nuclear power valves are central to the company's strategy, supported by policy initiatives [5]. - The company is expanding into overseas markets and enhancing operational services to capture additional market share [5][6]. Long-term Outlook - The company is expected to benefit from its integrated capabilities in forging, processing, assembly, and service, with a projected net profit of 267 million yuan, 307 million yuan, and 350 million yuan for 2025-2027 [6]. - The estimated earnings per share for the same period are projected to be 0.70, 0.80, and 0.91 yuan, with corresponding PE ratios of 30.31, 26.34, and 23.09 [6].

Investment Rating - The report assigns a "Buy" rating to the company, indicating an expected stock price increase of over 15% compared to the benchmark index [7]. Core Insights - The company's revenue for the first half of 2025 reached 704 million, representing a year-on-year growth of 9.43%. The net profit attributable to shareholders was 77 million, with a growth of 1.68% year-on-year [1][2]. - The nuclear power business is a strong driver of revenue growth, with significant contributions from high-end valve products such as the "Hualong One" pressure relief valve and CAP1400 main steam isolation valve, which saw a revenue increase of 26.54% [2]. - The company is actively expanding into new application scenarios, achieving breakthroughs in emerging fields like POE (polyolefin elastomer) and pumped storage, while also enhancing its service capabilities across the entire valve lifecycle [2][4]. Summary by Sections Financial Performance - In the first half of 2025, the company reported a revenue of 704 million, with a 9.43% increase year-on-year. The nuclear and nuclear chemical valve business generated 311 million, up 26.54%, contributing 46.57% to gross profit [1][2]. - The gross margin for the first half of 2025 was 19.56%, down 4.88 percentage points year-on-year, primarily due to a 48.06% increase in costs for the nuclear valve business [3]. Cost Management - The company managed to reduce its selling expenses to 23 million, a decrease of 28.64% year-on-year, while financial expenses dropped to 1 million, down 33.44% [3]. - Research and development expenses increased to 28 million, up 7.24% year-on-year, focusing on key equipment like ultra-large diameter nuclear valves [3]. Strategic Initiatives - The company is accelerating domestic substitution and high-end development of nuclear valves, supported by policies that enhance its supply capabilities across various reactor generations [4]. - The strategic focus includes innovation and return on investment, with plans to upgrade smart manufacturing capacities and extend operational services through overseas expansions [4][5]. Profit Forecast - The company is expected to see net profits of 267 million, 307 million, and 350 million for 2025, 2026, and 2027 respectively, with corresponding earnings per share of 0.70, 0.80, and 0.91 [5][10].