Core Viewpoint - CITIC Financial Asset has increased its stake in Hangyang Co., Ltd. to 5.00%, indicating confidence in the company's future prospects and value [1][2] Group 1: Stake Increase Details - On October 28, CITIC Financial Asset acquired 13.9684 million shares of Hangyang, representing 1.43% of the total share capital [1] - The transaction price was 26.06 CNY per share, slightly lower than the closing price of 26.14 CNY, with a total transaction value of 364 million CNY [1] - The acquisition aims to enhance CITIC Financial Asset's influence and support Hangyang's growth and business expansion [1] Group 2: Company Background - Hangyang Co., Ltd. was established in 1950 and is currently managed by the Hangzhou State-owned Assets Supervision and Administration Commission [2] - The company specializes in gas, equipment and engineering, and high-end manufacturing, with a focus on energy-saving and green low-carbon industries [2] Group 3: Financial Performance - Hangyang's revenue for 2022, 2023, and 2024 was 12.803 billion CNY, 13.309 billion CNY, and 13.716 billion CNY, respectively, with net profits of 1.210 billion CNY, 1.216 billion CNY, and 922 million CNY [3] - In 2024, the company experienced a decline in profit despite revenue growth, primarily due to a decrease in gas sales gross margin [3] - In the first three quarters of 2025, Hangyang reported revenue of 11.428 billion CNY, a year-on-year increase of 10.39%, and a net profit of 757 million CNY, up 12.14% [3]

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's performance in Q2 2025 met expectations, driven by an unexpected improvement in the gas business's gross margin, which offset the decline in profitability from the equipment business [3] - The gas sales business achieved revenue of 4.59 billion RMB in the first half of 2025, with a year-on-year growth of 14.1% and a gross margin of 21.2%, up 2.8 percentage points year-on-year [2] - The air separation equipment business reported revenue of 2.32 billion RMB, flat year-on-year, with a gross margin of 20.4%, down 5.0 percentage points year-on-year [2] - The report anticipates a rebound in physical consumption, leading to an increase in gas prices and higher load factors for air separation [3] Summary by Sections Performance Review - In Q2 2025, the company achieved revenue of 3.76 billion RMB, a year-on-year increase of 9.9% and a quarter-on-quarter increase of 5.6% [2] - The net profit attributable to the parent company was 250 million RMB, reflecting a year-on-year increase of 8.6% and a quarter-on-quarter increase of 12.0% [2] Business Analysis - The gas business's gross margin improvement is attributed to concentrated capacity release in regions with strong demand, successful diversification of gas business, and a continuous increase in direct sales proportion [3] - The air separation equipment business faces margin pressure due to a decline in chemical product prices, with the chemical product price index down 9.7% year-on-year and the Shanghai rebar price down 12.6% year-on-year in the first half of 2025 [3] Profit Forecast and Valuation - The forecast for net profit attributable to the parent company is 1.09 billion RMB for 2025, 1.25 billion RMB for 2026, and 1.45 billion RMB for 2027, representing year-on-year growth rates of 17.8%, 15.0%, and 15.8% respectively [4] - The corresponding price-to-earnings ratios are projected to be 22x for 2025, 19x for 2026, and 16x for 2027 [4]