August 2025 2025 FIRST HALF RESULTS REVIEW O U R B U S I N E S S 2025 First Half Results Review ~ Stock Code: 0270 F I N A N C I A L H I G H L I G H T S 1 The unaudited consolidated profit attributable to owners of the Company for 1H25 increased by 11.2% to HK$2,682 million and interim dividend per share increased by 11.2% to HK$26.66 cents. 2 The net finance costs from continuing operations was decreased by HK$201 million to HK$188 million and net loss arising from fair value adjustments for investment pro ...

Core Viewpoint - The company reported a significant increase in revenue and profit for the six months ending June 30, 2025, indicating strong financial performance and a positive outlook for future growth opportunities [1][2]. Financial Performance - The group's unaudited revenue from continuing operations reached HKD 94.28 billion, with a 9.1% increase in profit attributable to owners amounting to HKD 26.99 billion compared to HKD 24.73 billion in 2024 [1]. - The unaudited comprehensive profit attributable to owners increased by 11.2% to HKD 26.82 billion, up from HKD 24.11 billion in 2024 [1]. - The board declared an interim dividend of HKD 0.2666 per ordinary share, an increase from HKD 0.2397 in 2024 [1]. Debt and Financial Ratios - As of June 30, 2025, the capital debt ratio for continuing operations was 24.7%, a decrease from 30.9% on December 31, 2024 [1]. - The company's debt repayment and interest coverage remained robust, with an EBITDA to financial expenses ratio of 16.2 times as of June 30, 2025, compared to 10.5 times on December 31, 2024 [1]. Strategic Focus - The company aims to extend its water resources segment into high value-added areas, focusing on business structure transformation and upgrading [2]. - There is an emphasis on optimizing asset portfolios and resource allocation while actively seeking investment and acquisition opportunities related to the "Guangdong-Hong Kong-Macao Greater Bay Area Development Plan" [2]. - The company seeks to achieve breakthroughs in profit growth and enhance overall operational performance and value [2].

Core Insights - Goldman Sachs highlights that undervalued utility giants in Europe focusing on electricity supply and water resources will significantly benefit from the unprecedented global AI boom and the ongoing trend of electrification [1][4] - The report indicates that European electricity demand has faced a cumulative decline of approximately 10% since 2008 due to external shocks and a slower-than-expected electrification process, but is expected to increase by 40%-50% over the next decade [1][4] Company Analysis: Centrica - Centrica has identified a potential EBITDA of £1.6 billion by FY2028, with £400 million expected from its £4 billion investment plan, of which about 50% remains uncommitted [1][2] - The investment details regarding nuclear power are anticipated to be disclosed during a spending review on June 11, 2025, with a potential £2 billion equity investment offering approximately 6% upside to current share prices and a 3% increase in EPS by 2028 [2] - Centrica's core business encompasses retail gas and electricity, upstream oil and gas, flexible peaking plants, and storage, with a focus on green assets such as nuclear, hydrogen, and carbon capture [3] Industry Trends: AI and Electricity Demand - The demand for electricity from AI data centers is expected to surge, with global data center electricity demand projected to double by 2030, reaching approximately 945 TWh, driven primarily by AI applications [4][5] - In the U.S., data centers' share of electricity consumption is forecasted to increase twofold from 126 TWh in 2022 to 390 TWh by 2030 [5] - The PJM Interconnection anticipates a summer peak electricity demand increase of nearly 58 GW (approximately 38%) by 2035, attributed to the growth in AI [6] Company Performance: Vistra Energy - Vistra Corp. is projected to be one of the best-performing stocks in the S&P 500 for 2024, with a remarkable increase of 256%, surpassing even Nvidia's 170% rise [6][7] - Vistra and Constellation Energy are experiencing significant growth due to their independent power producer status, allowing them to sell electricity at market prices [7] Water Resource Utilities: Pennon Group - Pennon Group reported a core EBITDA of £335.6 million for FY2025, with a net debt of £4.1 billion, slightly above market expectations [8][9] - The company benefits indirectly from the massive water demand of data centers, which require significant amounts of water for cooling and other operational needs [9]

Core Insights - Goldman Sachs reports that European utility giants, which are undervalued in the context of electricity supply and water resource networks, will significantly benefit from the unprecedented global AI boom and the ongoing trend of electrification [1] Group 1: Electricity Demand Trends - Over the past fifteen years, European electricity demand has faced severe external shocks, resulting in a cumulative decrease of approximately 10% since 2008 [1] - Goldman Sachs anticipates a complete reversal of this trend, projecting that the rapid expansion of data centers and the acceleration of electrification will drive European electricity demand to increase by at least 40%-50% over the next decade [1]