Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company has shown steady growth in new contracts, but a decline in gross margin has negatively impacted its performance [1][5] - The company reported a revenue of 292.76 billion yuan and a net profit attributable to shareholders of 5.43 billion yuan for the first half of 2025, reflecting a year-on-year increase of 2.7% in revenue but a decrease of 13.8% in net profit [4][6] - The company is benefiting from the rapid growth of new contracts in overseas markets, particularly in wind, hydropower, and water sectors, with a total new contract amount of 686.7 billion yuan, up 5.8% year-on-year [5] Summary by Sections Revenue Performance - The company achieved a revenue of 292.76 billion yuan in H1 2025, with a slight increase of 2.7% year-on-year. In Q2 2025, revenue was 150.2 billion yuan, up 3.7% year-on-year [4][6] New Contracts - New contracts in H1 2025 totaled 686.7 billion yuan, with domestic and international contracts at 545.04 billion yuan and 141.67 billion yuan, respectively. The international contracts saw a significant increase of 17.5% year-on-year [5] Profitability - The company's gross margin and net margin for H1 2025 were 11.2% and 2.5%, respectively, showing a decline of 1.0 and 0.5 percentage points year-on-year. The decrease in gross margin is attributed to pressures in the construction contracting and surveying design sectors [6] Installed Capacity - The company reported a total installed capacity of 35.159 million kilowatts, with a new installed capacity of 2.031 million kilowatts in H1 2025, representing a year-on-year growth of 113.5% [7] Financial Forecasts - The company’s projected net profit attributable to shareholders for 2025 is 12.703 billion yuan, with a steady growth forecast for the following years [8][9]

Core Viewpoint - The report highlights the financial performance and operational developments of Power Construction Corporation of China (POWERCHINA) for the first half of 2025, emphasizing growth in contract signing and strategic positioning in the water resources and energy sectors amid a challenging economic environment [1][5]. Financial Performance - The total operating revenue for the first half of 2025 was approximately CNY 292.76 billion, representing a 2.66% increase compared to the same period last year [3]. - The total profit for the period was CNY 8.92 billion, a decrease of 12.19% year-on-year [3]. - The net profit attributable to shareholders was CNY 4.82 billion, down 22.66% from the previous year [3]. - The total assets increased to CNY 1.36 trillion, reflecting a growth of 5.39% compared to the end of the previous year [3]. Industry Overview - The water resources and environmental sector in China is expected to see significant opportunities from 2025 to 2030, driven by government policies aimed at enhancing water network construction and ecological governance [4][5]. - The national water construction investment remains high, with a focus on cross-basin water diversion, flood control, and sustainable development [4]. - The energy sector is experiencing growth, with a total installed power generation capacity of 3.65 billion kilowatts as of June 2025, marking an 18.7% year-on-year increase [4]. Business Segments - The company signed new contracts totaling CNY 686.70 billion in the first half of 2025, a 5.83% increase year-on-year, with domestic contracts accounting for 79.37% and international contracts 20.63% of the total [7]. - In the water resources and environment segment, new contracts amounted to CNY 77.32 billion, a decrease of 14.05% year-on-year [8]. - The energy and power segment saw new contracts worth CNY 431.39 billion, representing a 12.27% increase year-on-year [10]. Strategic Initiatives - The company is focusing on the "carbon peak and carbon neutrality" strategy, actively developing renewable energy technologies and participating in major infrastructure projects domestically and internationally [7][19]. - POWERCHINA is leveraging its strengths in planning and design to enhance its market position in the energy sector, particularly in wind and solar power [11][12]. - The company is also expanding its digital transformation initiatives, utilizing technologies such as BIM and CIM to improve project efficiency and management [18].

Group 1 - The company announced its 2024 annual report and 2025 Q1 report, with revenues, net profit attributable to the parent, and net profit excluding non-recurring items for 2024 projected at 633.7 billion, 12 billion, and 11.1 billion respectively, showing year-on-year changes of +4%, -7%, and -5% [1] - The company continues to show resilience in revenue growth, with engineering and power investment and operation revenues for 2024 expected to increase by 4% and 6% to 575 billion and 25.4 billion respectively [1] - The net profit margin is slightly under pressure, with the comprehensive gross margin for 2024 and 2025 Q1 expected to decrease by 0.1 and 1.0 percentage points to 13.3% and 10.9% respectively [1] Group 2 - The strategic transformation of the company is promising, maintaining a "buy" rating despite adjustments to profit forecasts due to macro investment rhythm impacts [1] - Revenue projections for 2025-2027 are expected to grow year-on-year by 8%, 10%, and 10% to 685.2 billion, 754.5 billion, and 826.7 billion respectively, with net profit attributable to the parent expected to increase by 10%, 9%, and 8% to 13.2 billion, 14.3 billion, and 15.5 billion respectively [1]