Core Viewpoint - Shanghai Industrial Holdings (00363) is recognized as a stable growth stock in infrastructure and consumer sectors, attracting investor attention due to high dividends and low valuations [1] Financial Performance - For the first half of the year, the company reported revenue of HKD 9.476 billion and a net profit of HKD 1.042 billion, with infrastructure and consumer goods contributing significantly to the earnings [1] - The company announced an interim dividend of HKD 0.42 per share, with a payout ratio of 43.8% and a dividend yield of 6.4% [1] Business Segments - The infrastructure segment, which includes toll roads, water services, and clean energy, contributed 92% of the net profit, with toll roads being a major cash cow [2] - The consumer goods segment, including Nanyang Tobacco and Yongfa Printing, showed a revenue growth of 20.23% from 2023 to 2025, with a profit contribution of HKD 403 million, reflecting a 26% year-on-year increase [3][4] Strategic Moves - The company successfully exited from Yuefeng Environmental, recovering HKD 4 billion in cash, which was deemed the optimal choice for maximizing shareholder value [3] - The company is actively exploring new investment opportunities in the health sector and has a cash reserve of HKD 28.5 billion, indicating strong financial health [4][6] Financial Strength - The company has reduced its net debt ratio from 65.12% at the end of 2024 to 60.99%, with total interest-bearing debt decreasing to HKD 58.51 billion [6] - Operating cash flow for 2023 and 2024 is projected at HKD 4.355 billion and HKD 4.813 billion, respectively, allowing for a healthy investment cycle [6] Valuation Perspective - The company is considered undervalued, with a price-to-book (PB) ratio of 0.3 and a price-to-earnings (PE) ratio of 5.5, compared to higher averages in its sectors [7] - Despite a 98% increase in market value over the past three years, the company is still seen as having significant room for valuation recovery [8]

Group 1 - The core business of the company's infrastructure and environmental sector remains stable, with revenue of HKD 44.33 billion and net profit of HKD 9.33 billion in the first half of the year. The highway segment generated revenue of HKD 10.19 billion, a year-on-year increase of 5.1%, with traffic volume up by 2.1% [1] - The consumer and health sectors showed significant growth, with the consumer segment achieving revenue and net profit growth of 11% and 26%, respectively, reaching HKD 19 billion and HKD 4.33 billion. The Nanyang Tobacco business performed strongly, with revenue of HKD 12.73 billion, a 16.4% increase, and net profit of HKD 3.37 billion, a 20% increase, alongside a 31% rise in sales volume [2] - The company's financial situation has improved, with interest-bearing liabilities reduced to HKD 585.13 billion and the debt-to-asset ratio down to 51.5%. Financial expenses decreased by 15%. The dividend policy is positive, with an interim dividend of HKD 0.42 per share for 2025, totaling HKD 4.57 billion, maintaining the same level as the previous year, while the payout ratio increased from 38% to 43.8% [3] Group 2 - The company is expected to achieve net profits of HKD 29.34 billion, HKD 30.84 billion, and HKD 31.97 billion for the years 2025-2027, with year-on-year growth rates of 4.8%, 4.8%, and 3.7% respectively [1]

Investment Rating - The investment rating for Shanghai Industrial Holdings (00363.HK) is "Outperform the Market" [4][6][23]. Core Views - The real estate segment has negatively impacted both revenue and profit, with a 8.6% year-on-year decline in revenue to HKD 9.476 billion and a 13.2% drop in net profit to HKD 1.042 billion for the first half of 2025. This decline is attributed to reduced sales from property handovers and significant provisions for inventory impairment and fair value losses on investment properties [1][7]. - The infrastructure and environmental segment reported a revenue of HKD 4.433 billion, down 3% year-on-year, with net profit decreasing by 11.6% to HKD 933 million, primarily due to the impact of the Hangzhou Bay Bridge's exclusion from the financials and a loss from the sale of Yuefeng [2][12]. - The consumer and health segment showed positive growth, with revenue increasing by 11% to HKD 1.9 billion and net profit rising by 26% to HKD 433 million, driven by strong performance in the tobacco business and a one-time gain in the health sector [3][13]. Summary by Sections Real Estate - Revenue for the real estate segment was HKD 3.143 billion, a decrease of 23.2% year-on-year, with net losses expanding to HKD 465 million due to impairment provisions. The losses from Shanghai Industrial Development and Shanghai Urban Development were HKD 754 million and HKD 492 million, respectively [2][12]. Infrastructure and Environmental - The infrastructure segment's revenue was HKD 4.433 billion, down 3%, with net profit at HKD 933 million, a decline of 11.6%. The highway segment performed better, with a revenue increase of 5.1% to HKD 1.019 billion and a slight net profit increase of 0.5% to HKD 548 million [2][12]. Consumer and Health - The consumer segment achieved revenue of HKD 1.9 billion, up 11%, and net profit of HKD 433 million, up 26%. The tobacco business saw a revenue increase of 16.4% to HKD 1.273 billion, with a net profit of HKD 337 million, reflecting a 20% increase [3][13]. Financial Metrics - The company’s financial metrics show a decrease in debt, with interest-bearing liabilities dropping from HKD 59.492 billion to HKD 58.513 billion, and the debt-to-asset ratio decreasing from 53.5% to 51.5%. Financial expenses also fell by 15% to HKD 875 million [20][25]. Dividend Policy - The company maintained its dividend at HKD 0.42 per share, totaling HKD 457 million, with the payout ratio increasing from 38% to 43.8% [20][25]. Profit Forecast - The profit forecast for the company remains unchanged, with expected net profits of HKD 2.934 billion, HKD 3.084 billion, and HKD 3.197 billion for 2025, 2026, and 2027, respectively, reflecting year-on-year growth rates of 4.8%, 4.8%, and 3.7% [4][23].

Group 1 - Shanghai Industrial Holdings (00363.HK) closed at HKD 14.960 on July 30, marking a 0.27% increase from the previous trading day, with an intraday high of HKD 15.280, reaching a nearly one-year high [1] - The net capital inflow on that day was HKD 8.2175 million, with no specific data on capital inflow and outflow [1] - Shanghai Industrial Holdings is the largest comprehensive enterprise of Shanghai Industrial Group overseas, focusing on domestic investment opportunities while leveraging its advantages in Hong Kong and Shanghai [1] Group 2 - The company has developed into a comprehensive enterprise over more than 20 years, with four core business areas: infrastructure and environmental protection (including toll roads, bridges, sewage treatment, and solid waste treatment), health care, real estate, and consumer products (including Nanyang Tobacco and Yongfa Printing) [1]