Core Viewpoint - Binhai Investment (02886) reported its mid-year results for 2025, showing revenue and gross profit pressure due to warm winter and ongoing economic recovery in China, but managed to maintain profit growth through cost-cutting and efficiency measures. Excluding the one-time impact of the warm winter, gross margin has significantly improved, and the growth of value-added services is rapid. The company is expected to see stable EPS growth from 2025 to 2027, with an increased dividend policy, maintaining a "Buy" rating and a target price of HKD 1.58 [1][10]. Sales Volume and Gross Margin - In the first half of 2025, total sales volume decreased by 14% year-on-year to 1.14 billion cubic meters, with pipeline sales down 12% to 830 million cubic meters and pipeline transportation down 18% to 310 million cubic meters. The decline was mainly due to warm winter, market demand changes, and major clients' maintenance [2]. - Despite the drop in sales volume, the company has seen a significant recovery in gross margin, with an average gross margin of RMB 0.44 per cubic meter, leading to an estimated gross profit of approximately HKD 366 million [3]. Value-Added Services - The value-added services segment has been growing rapidly since its launch in 2021, with revenue and gross profit both increasing by 7% year-on-year in the first half of 2025, reaching HKD 37.67 million and HKD 25.40 million, respectively. The gross margin remains at 67.4% [4]. - Among the four categories of value-added services, three recorded growth in gross profit, including a 91% increase in gas appliance sales due to the success of the proprietary brand "Taiyuejia" [4]. E-commerce Platform Launch - The company plans to launch an e-commerce platform by the end of September, which includes three systems: a store system, an after-sales service system, and a mobile online mall. This initiative aims to enhance the development of value-added services and reach more potential customers [5]. Connection Business - The connection business revenue fell by 25% year-on-year to HKD 125 million in the first half of 2025, with gross profit down 30% to HKD 71.9 million. However, the number of new connections showed a slight recovery compared to the previous half [6]. Financing Cost Reduction - The company has successfully reduced financing costs, with a significant decrease of 39% year-on-year to HKD 45.49 million in the first half of 2025. The proportion of loans in RMB increased to 82%, while high-interest USD loans decreased to 18% [8]. Support from Sinopec - Binhai Investment's subsidiary received a credit line of RMB 150 million from Sinopec's financial subsidiary to facilitate natural gas procurement payments. This support helps optimize the company's financing structure and reduce financial costs [9]. Future Outlook - The company expects that if the winter weather is normal, there will be strong growth in sales volume, coupled with gross margin recovery, leading to significant year-on-year growth in revenue and gross profit for the entire gas sales business in 2025 [9].