Group 1 - The stock price of China Nuclear Engineering Corporation (CNEC) decreased by 2.08% on September 2, trading at 8.94 CNY per share with a total market capitalization of 26.944 billion CNY [1] - Year-to-date, CNEC's stock price has dropped by 0.07%, with a decline of 5.89% over the last five trading days and a 4.14% drop over the last 20 days [1] - CNEC's main business segments include industrial and civil engineering (61.05% of revenue), nuclear power engineering (28.37%), and other services (10.63%) [1] Group 2 - As of June 30, CNEC reported a total revenue of 53.472 billion CNY for the first half of 2025, a year-on-year decrease of 2.11%, and a net profit attributable to shareholders of 0.798 billion CNY, down 16.48% year-on-year [2] - CNEC has distributed a total of 1.757 billion CNY in dividends since its A-share listing, with 0.784 billion CNY distributed over the past three years [3] - The number of shareholders for CNEC decreased to 90,300 as of June 30, 2025, while the average number of circulating shares per shareholder increased by 1.79% to 33,359 shares [2][3]

Core Viewpoint - The report highlights the financial performance and operational developments of China Nuclear Engineering & Construction Corporation for the first half of 2025, emphasizing the challenges faced and the strategic initiatives undertaken to enhance competitiveness in the nuclear power and construction sectors [1][2]. Company Overview and Financial Indicators - The company reported a total revenue of approximately 53.47 billion RMB, a decrease of 2.11% compared to the same period last year [2][3]. - The total profit amounted to approximately 1.43 billion RMB, reflecting a decline of 9.97% year-on-year [2][3]. - The net profit attributable to shareholders was approximately 797.67 million RMB, down 16.48% from the previous year [2][3]. - The company's total assets increased by 9.43% to approximately 247.20 billion RMB, while net assets rose by 8.84% to approximately 33.19 billion RMB [2][3]. Industry and Main Business Situation - The nuclear power industry is gaining strategic importance due to the global energy transition and China's dual carbon goals, with the approval of multiple new nuclear projects in 2025 [3][4]. - As of June 30, 2025, China has 112 nuclear units in operation, under construction, or approved for construction, with a total installed capacity of approximately 125 million kW, the largest globally [3][4]. - The company is a leader in nuclear power construction, maintaining a significant market share and continuously enhancing its capabilities through technological advancements [5][6]. Operational Performance - The company achieved new contracts worth approximately 844.75 billion RMB in the first half of 2025, with total revenue reaching approximately 534.72 billion RMB [8][9]. - The nuclear engineering segment remains the core business, with a focus on maintaining leadership in nuclear construction and expanding into industrial and civil engineering sectors [5][6]. - The company has signed significant contracts for various nuclear projects, indicating strong market demand and operational growth [9][10]. Technological and Strategic Initiatives - The company is advancing its digital transformation and innovation in nuclear engineering, focusing on smart manufacturing and digital management [9][10]. - A comprehensive reform initiative is underway to enhance management efficiency and align with national strategic goals, including the promotion of nuclear safety and quality management [10][11]. - The company is committed to expanding its capabilities across the nuclear energy value chain, including maintenance and emergency response services [16][17].

Investment Rating - The investment rating for the company is "Buy" with a target price of 10.81 RMB [8][9]. Core Views - The company reported a revenue of 1135.4 million RMB and a net profit of 20.6 million RMB for 2024, reflecting a year-on-year increase of 3.8% and 0.1% respectively. The performance was below expectations due to significant credit impairment losses in Q4 [1]. - The company is expected to benefit from the approval of 10 new nuclear power units, which will likely sustain high investment levels in the nuclear sector [1][4]. - The revenue from nuclear engineering projects increased by 34.6% year-on-year, contributing to a 29% share of total revenue, while the gross margin for Q4 improved by 1.0 percentage points year-on-year [2]. Summary by Sections Financial Performance - In 2024, the company signed new contracts worth 1634.4 million RMB, a year-on-year increase of 8.5%, and for Q1 2025, the new contracts amounted to 541.8 million RMB, up 30.7% year-on-year [2]. - The company’s R&D expense ratio slightly increased to 2.83% in 2024, reflecting higher investments in key construction areas like nuclear power [3]. - The company recorded a credit impairment loss of 20.5 million RMB in 2024, which is a 7.3% increase year-on-year [3]. Market Outlook - The approval of 10 new nuclear power units in April 2025 is expected to further stimulate nuclear investment, with a reported 48.8% year-on-year increase in nuclear investment during the first two months of 2025 [4]. - The company has secured 14 new nuclear unit construction projects in 2024, increasing the total number of units under construction to 32 by the end of 2024 [4]. Profit Forecast and Valuation - The forecasted net profits for 2025-2027 are 23.5 million RMB, 28.2 million RMB, and 32.4 million RMB respectively, reflecting a downward adjustment of 8% and 7% from previous estimates [5]. - The company’s target market value for 2025 is set at 326 billion RMB, with a target price of 10.81 RMB per share [5].