Core Viewpoint - New Hope Energy reported a mixed performance for the first half of 2025, with revenue growth but a decline in net profit, indicating stable operations amidst market challenges [1] Financial Performance - 1H25 revenue reached 55.7 billion RMB, a year-on-year increase of 2.0% - Net profit attributable to shareholders was 2.429 billion RMB, down 5.6% year-on-year - Core profit stood at 3.223 billion RMB, a slight decline of 1.2% year-on-year, aligning closely with forecasts [1] Business Segments - Retail gas volume showed stable operations, with 1H25 retail gas volume at 12.953 billion cubic meters, up 1.9% year-on-year, outperforming national natural gas consumption growth of -0.9% [1] - The company added 692,000 residential connections, a decrease of 10.7% year-on-year, and commercial gas volume increased by 2.4% year-on-year [1] Energy Efficiency and Smart Home Services - The company achieved a sales volume of 19.76 billion kWh in 1H25, a marginal increase of 0.1% year-on-year, with 374 operational projects, an increase of 18 from the end of 2024 [1] - Smart home service penetration reached 10.4%, with an average customer spending of 649 RMB per household, indicating growth in high-consumption areas [1] Profitability Forecasts - Core profit forecasts for 2025-2027 have been slightly adjusted downwards by 3.0%, 2.6%, and 1.5% to 7.0 billion, 7.46 billion, and 7.92 billion RMB respectively, with a projected CAGR of 4% over three years [2] - The target price has been revised to 68.0 HKD, based on a 10x 2025E PE ratio, reflecting a premium due to the smooth progress of the privatization process [2]

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's 1H25 revenue reached 55.7 billion RMB, a year-on-year increase of 2.0%, while the net profit attributable to shareholders was 2.429 billion RMB, down 5.6% year-on-year [1] - The core profit of 3.223 billion RMB was in line with expectations, with a slight year-on-year decline of 1.2% [1] - The company’s domestic core profit from its basic business grew by 0.7% year-on-year, supported by capital expenditure expansion in the energy sector and increased penetration and average spending in smart home services [1][3] - The interim dividend per share remained stable at 0.65 HKD, with a payout ratio of 21% [1] Summary by Sections Financial Performance - The company achieved a retail gas volume of 12.953 billion cubic meters in 1H25, up 1.9% year-on-year, outperforming the national natural gas consumption growth rate of -0.9% [2] - The industrial and commercial gas volume was 9.79 billion cubic meters, up 2.4% year-on-year, driven by new industrial gas connections and existing demand [2] - The company expects a 4% year-on-year increase in retail gas gross profit for 2025 [2] Energy Sales and Smart Home Services - The company’s energy sales volume reached 19.76 billion kWh in 1H25, a slight increase of 0.1% year-on-year, with efficiency improvements offsetting energy price declines [3] - The penetration rate of smart home services reached 10.4%, with an average spending of 649 RMB per household, and a projected 5% year-on-year increase in smart home gross profit for 2025 [3] Profit Forecast and Target Price - The profit forecast for 2025-27 has been slightly adjusted downwards by 3.0%, 2.6%, and 1.5% to 7.0 billion, 7.46 billion, and 7.92 billion RMB respectively, with an expected CAGR of 4% over three years [4] - The target price has been revised down to 68.0 HKD, based on a 10x 2025E PE ratio, reflecting a premium due to the smooth progress of the privatization process [4]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company demonstrates strong operational resilience, with a high dividend yield leading to a potential revaluation of its value [1] - The privatization transaction is progressing normally, with the current stock price implying a potential discount of 41% for the company's H shares [4] - The expected dividend yield for 2025 is 5.4% [1] Summary by Relevant Sections Retail Gas Volume - In Q1 2025, the company achieved retail gas volume of 7.258 billion cubic meters, a year-on-year increase of 0.3%, outperforming the national natural gas consumption growth rate of -2.2% [2] - The company expects a 6% year-on-year growth in gross profit from retail gas in 2025 [2] Comprehensive Energy Sales - The company reported a comprehensive energy sales volume of 10.039 billion kWh in Q1 2025, a year-on-year increase of 9.9% [3] - The expected gross profit growth for comprehensive energy in 2025 is projected to be 12% [3] Smart Home Services - The penetration rate for smart home services reached 3.7% in Q1 2025, a decrease of 0.3 percentage points year-on-year [3] - The expected gross profit growth for smart home services in 2025 is projected to be 10% [3] Financial Forecasts - The company slightly adjusted its profit forecasts, with core profits for 2025-2027 expected to be 7.220 billion, 7.655 billion, and 8.039 billion RMB respectively, reflecting a CAGR of 5% over three years [5] - The target price has been slightly revised down to 68.6 HKD, based on a 10x PE for 2025E [5] Key Financial Metrics - The company’s revenue for 2025 is projected at 113.873 billion RMB, with a year-on-year growth of 3.66% [6] - The expected EPS for 2025 is 6.38 RMB [6]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company demonstrates strong operational resilience, with a high dividend yield leading to a potential revaluation of its value [1] - The privatization transaction is progressing normally, with the current stock price implying a potential discount of 41% for the company's H shares [4] Summary by Sections Sales and Revenue - In Q1 2025, the company achieved a total gas sales volume of 7.258 billion cubic meters, representing a year-on-year increase of 0.3%, outperforming the national natural gas consumption growth rate of -2.2% [2] - The company expects a 6% year-on-year growth in gross profit for retail gas in 2025 [2] Energy Sales and Smart Home Services - The company reported a 9.9% year-on-year increase in comprehensive energy sales volume, reaching 100.39 billion kWh in Q1 2025 [3] - The penetration rate for smart home services decreased to 3.7%, with a year-on-year decline of 0.3 percentage points [3] - The company anticipates a gross profit growth of at least 10% for smart home services in 2025 [3] Financial Projections - The company slightly adjusted its profit forecasts, with core profits for 2025-2027 expected to be 7.220 billion, 7.655 billion, and 8.039 billion RMB, respectively [5] - The target price is set at 68.6 HKD, based on a 10x 2025E PE ratio [5] Key Financial Metrics - The company is projected to have a revenue of 113.873 billion RMB in 2025, with a year-on-year growth of 3.66% [6] - The expected EPS for 2025 is 6.38 RMB, with a projected ROE of 15.32% [6]