Core Viewpoint - The company maintains a "buy" rating despite a decline in net profit, supported by resilient revenue and potential benefits from the Yarlung Tsangpo River hydropower project [1] Group 1: Financial Performance - In H1 2025, the company achieved revenue of 292.76 billion, a year-on-year increase of 2.66%, while net profit attributable to shareholders decreased by 13.81% to 5.43 billion [1] - For Q2 2025, the company reported revenue of 150.20 billion, a year-on-year increase of 3.57%, with net profit attributable to shareholders down 14.17% to 2.79 billion [1] - The comprehensive gross margin for H1 2025 was 11.23%, a decrease of 1.04 percentage points year-on-year [3] Group 2: Business Segments - Revenue from engineering contracting and surveying design, power investment and operation, and other businesses in H1 2025 was 265.93 billion, 12.39 billion, and 13.56 billion respectively, with year-on-year changes of +3.19%, +1.73%, and -5.42% [2] - The company’s installed capacity as of H1 2025 was 35.16 million kilowatts, with year-on-year increases in wind power (20.45%) and solar power (60.87%) [2] Group 3: New Contracts and Growth Potential - The company signed new contracts worth 686.70 billion in H1 2025, achieving 49.13% of the annual target, with a year-on-year increase of 5.83% [4] - New contracts in the energy and power sector totaled 431.39 billion, reflecting a year-on-year increase of 12.27%, with significant growth in wind power contracts [4] - The Yarlung Tsangpo River hydropower project has officially commenced, positioning the company to benefit from this long-term investment [4]

Investment Rating - The report maintains a "Buy" rating for the company [1][6][17] Core Views - The company demonstrated resilient revenue in Q2, achieving a total revenue of 292.76 billion with a year-on-year growth of 2.66%. The net profit attributable to the parent company decreased by 13.81% to 5.43 billion [1] - The company is expected to benefit significantly from the construction of the Yarlung Tsangpo River hydropower project, where it is a major participant [1][4] - The report has adjusted the forecast for the company's net profit for 2025-2027, now estimating 12.05 billion, 13.05 billion, and 14.13 billion respectively, down from previous estimates [1] Revenue Breakdown - In H1 2025, revenue from engineering contracting and surveying design was 265.93 billion, power investment and operation was 12.39 billion, and other businesses contributed 13.56 billion, with year-on-year changes of +3.19%, +1.73%, and -5.42% respectively [2] - The company has a total installed capacity of 35.16 million kilowatts, with wind power, solar energy, hydropower, thermal power, and independent storage capacities showing year-on-year growth of 20.45%, 60.87%, 3.53%, stable, and stable respectively [2] Profitability and Cash Flow - The overall gross margin for H1 2025 was 11.23%, a decrease of 1.04 percentage points year-on-year. The gross margins for engineering contracting, power investment, and other businesses were 8.46%, 45.05%, and 32.25% respectively [3] - The company experienced a net cash outflow of 51.20 billion in H1 2025, which is an increase of 4.57 billion compared to the same period last year [3] Contract and Order Growth - The company signed new contracts worth 686.70 billion in H1 2025, achieving 49.13% of the annual target, with a year-on-year increase of 5.83%. The new contracts in the energy and power sector amounted to 431.39 billion, reflecting a growth of 12.27% [4] - The overseas new contract amount reached 141.67 billion, with a year-on-year increase of 17.5%, indicating sustained high demand in international markets [4] Financial Data and Valuation - The projected revenue for 2025 is 656.97 billion, with a growth rate of 3.53%. The estimated net profit attributable to the parent company for 2025 is 12.05 billion, with an EPS of 0.70 [5][11] - The company’s P/E ratio is projected to be 8.46 for 2025, while the P/B ratio is expected to be 0.58 [5][11]

Core Insights - China Power Construction Corporation (China Power) announced a significant increase in new contract amounts for hydropower projects, with a total of 686.7 billion yuan signed in the first half of 2025, marking a year-on-year growth of 5.83% [2] - The energy and power sector was the primary contributor, with new contracts amounting to 431.4 billion yuan, reflecting a year-on-year increase of 12.27% [2] - Hydropower and wind power saw remarkable growth, with new contracts for hydropower increasing by 66.67% to 100.5 billion yuan, while wind power contracts surged by 68.78% to 142.9 billion yuan [2][4] Business Performance - The total number of new contracts in the energy and power sector reached 2,939, with a total contract value of 431.4 billion yuan [4] - Hydropower projects accounted for 576 new contracts, with a total value of 100.5 billion yuan, while pumped storage hydropower projects contributed 413.8 billion yuan [4] - Wind power projects had 652 new contracts valued at 142.9 billion yuan, while solar power contracts decreased by 28.55% to 113.7 billion yuan [4] Market Reaction - Following the announcement of the Yarlung Tsangpo River hydropower project, China Power's stock experienced a rare limit-up, closing at 5.59 yuan per share, with a market capitalization reaching 962.9 billion yuan [2][3] - The stock's trading volume surged, with closing orders exceeding 7 million shares, more than seven times the daily trading volume [2][3] Industry Position - China Power is recognized as a leading global player in hydropower construction, holding over 65% of China's large and medium-sized hydropower station construction tasks and over 50% of the global market [7] - The company is expected to secure approximately 21.8 to 29.1 billion yuan in project volume from the Yarlung Tsangpo River hydropower project based on its market share [7]

Core Viewpoint - China Power Construction Corporation (China Power) has reported a significant increase in new contract amounts for hydropower projects, driven by the recent launch of the Yarlung Tsangpo River hydropower project, leading to a surge in stock prices [2][4]. Summary by Sections New Contract Amounts - From January to June 2025, China Power signed new contracts totaling 686.699 billion yuan, representing a year-on-year growth of 5.83% [2]. - The energy and power sector contributed the majority, with new contracts amounting to 431.388 billion yuan, up 12.27% year-on-year [3]. Hydropower and Wind Power Growth - Hydropower contracts saw a remarkable year-on-year increase of 66.67%, reaching 100.455 billion yuan [3]. - Wind power contracts also experienced substantial growth, with a year-on-year increase of 68.78%, totaling 142.902 billion yuan [3]. Decline in Traditional Power Sources - Traditional thermal power contracts plummeted by 62.03%, falling below 20 billion yuan [3]. - Solar power contracts also declined by 28.55%, although they remained above 100 billion yuan [3]. Yarlung Tsangpo River Project - The Yarlung Tsangpo River hydropower project officially commenced on July 19, with a total investment of approximately 1.2 trillion yuan [4]. - The project will consist of five tiered power stations, primarily focusing on power transmission outside Tibet while also addressing local consumption needs [4]. Market Reaction - Following the announcement of the Yarlung Tsangpo project, China Power's stock surged to a limit-up, closing at 5.59 yuan per share, with a market capitalization reaching 96.29 billion yuan [4]. - The trading volume on that day was significantly high, with closing orders exceeding 7 million, more than seven times the average trading volume [4]. Market Position - According to Everbright Securities, China Power holds a leading position in the global hydropower construction market, with over 65% of large and medium-sized hydropower projects in China under its management [4][5].

Investment Rating - The industry rating is "Outperform the Market" (maintained rating) [4] Core Viewpoints - The western fixed asset investment (FAI) is experiencing high growth, with the issuance of special bonds accelerating, which will provide stronger support for infrastructure [1][21] - The GDP growth rate in the western region from 2019 to 2024 has reached a compound annual growth rate (CAGR) of 7%, with significant support from central financial policies and national strategic planning [28][32] - The issuance of special bonds in the central and western regions has significantly accelerated, with a notable increase in new special bonds in provinces like Sichuan and Shaanxi [21][32] Summary by Sections 1. High Prosperity of Western Fixed Asset Investment - The western region has maintained double-digit growth in FAI, with provinces like Inner Mongolia, Xinjiang, and Tibet showing strong performance [1] - The issuance of special bonds has increased significantly, with Sichuan's issuance up by 162% year-on-year [21] 2. Investment Opportunities in Key Regions - **Sichuan-Chongqing**: The transportation planning investment in Sichuan during the 14th Five-Year Plan is expected to increase by 16.5% compared to the previous plan, benefiting local construction companies [2][36] - **Tibet**: Active mining and robust infrastructure projects are expected to drive high regional investment demand, with significant projects like the construction of major copper mines [2][48] - **Xinjiang**: The coal chemical industry is thriving, with nearly 500 billion yuan invested in the past five years, and the region is expected to see continued infrastructure support [3][60] 3. Major Infrastructure Projects Boosting Regional Investment - The construction of the Pinglu Canal is expected to significantly enhance water transport infrastructure in Guangxi, with a total investment of approximately 727 billion yuan [3] - The Western Land-Sea New Corridor is projected to connect multiple provinces and enhance regional infrastructure growth, with completion expected by 2035 [3][60] 4. Investment Recommendations - Key stocks recommended include Sichuan Road and Bridge, China Chemical, and China Energy Engineering, all rated as "Buy" [9][47]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [6][17]. Core Views - The company's Q1 performance continues to face pressure, with a slight revenue increase of 1.61% year-on-year to CNY 142.56 billion, while net profit decreased by 12.03% to CNY 2.636 billion. The expectation is for gradual improvement in operations due to anticipated fiscal policy support [1][2]. - The report highlights the potential benefits for the company from major hydropower projects, as it is a leading player in the water conservancy and hydropower sector, responsible for over 80% of river planning and more than 65% of the construction of medium and large hydropower stations in China [3][1]. Financial Performance Summary - In Q1 2025, the company reported a gross margin of 10.81%, a decrease of 0.98 percentage points year-on-year. The net profit margin was 2.46%, down by 0.4 percentage points [2]. - The company signed new contracts worth CNY 299.32 billion in Q1 2025, a decrease of 9.6% year-on-year. Notably, new contracts in hydropower and wind power increased by 20.2% and 67.3% respectively, indicating strong demand in these sectors [3]. - The company's operating cash flow showed a net outflow of CNY 40.519 billion in Q1 2025, which is an increase in outflow by CNY 1.516 billion compared to the same period last year [2]. Financial Data and Valuation - The projected revenue for the company is expected to grow from CNY 609.41 billion in 2023 to CNY 738.51 billion by 2027, with a compound annual growth rate of approximately 6.87% [5]. - The estimated net profit attributable to the parent company is projected to increase from CNY 12.99 billion in 2023 to CNY 15.66 billion by 2027, reflecting a growth rate of 11.76% [5]. - The company's price-to-earnings (P/E) ratio is projected to decrease from 6.43 in 2023 to 5.34 by 2027, indicating potential undervaluation [5].