As one of China's leading clean energy operators, BINHAI INV (02886) delivered steady interim results for the first half of 2025. Despite facing headwinds from a warm winter and sluggish real estate market recovery, the group demonstrated exceptional operational resilience and profitability. Particularly noteworthy were improvements in gross margin, second-quarter gas sales volume rebound, declining financing costs, and growth in net profit attributable to shareholders, highlighting its investment value as a leader in the urban gas industry.

**First Half 2025 Performance Overview: Demonstrating Resilience Amid Challenges**

According to the 2025 interim results announcement, BINHAI INV recorded total revenue of approximately HK$2.931 billion in the first half, down 17% year-on-year, primarily due to the warm winter causing a 0.9% decline in national natural gas consumption and a 14% decrease in the group's total gas sales volume to 1.14 billion cubic meters.

Core business pipeline gas sales revenue was approximately HK$2.741 billion (94% of total revenue), down 16.8% year-on-year. Engineering construction and natural gas pipeline installation service revenue declined 25.6% to HK$125 million, affected by the sluggish real estate market. Natural gas transmission service revenue fell slightly to HK$27 million.

Notably, value-added service revenue bucked the trend with 7% growth to HK$37.67 million, serving as a bright spot. Despite revenue pressure, the company demonstrated steady operational capabilities by optimizing gas source structure and seizing policy opportunities, laying the foundation for subsequent recovery.

**Significant Gross Margin Improvement, Outstanding Gas Profitability**

Despite declining revenue, BINHAI INV's operational efficiency improved significantly, particularly in gross margin and gas profitability performance. In the first half of 2025, group gross profit was approximately HK$310 million, down 10% year-on-year, but gross margin improved by 0.9 percentage points to 10.6%.

More importantly, the average gross margin per cubic meter for urban gas increased by RMB 0.07 year-on-year to RMB 0.50 per cubic meter. This benefited from the company's active optimization of upstream gas source structure, reducing procurement costs, and benefiting from residential gas price adjustment mechanisms implemented by various local governments, such as retail price adjustments in Liuyang, Changle, and Zibo, improving the inverted pricing issue for residential gas.

These measures not only enhanced the profitability of the gas business but also optimized the upstream-downstream price linkage mechanism, providing assurance for the group to maintain competitive advantages in an oversupplied market environment. Value-added service business performed impressively, with "Taiyuejia" brand gas appliance sales gross profit growing 91% year-on-year, consolidating the group's diversified profit foundation.

**Strong Q2 Gas Sales Volume Rebound Signals Achievable Annual Targets**

Although total gas sales volume declined 14% in the first half, BINHAI INV's second-quarter performance instilled confidence in investors. Results showed second-quarter total gas sales volume increased 13% year-on-year, reversing the negative impact of the first-quarter warm winter and indicating rapid business recovery.

Pipeline gas sales, as the core business, covers residential users (187 million cubic meters) and industrial users (642 million cubic meters), demonstrating strong growth momentum driven by recovering second-quarter demand. With steady economic recovery across regions, combined with the company's active expansion of downstream markets, further stimulation of gas sales volume growth is expected.

Management expressed confidence in achieving annual gas sales guidance for pipeline gas as domestic economic recovery and clean energy demand growth continue, providing support for continued performance improvement in the second half.

**Significant Decline in Financing Costs, More Stable Financial Structure**

BINHAI INV demonstrated excellent financial management. In the first half of 2025, the company's comprehensive financing rate decreased to 4.67%, down 82 basis points from the same period last year, saving approximately HK$29.14 million in financing costs. This benefited from the group's development of diversified financing channels and optimization of financing structure.

More encouragingly, the group's asset-liability ratio fell below 70% for the first time in recent years, reflecting significant improvement in financial structure. This not only reduced financial risks but also provided greater flexibility for future strategic investments and business expansion, enhancing the company's competitive advantage in the industry.

**3% Growth in Net Profit Attributable to Shareholders Demonstrates Earnings Resilience**

Despite revenue decline challenges, BINHAI INV achieved profit attributable to company owners of approximately HK$173 million, up 3% year-on-year, with basic earnings per share reaching 12.54 HK cents. This growth reflects the company's success in cost control, business structure optimization, and profitability enhancement.

Improved gross margins, declining financing costs, and rapid growth in value-added service business effectively offset the impact of declining gas sales volume. The growth in net profit attributable to shareholders demonstrates the company's operational resilience in complex market environments and proves the effectiveness of its diversification strategy.

Management expects profitability to continue steady improvement as price adjustment mechanisms expand coverage and market demand recovers.

**Future Growth Drivers: Policy and Technology Dual-Engine Drive**

BINHAI INV's future growth potential comes from three major drivers. First, the Chinese government's promotion of "carbon neutrality" and "coal-to-gas" policies significantly promote natural gas demand growth, particularly in industrial centers like Tianjin and Shandong, where government subsidies and clean energy promotion provide stable momentum for pipeline gas sales and transmission services.

Second, China's continued urbanization drives gas pipeline network expansion, with the group investing in infrastructure in emerging markets like Zhejiang, expanding user base and enhancing revenue potential.

Finally, through subsidiary Tianjin Bintou Xinzhi Technology Co., Ltd., applying IoT, cloud computing, and artificial intelligence technologies, the group optimizes gas pipeline network monitoring and operational efficiency, reducing costs and enhancing market competitiveness, laying the foundation for long-term development.

**Stable Dividends Attract Income-Seeking Investors**

BINHAI INV has paid dividends annually since 2013, with an average dividend yield exceeding 5% over the past five years, attractive to income-seeking investors. The company paid a full-year dividend of HK$0.076 for fiscal 2024, with a trailing annual dividend yield of 6.55%. The company previously announced dividend plans, expecting to pay HK$0.081 for 2025, which at the current price of HK$1.15 translates to an expected dividend yield of 7.00%, higher than the five-year average of 5.7%.

Against the backdrop of market expectations for continued US interest rate cuts over the next year, the company's stable dividend policy is expected to maintain high dividend yields, enhancing investment attractiveness.

Regarding stock price, after rebounding from the September 2024 low of HK$0.86, it has repeatedly touched HK$1.24 and stabilized around HK$1.00. It closed at HK$1.15 on August 22, 2025, up 5.36% and 4.2% above the 50-day and 200-day moving averages respectively, showing stable short-term trends.

**Conclusion: An Investment Opportunity Worth Attention**

BINHAI INV's first half 2025 results demonstrate its resilience and potential amid challenges. Improved gross margins, second-quarter gas sales volume rebound, declining financing costs, and optimized asset-liability ratios, combined with 3% growth in net profit attributable to shareholders, highlight the company's steady operational capabilities and financial management.

As a leader in the urban gas industry, BINHAI INV is advancing toward its goal of becoming a comprehensive energy service provider through policy support, technological innovation, and diversification strategies. For retail investors seeking stable returns, BINHAI INV, with its high dividend yield and solid prospects, is undoubtedly an investment choice worth attention.