Q2 performance was under pressure in the short term. Under the boom in power grids, hydropower, and nuclear power, the 24H1 company achieved revenue of 194.26 billion yuan, +1.1% year-on-year, net profit to mother of 2.78 billion yuan, +4.7% year-on-year, net profit of 2.33 billion yuan after deducting non-return to mother net profit of 2.33 billion yuan, or -0.9% year on year. Among them, 24Q2 achieved revenue of 96.86 billion yuan in a single quarter, -6.5% year-on-year, net profit of 1.3 billion yuan, or -15.2% year-on-year, after deducting non-attributable net profit of 1.21 billion yuan, or -8.7% year-on-year. As the company accelerates its deployment in the field of new energy, the company's development momentum will continue to be released as the power grid, hydropower, and nuclear power boom increases. We expect the company's net profit to be 8.7, 9.5, and 10.5 billion yuan in 24-26, maintaining a “buy” rating.

Real estate investment and operation revenue fell by about 3.2 billion yuan. Looking at the accelerated promotion of new energy investment and operation sub-business, 24H1 survey and design and consulting/engineering construction/industrial manufacturing/investment and operation achieved revenue of 78.1/164.98/14.64/13.14 billion, respectively, of +22.7%/+2.9%/-5.3%/-11.2% year-on-year, respectively.

Among them, investment and operating income from new energy and integrated smart energy was +48.4% to 2.39 billion yuan, and real estate (new urbanization) investment and operating income was -45.4% to 3.82 billion yuan. Investment and operation of new energy sources are advancing at an accelerated pace, and the scale of clean energy continues to rise. By the end of 24H1, the company held 13.7 GW of grid-connected installed capacity, +60.2% year over year, of which New Energy Holdings installed 11.6 GW, +78.3% year over year.

The overall gross margin improved year on year, and the increase in the cost ratio + impairment dragged down the performance performance of 24H1 company's comprehensive gross profit margin of 12.19%, +1.26pct year over year. Among them, gross margin of survey and design and consulting/engineering construction/industrial manufacturing/investment and operation was 36.56%/7.34%/17.23%/43.44%, respectively, +0.27/+0.48/-1.62/+14.38pct, respectively. Among them, the gross margin of new energy investment and operation business was +2.57pct to 46.14% year on year, and gross margin of real estate investment and operation business was + 17.82pct to 36.35%.

The cost ratio increased by 0.94 pct to 8.22% during the 24H1 period. Among them, sales, management, R&D, and finance expenses were +0.08, +0.11, +0.31, and +0.44pct, respectively. Asset+credit impairment losses in the first half of the year were 1.27 billion yuan, +87.5% year-on-year. Under the combined influence, 24H1's net interest rate was 2.34%, -0.02pct year over year. 24H1 CFO had a net outflow of 14.52 billion yuan, an increase of 0.88 billion yuan over the same period last year.

Power grids, hydropower, and nuclear power are booming. Optimistic for the company's medium- to long-term development, the National Energy Administration announced that the M1-7 grid investment project completed was +19.2% to 294.7 billion yuan. Furthermore, the State Grid plans to exceed 600 billion yuan in power grid investment for the first time in 24, an increase of 71.1 billion yuan over the previous year. The new investment is mainly used in UHV AC/DC engineering construction and other fields. The company undertakes more than 70% of China's million-kilowatt thermal power plants, 90% of UHV engineering survey and design tasks, more than 60% of conventional nuclear power plant islands, more than 50% of large-scale hydropower projects, and more than 20% of new energy engineering design and construction tasks, and is expected to fully benefit from the boom in the power grid, hydropower, and nuclear power industries. 24H1 signed a new contract of 738.6 billion yuan, +14.4% over the same period. Among them, the traditional energy engineering business represented by thermal power, hydropower, transmission and transformation, and nuclear power reached 204.31 billion yuan, an increase of 63.8% over the previous year, and traditional energy projects maintained high growth. Furthermore, the amount of new contracts signed by the “Belt and Road” co-construction countries in the first half of the year was +44.25% compared to the same period, and the boom continued.

Risk warning: Investment in electricity and infrastructure fell short of expectations; new orders declined; non-public offerings fell short of expectations, etc.