BINHAI INV (02886) reports impressive interim results as new projects gradually achieve scale, with the valuation expected to improve.

BINHAI INV (02886) announced its interim results for the six months ending June 30, 2026. Despite external challenges such as geopolitical fluctuations in the global natural gas market, ongoing adjustments in the domestic real estate sector, and overall weak industry demand, the Group achieved both revenue and profit growth, underlining the resilience of its core business. Moreover, supported by its two major shareholders, the Group accelerated its transformation into a comprehensive energy supplier, opening up medium to long-term growth opportunities. From the core financial data, during this period, the Group achieved an operating revenue of 2.94 billion RMB, a year-on-year increase of 8%; gross profit of 296 million RMB, up 3%; profit for the period of 184 million RMB, an increase of 12%; and profit attributable to equity holders of the company amounted to 180 million RMB, an increase of 12.5%, with basic earnings per share rising 13% to 13.16 cents RMB. The profitability quality steadily improved. Total assets stood at 7.417 billion RMB, remaining largely stable; total equity reached 2.318 billion RMB, up 3%, with shareholders' equity continuously growing. The main business sectors exhibited structural differentiation. The core pipeline natural gas sales business grew against the market trend, with total gas sales volume reaching 1.204 billion cubic meters, up 5.6%. Among this, pipeline natural gas sales amounted to 922 million cubic meters, marking an 11.2% increase, driving sales revenue to 2.805 billion RMB, a rise of 10%. The demand for gas from residential and industrial users expanded simultaneously, reflecting the stability of the regional fundamentals. On the other hand, impacted by the downturn in real estate, revenue from engineering construction and installation services fell by 38% to 72.04 million RMB. The contraction of the high-margin installation business dragged the overall gross profit margin down slightly from 10.6% to 10.1%. In the natural gas transmission business, income dropped by 7% year-on-year due to production halts caused by client equipment failures. In contrast, the value-added services sector performed remarkably well, mitigating the aforementioned negative impact, with revenue from value-added services reaching 38.99 million RMB, up 12%, among which the maintenance extension services surged by 93%. The Group restructured its original sales of gas appliances, small installations, non-residential maintenance, and insurance sales into four major sectors: smart home, home services, maintenance extension, and insurance business. It also established strategic cooperation with Tianjin TEDA and signed a three-year framework cooperation agreement for peripheral products with China Radio and Television Tianjin Network, thereby expanding from private domain users to various value-added service-related projects in the public domain, making value-added services an important supplementary growth driver for the business. On the financial management front, the Group's optimization of financing showed remarkable results, with the comprehensive financing rate decreasing from 4.4% at the end of 2025 to 4.0%, resulting in a year-on-year reduction in interest expenses of about 14 million RMB. The Group completed the replacement of a historical USD syndicated loan and signed a new syndicated loan, reducing the proportion of USD-denominated debt to 9%, thus lowering exchange rate fluctuation risks. Although the Group's current ratio is only 0.34, liquidity pressure still exists; however, management has reported securing bank credit lines of 972 million RMB, sufficient to cover debt obligations maturing in the next twelve months. In terms of business prospects, the company has established three strategic directions: "consolidating the foundation of city gas, vigorously developing value-added services, and accelerating the transformation into a comprehensive energy supplier." The growth logic is clear. First, stakeholder empowerment builds core competitive barriers, and the major shareholder TEDA has signed a framework agreement to deepen strategic cooperation with Sinopec Natural Gas to support the development of BINHAI INV, providing all-around support in gas sourcing, market expansion, and industrial investment, ensuring the stability of gas procurement for Yan Hai Investment and reducing procurement costs, thereby establishing a safety net for its core business in an environment of severe external gas price fluctuations. Secondly, the traditional gas foundation remains resilient. As a low-carbon transitional energy source, natural gas is still an important carrier of energy transformation under the national dual-carbon strategy. Although the apparent consumption of natural gas in the domestic market slightly declined in the first half of the year, the recovery of industrial and commercial sectors and the rigid demand for residential cooking and heating will support steady growth in gas sales volume. While the real estate slowdown has affected installation services, urban renewal and the renovation of old communities can bring subsequent connection and renovation demands, alleviating the pressure from the decrease in new housing. Furthermore, the new comprehensive energy business is opening up a second growth curve, with several demonstration projects already underway. The Group has signed a green hydrogen supply framework agreement with Sinopec Xingxing New Energy to promote hydrogen blending demonstrations in the pipeline network and a green hydrogen supply at the scale of 10,000 tons, exploring the commercialization model of "green hydrogen + natural gas"; simultaneously promoting multi-energy complementarity with "geothermal & natural gas +", and developing carbon assets; a joint venture has been established in Deqing, Zhejiang, to invest in the construction of distributed photovoltaic projects, marking a significant step into the substantive implementation phase of comprehensive energy. By leveraging its extensive pipeline network and industrial and commercial customer resources, the Group aims to upgrade from merely selling gas to becoming an integrated energy service provider offering photovoltaic, hydrogen energy, geothermal, energy management, and carbon asset services, breaking free from traditional city gas industry's growth ceiling restrictions. Additionally, the expansion potential of the value-added services sector is worth anticipating. Currently, this sector is still relatively small but has already completed the standardization and integration expansion of its business modules. Leveraging the resources from TEDA's urban renewal projects, the sector aims to mass-produce smart home products, kitchen beautification, and safety inspection maintenance within communities, while also exporting a grid-based operational model that integrates multiple functions such as gas supply, maintenance, meter reading, and safety inspections, down to each customer's home. With an expected increase in penetration rates and enhancement of customer loyalty, the sector is poised to continuously contribute to gross profit growth. Overall, BINHAI INVs core business demonstrates sufficient profit resilience. With the backing of its two major shareholders, the traditional gas foundation remains solid, and the orderly implementation of value-added services along with new comprehensive energy businesses such as green hydrogen and photovoltaics holds a bright long-term development prospect. If subsequent new projects gradually achieve scaling, it is expected to further boost the companys valuation and performance. This article is reproduced from "Asdaq Financial Network," author: Zhang Zhiwei; GMTEight editor: Feng Qiuyi.