BINHAI INV (02886) has a solid fundamental position, and its financial quality has significantly improved.

As a city gas enterprise listed on the Hong Kong Stock Exchange, BINHAI INV (02886) has delivered mid-term results with increases in both revenue and profit amid a weaker overall industry demand environment in the first half of 2026. At the same time, the company is accelerating its layout in value-added services, green hydrogen, and integrated energy businesses, supported by the resources of its two major shareholders, Tianjin TEDA and Sinopec, making it a defensive stock within the Hong Kong city's gas segment. According to the mid-term results for 2026, the company reported a main business revenue of 2.94 billion RMB for the first half of the year, an increase of 8.1% year-on-year; net profit attributable to shareholders reached 180 million RMB, a year-on-year increase of 12.5%. The growth rate of net profit significantly outpaced the revenue increase of 8.1%, resulting in basic earnings per share of 13.16 cents, a year-on-year improvement of 13.2%. On the sales side, the total sales gas volume was 1.2 billion cubic meters, marking a year-on-year increase of 5.6%. Among this, sales gas volume for industrial and commercial users grew by 13.0%, becoming the main engine for gas sales growth, with incremental contributions from industrial clients of subsidiaries in Shandong Zhaoyuan and Jiangxi Gao'an expanding production. In contrast to the macro background where the national apparent natural gas consumption decreased by 2.4% year-on-year, the companys operational performance clearly outperformed the market. The taxed gross margin for city gas increased to 0.58 RMB per cubic meter, up by 0.08 RMB year-on-year, benefiting from the implementation of pricing policies in multiple locations, which offset procurement cost pressures from fluctuations in international gas prices. However, the engineering installation business was hampered by the real estate sector, with revenue falling by 37.9% year-on-year, becoming a major drag on performance. Value-added services achieved a gross profit of 28.02 million RMB, an increase of 18.9% year-on-year, with an overall gross profit margin of 71.9%, serving as an important supplementary source of profit. The faster profit growth compared to revenue can be largely attributed to refined financial management, with ongoing optimization of debt structure and reduction in financing expenses, directly enhancing profit margins from saved financial costs. The company has adopted multiple measures to promote debt governance: the debt-to-asset ratio continued to decline from 69.7% at the end of 2025 to 68.7% at the end of June 2026, a decrease of 1.0 percentage points, alleviating debt pressure; return on equity (ROE) improved to 8.1% from 7.6% in the same period last year, indicating better asset utilization; simultaneous enhancement of working capital management saw accounts receivable shrink from 220 million RMB to 175 million RMB, a year-on-year decrease of 21%, improving collection efficiency and enhancing operating cash flow quality. The replacement of dollar loans is a key action in this round of financial optimization. In the past, the company had a considerable amount of dollar syndicated loans, bearing the volatility of overseas interest rates as well as the exchange loss risk arising from fluctuations in the RMB-to-USD exchange rate. In the first half of 2026, the company completed a new round of syndicated loan restructuring, achieving the replacement of existing dollar loans, reducing the proportion of dollar debt from 20% at the end of 2025 to 9%, significantly mitigating the impact of exchange rate fluctuations on profit performance and reducing concerns over foreign exchange losses. At the same time, the debt maturity structure was adjusted, with short-term loans within one year decreasing from 39% at the end of 2025 to 23%, reducing short-term repayment pressure and freeing up more cash flow for business operations and capital expenditures; the company has a bank credit line of 972 million RMB available, providing a sufficient liquidity safety net to cover future debt repayment needs. With the adjustment of the debt structure, the overall financing interest rates and financial costs have significantly decreased. In the first half of 2026, the group's average financing rate dropped to 4.0%, down from 4.4% at the end of 2025, a reduction of 40 basis points; financing costs fell from 42.19 million RMB in the first half of 2025 to 32.06 million RMB, a year-on-year decrease of about 24%, saving over 10 million RMB in financing costs, which directly contributed to the profit increase and is also a key factor for the profit growth outpacing revenue growth. Amid a backdrop where most companies in the city gas industry still face high debt and high financial costs, BINHAI INV achieved continuous financial improvement through the replacement of high-interest foreign currency loans, adjustment of short and long-term debt structures, and expansion of low-cost domestic bank credits, significantly enhancing its risk resistance capability. It is also worth noting that, beyond the traditional city gas segment, the company is currently focusing on value-added services, integrated energy, and collaboration with shareholders' resources. The value-added services have completed restructuring into four major segments: smart home, home services, extended maintenance, and insurance business; the company has also commenced grid-based operations, opening community stores in Zhuozhou to provide safety inspections, maintenance, and sales services at the community level. The annual gross profit target for value-added services is set at 58 million RMB, with an approximately 48% achievement rate in the first half. Significant breakthroughs have been made in the integrated energy sector, with the signing of a green hydrogen supply framework agreement with Sinopec New Energy, planning to promote hydrogen blending trials in the Tianjin pipeline network, aiming to be ready for green hydrogen acceptance by the end of 2028; distributed photovoltaic projects are also progressing, with two photovoltaic projects in Deqing totaling 3.51 MW expected to be completed and put into operation by the end of September 2026. Green hydrogen and photovoltaics are still in their nurturing phase and are unlikely to contribute significant profits in the short term, representing more of a long-term value. At the shareholder level, Tianjin TEDA and Sinopec together hold over 72% of the company's shares, providing comprehensive support in gas supply security, cooperation in new energy, market integration, and shareholder resource provision. Meanwhile, the company has introduced a three-year dividend guidance for 2025-2027, basing each annual dividend increase on 0.076 HKD per share in 2024, aiming for an increase of no less than 10% per year, offering investors a clear expectation of returns. In summary, BINHAI INV is a city gas stock characterized by a "defensive-first, growth-in-the-future" approach. The traditional gas sales business benefits from shareholder gas supply support, and through refined financial management, the company has completed the replacement of dollar loans, reduced financing rates, and continuously improved its debt-to-asset ratio, with dividends increasing annually, providing a safety net with high dividends. Given its current price-to-earnings ratio and dividend yield of only 6.2 times and 7.8 cents respectively, the overall valuation is attractive, suggesting that medium to long-term investors seeking stable dividends should pay close attention. This article is reproduced from "Hui Gang Information," GMTEight edited by Li Fo.