Guozheng International has reaffirmed its "Buy" rating on BINHAI INV (02886) with a target price of HK$1.43. The report highlights the company's accelerated sales volume growth in the first quarter, coupled with cost optimization and a high dividend distribution strategy, which continue to enhance its investment appeal.
In the first quarter of 2026, BINHAI INV reported pipeline gas sales volume of 794 million cubic meters, representing a 21% year-on-year increase. Within this, pipeline gas sales reached 585 million cubic meters, up 23% year-on-year. This sustained growth trend indicates resilient end-user demand. For the full year 2025, the company achieved revenue of RMB 5.606 billion, with net profit attributable to shareholders reaching RMB 206 million, a 12% increase year-on-year, reflecting improved profitability. Despite overall market demand pressures, the company's performance remained relatively stable. BINHAI INV projects total gas sales volume to reach 2.5 billion cubic meters in 2026, including 1.9 billion cubic meters of pipeline gas, representing a 6% year-on-year growth.
The report also notes a significant reduction in the company's financing costs. In 2025, financing costs decreased by 41% year-on-year, with the average annual loan interest rate dropping to 4.4%, down 90 basis points from the previous year. By optimizing its debt structure, replacing high-interest liabilities, and expanding financing channels, BINHAI INV has effectively reduced its financial burden. Furthermore, the company's two major shareholders have increased their support by signing strategic cooperation agreements, providing resources in areas such as gas supply security, end-user markets, and clean energy projects, which supports long-term development.
Regarding dividends, the company has enhanced its distribution efforts. In 2025, it paid a dividend per share of HK$0.0836, an increase of HK$0.0076 year-on-year, with a full-year dividend payout ratio of 51%. BINHAI INV has also outlined a clear dividend guidance for the next three years, projecting an annual increase of no less than 10% in dividend per share from 2025 to 2027, based on the 2024 level. The current dividend yield is approximately 6.9%, which is highly attractive within the utilities sector.
Guozheng International believes that, against the backdrop of dual-carbon policies, BINHAI INV is accelerating its transition into a comprehensive energy supplier, with new energy businesses expected to unlock long-term growth potential. Based on expectations of steady sales volume growth, slight improvement in margins, and cost reductions, the company is valued at approximately 8 times projected 2026 earnings, corresponding to a target price of HK$1.43, sustaining the "Buy" rating. Potential risks include weaker-than-expected demand, significant cost fluctuations, and a continued downturn in the real estate sector, which could impact the company's performance.
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