Star Electric Power 2025 Annual Report Analysis: Net profit attributable to parent company down 12.02%, net operating cash flow decreased by 32.39%

Operating Revenue: Up 6.29% Year over Year; Power Business as Core Support

In 2025, the company achieved operating revenue of RMB 3.021 billion, up 6.29% year over year. By business segment, the power generation and supply segment contributed operating revenue of RMB 2.573 billion, up 2.10% year over year, accounting for 85.17% of total revenue and still serving as the core source of the company’s revenue; the construction contracting business recorded operating revenue of RMB 338 million, up 22.28%; market-based electricity sales service revenue was RMB 41.0626 million, up sharply by 88.93% year over year, becoming an important supplementary driver for revenue growth.

In terms of sales volume, full-year electricity sales were 5.341 billion kWh, up 7.87% year over year; water sales were 49.7678 million tons, up 2.19% year over year. Both volume and pricing increases drove an expansion in revenue scale.

Net Profit: Parent-Company-Attributable Net Profit Down 12.02% YoY; Profitability Under Pressure

In 2025, the company realized net profit attributable to shareholders of listed companies of RMB 184 million, down 12.02% year over year; net profit attributable to non-recurring items attributable to the parent company was RMB 182 million, down 2.44% year over year. The decline in profitability is mainly driven by two factors: first, income tax expenses increased by 267.31% year over year; in the prior-year period, due to a bankruptcy liquidation loss at a subsidiary that was tax-deductible before income tax, income tax expenses decreased significantly, and this effect disappeared in 2025; second, investment income fell by 55.94% year over year. The net profit of the joint venture China Resources Wantong declined, while investment income resulting from non-continuity of contributions brought by subsidiary deregistration and liquidation allocations in the prior-year period did not recur.

Earnings Per Share: Falling in Line With Net Profit

In 2025, basic earnings per share were RMB 0.3361 per share, down 12.04% year over year; basic earnings per share from non-recurring items were RMB 0.3330 per share, down 2.46% year over year. The movement in earnings per share remained consistent with the trend of net profit.

Expenses: Overall Structure Relatively Stable, Financial Expenses Dropping Sharply

Total period expenses of the company in 2025 were RMB 947,100, and compared with the prior year, there was a clear change:

Selling Expenses: Slight Decrease of 3.94%

Selling expenses decreased by 3.94% year over year, mainly because the company optimized cost control in the sales cycle, reducing unnecessary marketing expenditures; overall, the scale of selling expenses remained stable.

Administrative Expenses: Up 3.14%

Administrative expenses increased by 3.14% year over year, mainly due to higher management costs arising from adjustments to the company’s governance structure, upgrades to digital systems, and the like; at the same time, the company increased investment in compliance risk control and audit supervision.

R&D Expenses: Down 9.61%

R&D expenses decreased by 9.61% year over year, but total R&D investment for the full year was RMB 31.7487 million, up 13.21% year over year. Among them, capitalized R&D investment was RMB 24.0503 million, accounting for 75.75% of total R&D investment, indicating that the company’s R&D investment structure has been adjusted, with more projects entering the capitalized stage.

Financial Expenses: Interest Income Surges; From Negative to Even More Negative

Financial expenses were -RMB 13.7188 million, further down from -RMB 7.0359 million last year. This was mainly because the company’s interest income increased sharply year over year. In 2025, interest income was RMB 17.4797 million, compared with RMB 11.8415 million in the same period last year. The growth rate of interest income exceeded the growth rate of interest expenses.

R&D Personnel Profile: Stable Team Size, Optimized Structure

The company had 51 R&D personnel, accounting for 3.63% of the company’s total workforce. By educational background, there were 6 master’s degree holders and 45 bachelor’s degree holders, with no personnel holding associate degrees or below; overall, the R&D team has a relatively high educational level. By age structure, there were 18 people aged 30–40, 14 people aged 40–50, and 18 people aged 50–60. Young and middle-aged R&D personnel account for more than 60%, combining both experience and vitality. During the reporting period, the company newly obtained 24 national intellectual property rights, and achieved positive results in industry-university-research collaborations. It built the “Star Power – Shanghai Jiao Tong University and Sichuan Institute joint laboratory for new power systems,” and its R&D innovation capability continued to improve.

Cash Flows: Operating Cash Flow Under Pressure; Net Outflow in Investing Cash Flow Expands

In 2025, the company’s cash flows overall showed a pattern of falling net operating cash flow, expanding net outflows in investing cash flow, and an increase in net outflows in financing cash flow:

Net Cash Flow From Operating Activities: Down 32.39% YoY

Net cash flow from operating activities decreased by 32.39% year over year, mainly because an increase in electricity sales led to a significant rise in purchase costs, expanding the scale of cash outflows for paying electricity purchase fees. At the same time, the collection pace of accounts receivable slowed somewhat, reducing the overall efficiency of operating cash inflows.

Net Cash Flow From Investing Activities: Net Outflow Increases by RMB 30.23 million YoY

Net cash outflow from investing activities was RMB 270 million. In the same period last year, net outflow was RMB 240 million. The expansion in the net outflow scale was mainly due to the company increasing investment in grid infrastructure, industrial infrastructure, and equipment technology upgrades. The company completed RMB 268 million in actual financial expenditures throughout the year, mainly used for projects such as the 110kV Longfeng transmission and transformation project.

Net Cash Flow From Financing Activities: Net Outflow Increases by RMB 9.2074 million YoY

Net cash outflow from financing activities was RMB 69.5296 million, mainly used for debt repayment and profit distribution. In 2025, the company distributed cash dividends totaling RMB 60.2649 million in total, accounting for 32.73% of net profit attributable to the parent company. The dividend payout ratio remained stable.

Potential Risks: Three Layers of Risk to Watch Closely

External Environmental Risk

A macroeconomic environment characterized by strong supply and weak demand, slower commissioning of projects attracted for investment in supply-side areas, increased distributed photovoltaic self-generation and self-consumption, and weakening momentum behind sustained rapid growth in electricity sales; the construction of new power systems and uncertainties in weather bring challenges to ensuring power supply.

Enterprise Development Risk

Power generation is constrained by limitations on water resources in the Fu River; traditional businesses such as power supply and water supply are subject to regional constraints, revealing development bottlenecks; increased openness in market-based power trading heightens competitive pressure in electricity sales business, and it will take time to cultivate new businesses.

Production and Operation Risk

Increased investment in the construction of the electricity and water network means that some projects have low return rates in the short term; rigid increases in operation and maintenance costs, and delayed water price adjustments, result in an inefficient cost transmission; issues such as high spending on intelligent upgrades and insufficient talent reserves have become more prominent.

Compensation for Directors, Supervisors, and Senior Management: Compensation for Core Management Stable

• Chairman Chen Feng: In the reporting period, the total pre-tax remuneration received from the company was RMB 893,100.
• General Manager He Hao: In the reporting period, the total pre-tax remuneration received from the company was RMB 893,100.
• Deputy General Manager: Deputy general managers such as Yang Jinggang, Wu Haitao, Lü Yi, Yang Dashen, etc. had pre-tax remuneration of RMB 781,400 each.
• Chief Financial Officer Zhang Wanhui: In the reporting period, the total pre-tax remuneration was RMB 781,400.

The compensation system for directors, supervisors, and senior management aligns with the company’s operating performance and job responsibilities. Independent director allowances are RMB 80,000 per year, and the remuneration decision-making procedures are standardized and transparent.

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