Capturing Market Potential and Maintaining Efficiency Enhancement and Profitability

Following the issuance of the “Circular on Deepening the Market-based Reform of New Energy On-Grid Tariff and Promoting the High-Quality Development of New Energy” (the “Circular No. 136”) jointly by the National Development and Reform Commission of the People’s Republic of China (the “NDRC”) and the National Energy Administration (the “NEA”) at the beginning of this year, new energy power generation has entered the power market in full scale. Coupled with the ongoing growth in the installed capacity of new energy, the reliability of power supply continues to enhance. Concurrently, with the gradual launch of the domestic policies to stimulate consumption, industrial electricity consumption in certain provinces began to recover during the second quarter this year, driving the growth rate of power consumption among the secondary industries.

Looking ahead to the second half of the year, the China Electricity Council expects power consumption growth to exceed that of the first half, with the national total electricity consumption likely to grow by 5%–6% year-on-year, and power demand continuing to maintain its stable growth. Additionally, it expects that the installed capacity of power generation newly put into operation nationwide in the second half of the year will amount to 500 million kW, of which approximately 400 million kW is expected to be newly added installed capacity of new energy power generation. This trend will present new opportunities and challenges to the power market.

Against the backdrop of a comprehensive green transformation of the economy and society, new energy remains the key solution to addressing electricity demand growth. We will flexibly adjust our power trading strategies to actively respond to the policy of full-scale entry of new energy power generation into the power market. By properly coordinating the integration of medium- and long-term power transactions with spot market transactions, we will ensure that settlement tariffs maintain a leading position in the region. We will also reasonably allocate resources, strengthen the building of our team of dedicated power trading personnel and supporting decision-making systems, precisely evaluate the demand and supply situation in the power market, so as to continuously enhance trading revenues.

Strengthening Financial Management and Control to Facilitate Efficiency Enhancement

The People’s Bank of China will continue to implement a moderately accommodative monetary policy in the second half of the year with a view to maintaining ample market liquidity and guiding reasonable credit growth of financial institutions to provide further support for financing of the real economy. The Company will closely monitor the relevant policies and actively explore low-cost financing channels, including domestic and cross-border direct loans, fully utilize various preferential fiscal policies and optimize its financing and debt structure so as to meet the capital requirements of various investment projects in the coming future. The Group will further optimize its financial management and control system, enhance the informatization and intelligence level of key business processes with a focus on strengthening functions such as accounting, funding, costs, tax planning, and project risk management. The Group will comprehensively promote cost reduction and efficiency enhancement to ensure the achievement of gearing ratio control targets for the year, providing strong support for the realization of its high-quality development and green and low-carbon transformation.

Deepening Asset Management and Continuing to Enhance Asset Quality

The resolutions relating to the Proposed Asset Restructuring (please refer to the following section titled “Material Acquisitions and Disposals” for details) have been voted for and passed by shareholders of the Company and SPIC Yuanda Environmental-Protection Co., Ltd. (“Yuanda Environmental”) at their respective general meetings. Currently, Yuanda Environmental is advancing forward the regulatory review of the transaction by the Shanghai Stock Exchange (the “SSE”) and aims to complete the transaction by the end of the year. Upon completion of the Proposed Asset Restructuring, the Company will directly hold a controlling stake in Yuanda Environmental, and through which, continue to hold controlling interests in Wu Ling Power Corporation (“Wu Ling Power”) and SPIC Guangxi Changzhou Hydropower Development Co., Ltd. (“Changzhou Hydropower”). We will consistently pursue the complementary positioning of multi-energy asset portfolio comprising hydropower, wind power and photovoltaic power and thermal power, and therefore fully utilize the synergies between environmental-friendly new energy business and clean thermal power business, laying a solid foundation for the Company’s strategic goal of becoming a comprehensive clean energy flagship listed platform for State Power Investment Corporation Limited (“SPIC”).

The Group will accelerate the promotion of coal-and-power joint-operation, complete the equity transfer in relation to its equity participation in coal-fired power projects, and further enhance the risk-resistant capability of thermal power projects in securing stable power supply. In addition, we will promote the transfer and disposal of equity interests in certain inefficient assets in an orderly manner so as to continuously optimize the portfolio of various power sources and enhance the synergy between new energy and traditional energy, thereby ensuring the diversity and stability of power supply.

In the second half of 2025, the Group will seize the opportunities presented by peak-loading periods during the summer and winter seasons, put all-out effort to fully leverage peak power generation to maximize benefits, continue to strengthen production safety and operational synergies, as well as optimize asset quality and maintain profitability.