Three equipment projects go overseas with a "zero" breakthrough! Dongfang Electric's net profit attributable to the parent company in 2025 is expected to increase by over 30% year-on-year, but its net operating cash flow will decrease by 80% year-on-year.

By China Business Daily Reporter｜Cai Ding    By China Business Daily Editor｜Huang Bowen

Late on March 31, Dongfang Electric (SH600875, share price 35.05 yuan, market cap 121.2 billion yuan) released its 2025 annual report.

In 2025, the company achieved revenue of approximately 77.583 billion yuan, a year-on-year increase of 13.11%; attributable net profit of approximately 3.831 billion yuan, a year-on-year increase of 31.11%; net profit after deducting non-recurring items of approximately 3.192 billion yuan, a year-on-year increase of 61.17%; and basic earnings per share (EPS) of 1.15 yuan, a year-on-year increase of 22.34%. The company plans to use its total share capital as the base and distribute cash dividends of 5.3 yuan (tax included) to all shareholders for every 10 shares.

Although attributable net profit recorded positive growth, a reporter from The Daily Economic News noticed that Dongfang Electric’s net cash flow from operating activities during the period was 2.014 billion yuan, down 79.98% year on year. The company said the reasons are: first, the construction and transfer projects are in the construction phase, so cash outflows increased year on year; second, as more projects are being executed, project procurement increased.

Newly effective orders during the period reached 117.251 billion yuan; ending orders on hand exceeded 140 billion yuan

Viewed longitudinally, this is the first time Dongfang Electric’s annual revenue has surpassed 70 billion yuan, and it comes after its attributable net profit recorded a 17.7% decline in 2024 before regaining momentum. Even so, the 3.831 billion yuan of attributable net profit remains below the consensus forecasts of 13 institutions (about 3.986 billion yuan).

The 2025 annual report shows that, facing uncertainties such as weakening global economic growth momentum and intensifying price competition in the new energy sector, the company’s international operations face certain risks and challenges. However, in 2025, the value of newly effective contracts in Dongfang Electric’s international market still exceeded 14 billion yuan. Breakthroughs were achieved in overseas orders for one million-kilowatt nuclear power units, 50-megawatt heavy-duty gas turbines, and pumped-storage power plant units—delivering “zero” breakthroughs.

Overall, in 2025 Dongfang Electric’s gross margin increased by 1.53 percentage points year on year to 17.01%. By business segment, in 2025, Dongfang Electric’s energy equipment manufacturing business revenue increased 22% year on year to 58.005 billion yuan, and gross margin increased by 2.96 percentage points year on year, while manufacturing services revenue declined 16.79% year on year to 12.901 billion yuan.

In 2025, Dongfang Electric’s newly effective orders reached 117.251 billion yuan, up 15.93% year on year. Of this, energy equipment manufacturing accounted for 67.33%, manufacturing services accounted for 22.15%, and emerging industries accounted for 10.52%. By the end of 2025, the company’s orders on hand were 140.31 billion yuan. At the same time, the company continued to consolidate its traditional industry advantages, with market share in the nuclear power and gas power markets remaining No. 1 in the industry.

As disclosed in the annual report, in 2025, Dongfang Electric focused on breakthroughs in key core technologies: the world’s first commercial supercritical carbon dioxide power generation unit was successfully put into commercial operation; the world’s first 700-megawatt ultra-supercritical circulating fluidized-bed boiler was selected as one of the “Top 10 Super Projects of China’s Central State-Owned Enterprises in 2025”; the “Guohe One” demonstration project’s Unit 2 was put into commercial operation; and core main equipment such as the main helium blower and steam generator for the world’s first 600-megawatt commercial high-temperature gas-cooled reactor demonstration project was completed for R&D and delivery…

At end-2025, both accounts receivable and inventory balances increased by more than 20% from the beginning of the year

The annual report also shows that, as of the end of 2025, Dongfang Electric’s accounts receivable increased 21.11% from the beginning of the year to 15.194 billion yuan, mainly because it grew along with the increase in revenue scale. Meanwhile, in 2025, the company’s credit impairment losses decreased by 0.409 billion yuan year on year, mainly due to the increase in the balance of receivables and the rolling impact of aging; asset impairment losses decreased by 0.194 billion yuan year on year, mainly due to the increase in the balance of contract assets and the rolling impact of aging.

For inventory, as of the end of 2025, Dongfang Electric’s inventory balance reached 26.171 billion yuan, up 20.69% from the beginning of the year. The company explained that the main reason is the growth in work-in-progress balances.

In addition, in 2025 Dongfang Electric’s net cash flow from operating activities was 2.014 billion yuan, down 79.98% year on year. The company said the reasons are: first, construction and transfer projects are in the construction phase, so cash outflows increased year on year; second, as more projects are being executed, project procurement increased.

At the same time, the company’s investment income also decreased by 45.02% year on year to 0.867 billion yuan in 2025. The company said this was mainly due to a year-on-year decline in investment gains arising from the disposal of subsidiary equity.

Looking ahead to 2026, Dongfang Electric said the company will do its utmost to develop major hydropower engineering equipment, and will accelerate breakthroughs and R&D efforts on technologies such as independently developed heavy-duty gas turbines to enhance domestic substitution capability and improve the resilience and safety level of the industrial chain and supply chain. Meanwhile, at the operational level, it will focus on improving key indicators such as operating cash flow and the asset-liability ratio. It will strictly control increases in accounts receivable, inventory, and so on, improve the efficiency of capital turnover, and adhere to the operating philosophy that “business should have value, scale should be effective, and profits should have cash flow.”

Cover image source: China Business Daily Media Database

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