Summary of Shenzhen Kstar Science & Tech (002518.SZ) Conference Call Company Overview - **Company**: Shenzhen Kstar Science & Tech (002518.SZ) - **Industry**: Electric power conversion technology, focusing on data centers and energy storage systems (ESS) Key Financial Highlights - **FY25 Net Income**: Expected in the range of Rmb600 million to Rmb660 million, representing a year-over-year increase of 52% to 67%, with a midpoint growth of 60% [5] - **Recurring Net Income**: Projected between Rmb550 million and Rmb620 million, indicating a 60% to 80% year-over-year increase, with a midpoint growth of 70% [5] - **4Q25 Net Income**: Estimated between Rmb154 million and Rmb214 million, showing a significant year-over-year increase of 313% to 473% [5] - **Sales Growth**: Anticipated total sales CAGR of 27% from 2025 to 2030, driven by overseas high-power electrical sales [1][9] Revenue and Earnings Forecast - **Revenue Forecast**: - 2025E: Rmb5,332 million - 2026E: Rmb7,527 million - 2027E: Rmb9,761 million - 2028E: Rmb11,861 million - 2029E: Rmb14,334 million - 2030E: Rmb17,384 million [6] - **Net Income Forecast**: - 2025E: Rmb632 million - 2026E: Rmb1,046 million - 2027E: Rmb1,451 million - 2028E: Rmb1,865 million - 2029E: Rmb2,356 million - 2030E: Rmb2,940 million [6] Strategic Initiatives - **Overseas Expansion**: Kstar is focusing on increasing its overseas sales, particularly in high-power electricals, which are expected to rise from Rmb100 million in 2025E to Rmb800 million in 2026E [1] - **Product Development**: The company is actively developing next-generation products, including 800V DC systems, to capitalize on the architecture upgrade cycle expected from 2026 [1][11] - **ODM Model**: The overseas ODM model is projected to command a pricing premium of 25% to 50% compared to domestic orders, enhancing profitability [1] Margin and Return Expectations - **Gross Profit Margin (GPM)**: Expected to expand to 33% by 2028E, supported by a higher mix of overseas sales [1] - **Operating Profit Margin (OPM)**: Anticipated to reach 18% by 2028E [1] - **Return on Equity (ROE)**: Projected average ROE of 25% from 2026 to 2030 [1] Investment Thesis - **Growth Drivers**: - Expansion into overseas markets, particularly North America - Increased domestic data center revenue due to higher capital expenditures from state-owned and private enterprises - Recovery in overseas ESS business driven by normalized channel inventories and demand [19] - **Valuation**: The 12-month price target is set at Rmb67.6, based on a P/E ratio of 26x for 2028E, indicating a potential upside of 26% from the current price [2][7] Risks - **Key Risks**: - Lower-than-expected growth in US ODM orders - Delays in new product launches, particularly the 800V DC products - Slower growth in overseas ESS and associated margins [20] Conclusion - **Recommendation**: Maintain a Buy rating on Kstar, given its strong growth prospects, attractive valuation, and ongoing transition into a key ODM partner for global data center electrical players [2][19]

Investment Rating - The report assigns a "Buy" rating for the company with a 12-month target price of Rmb60.10 [3][4][14]. Core Insights - The company reported strong performance for the fiscal year 2025, with net profit expected to be between Rmb600 million and Rmb660 million, representing a year-on-year growth of 52% to 67%, which aligns with market expectations [4]. - The fourth quarter net profit is projected to reach Rmb154 million to Rmb214 million, showing a significant year-on-year increase of 313% to 473% [4]. - The growth is attributed to accelerated shipments of data center products and a recovery in energy storage product deliveries, with management expecting an increase in orders related to the United States starting in 2026 [4]. - The company anticipates that revenue from its data center business will be approximately Rmb3 billion in 2025, with over 50% of sales coming from overseas [4]. - The management has secured new orders worth Rmb1 billion from a major client, with additional orders valued at Rmb300 million and Rmb100 million expected to be delivered in 2026 [4]. Financial Metrics - The company's market capitalization is Rmb31.2 billion (approximately US$4.48 billion) [3]. - The stock has a price-to-book ratio of 6.4 for the fiscal year ending December 2025 [3]. - The average daily trading volume is 15.43 million shares, with an average daily turnover of Rmb725 million [3]. - Earnings per share (EPS) estimates for the fiscal years are Rmb1.04 for 2025, Rmb1.55 for 2026, and Rmb2.14 for 2027 [3][4]. Valuation - The target price of Rmb60.10 is based on a discounted cash flow (DCF) valuation method [4]. - The report does not adjust the earnings per share (EPS) forecasts or the target price [4].

Investment Rating - The report maintains a positive outlook on the "space photovoltaic" sector, indicating it as a key investment theme for 2026, driven by strong demand and geopolitical narratives [7][8]. Core Insights - The space photovoltaic industry is experiencing significant advancements, primarily among companies already established in the sector, highlighting the high barriers to entry [7][8]. - The Chinese photovoltaic supply chain is expected to accelerate the growth of the space photovoltaic market, benefiting from the U.S. demand for "self-sufficiency" in solar products [7][8]. - The wind power and grid equipment sectors have also received substantial positive catalysts, with notable developments in offshore wind projects and significant investments planned by the State Grid [7][8]. Summary by Relevant Sections Space Photovoltaics - Recent developments in the space photovoltaic sector include strategic partnerships and investments by companies like JunDa and Dongfang Risen, focusing on advanced technologies such as perovskite and HJT cells [8][9]. - The U.S. is facing a critical need for domestic solar supply chains due to trade barriers, which presents a significant opportunity for Chinese companies to capitalize on this demand [11][12]. Wind Power - The UK government has signed contracts for 8.4GW of offshore wind projects, exceeding market expectations, which strengthens the outlook for domestic supply chain exports [13][14]. - The auction results indicate a favorable pricing environment for developers, enhancing the profitability of future projects [14]. Grid Equipment - The State Grid's investment plan of 4 trillion yuan for the 14th Five-Year Plan represents a 40% increase from the previous plan, establishing a strong foundation for long-term growth in the grid sector [3][15]. - The aging infrastructure in North America is driving demand for new transformers and grid solutions, creating opportunities for companies like Siyuan Electric and Jinpan Technology [17][19]. Lithium Batteries - New regulations on battery recycling are set to take effect in April 2026, emphasizing the importance of a comprehensive management system for used batteries [22][23]. - Companies like Fulin Precision are expanding their production capabilities in lithium iron phosphate batteries, indicating a positive trend in the lithium battery market [25][26]. Hydrogen and Fuel Cells - The hydrogen industry is poised for growth, with significant policy support and increasing sales of hydrogen vehicles expected in the coming years [4][5].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to return to a growth trajectory driven by its data center business and the recovery of the energy storage market in Europe and emerging markets [6][7] - The company forecasts a net profit attributable to shareholders of 600 million to 660 million yuan for 2025, representing a year-on-year growth of 52.21% to 67.43% [6] - The data center and energy storage segments are seeing continuous increases in orders and shipments, contributing to the company's growth [6] Financial Forecasts - Revenue projections for 2025, 2026, and 2027 are 5,173 million, 7,025 million, and 9,155 million yuan respectively, with growth rates of 24.4%, 35.8%, and 30.3% [6][7] - Net profit attributable to shareholders is projected to be 623 million, 1,002 million, and 1,358 million yuan for the same years, with growth rates of 57.9%, 60.9%, and 35.6% [6][7] - Earnings per share are expected to be 1.07, 1.72, and 2.33 yuan for 2025, 2026, and 2027 respectively [6][7] Business Segments - The data center business has established a comprehensive product system, including integrated power modules and high-performance cooling solutions, and has formed deep partnerships with major internet companies [6] - The energy storage business is positioned for rapid growth in 2025, supported by a complete layout of technology, products, and global channels [6]

Group 1 - The company expects a positive net profit for the fiscal year 2025, indicating either a turnaround or an upward trend in performance [1] - The performance forecast period is from January 1, 2025, to December 31, 2025 [1] - The company has communicated with its auditing firm regarding the performance forecast, and there are no significant discrepancies between the two parties [1] Group 2 - The company's growth is attributed to its dual business focus on "data centers and renewable energy," both of which are showing growth trends for 2025 [1] - The data center business is the company's core area, benefiting from a new wave of infrastructure investment in the industry [1] - The renewable energy segment is experiencing a rebound in demand, particularly in the European energy storage market and emerging markets, contributing to overall performance growth [1]

Group 1 - Canada will grant China an annual quota of 49,000 electric vehicles, which will enjoy a 6.1% Most Favored Nation tariff rate, with the quota increasing at a certain rate each year [1] - The Ministry of Commerce of China expects both countries' industries to seize opportunities for mutual benefit and win-win cooperation [1] - The State Council of China is focusing on boosting consumption and supporting new service consumption growth points, aiming to enhance service quality and consumer willingness [1] Group 2 - The China Securities Regulatory Commission (CSRC) is strengthening market monitoring and regulation to prevent excessive speculation and market manipulation [1] - The CSRC is drafting a trial management method for derivative trading, emphasizing prudent regulation and maintaining reasonable leverage levels in the derivatives market [1] - The market supervision authority approved the acquisition of Dole Group by American Axle Manufacturing with additional restrictive conditions to ensure fair competition in the automotive parts sector [2] Group 3 - TCL Zhonghuan signed a cooperation framework agreement to invest in a new energy project [4] - Huatai Hotel's controlling shareholder is planning a merger and reorganization, which may lead to a change in actual control [4] - Cheng Tian Wei Ye plans to raise no more than 800 million yuan through a private placement for liquid cooling system projects [4]

Key Points - China Metallurgical Group Corporation (China MCC) expects a decline of over 50% in net profit attributable to shareholders in 2025 due to losses in the real estate sector and increased asset impairment provisions [1] - JAC Motors anticipates a net loss of approximately 1.68 billion yuan in 2025, although this represents a reduction in losses compared to the previous year [2] - Northern Rare Earth forecasts a net profit increase of 116.67% to 134.60% in 2025, driven by improved sales and production efficiency in rare earth products [3] - Shenghong Technology projects a net profit increase of 260.35% to 295% in 2025, attributed to the growing demand for AI infrastructure and high-end products [4] - Lanke Technology expects a net profit increase of 52.29% to 66.46% in 2025, benefiting from strong demand in the AI industry [7] - Aiwai Electronics anticipates a net profit increase of 17.70% to 29.47% in 2025, focusing on high-value chip solutions [25] - Longxin General expects a net profit increase of 47.15% to 60.53% in 2025, driven by steady growth in its core motorcycle and general machinery businesses [28] - China One Heavy Industry predicts a net loss of 310 million to 460 million yuan in 2025, although this represents a significant reduction from the previous year's loss [35] - Kunda Technology expects a net loss of 1.2 billion to 1.5 billion yuan in 2025, impacted by industry supply-demand imbalances [34] - Daqing Energy anticipates a net loss of 1 billion to 1.3 billion yuan in 2025, although this reflects a narrowing of losses compared to the previous year [42]

Core Viewpoint - Keda (002518) announced on January 16 that it expects a net profit of 600 million to 660 million yuan for 2025, representing a year-on-year growth of 52.21% to 67.43% [2] Group 1: Financial Performance - The expected net profit for 2025 is between 600 million and 660 million yuan [2] - The projected year-on-year growth rate is between 52.21% and 67.43% [2] Group 2: Stock Performance - Keda's stock closed at 53.60 yuan, up 1.15%, with a turnover rate of 3.05% and a transaction volume of 918 million yuan [2] - Over the past five days, the stock has increased by 0.06% [2] - Among stocks with a profit forecast increase of over 50%, 67.80% saw a price increase on the announcement day, and two stocks hit the daily limit [2] - The percentage of stocks that increased in price over the five days following the announcement is 76.27% [2] Group 3: Capital Flow - The net inflow of main funds for Keda today was 23.62 million yuan, with a total net inflow of 128 million yuan over the past five days [2] - As of January 15, the margin trading balance was 420 million yuan, with a financing balance of 418 million yuan, reflecting an increase of 8.56% compared to the previous trading day [2] - The cumulative growth of the financing balance over the past five days is 3.43% [2]

Group 1 - The company, Keda, announced an expected net profit attributable to shareholders of 600 million to 660 million yuan for 2025, representing a year-on-year growth of 52.21% to 67.43% [2]

Group 1 - Su Dawei Ge's wholly-owned subsidiary plans to invest in a fund focusing on semiconductor, new energy, AI, and aerospace sectors, contributing 20 million yuan for a 10.2302% stake [2] - Shimao Energy terminates plans for a change in control after failing to reach consensus on key terms, with stock resuming trading on January 19 [3] - Huatian Hotel's controlling shareholder is planning a merger and restructuring, potentially changing the actual controller to the Hunan Provincial State-owned Cultural Assets Supervision and Administration Commission [4] Group 2 - Jinpu Titanium's subsidiary Xuzhou Titanium will cease production due to intensified market competition, which is expected to significantly impact revenue in 2026 [5] - Dingxin Communications' deputy general manager is under investigation by the CSRC for suspected short-term trading of company stock, but it will not affect the company's operations [6] - Xinhang New Materials plans to acquire 51% of Hairete for 12.8826 million yuan to explore new growth points [7] Group 3 - Hualan Co.'s controlling shareholder raises the upper limit of its share buyback plan from 58.08 yuan to 86.66 yuan per share [8] - Wanhua Chemical's MDI Phase II facility has resumed normal production after maintenance [9] - Junsheng Electronics introduces a strategic investor, with a 1 billion yuan investment aimed at reducing overall debt [10] Group 4 - Jiangbolong announces five shareholders plan to transfer 3% of the company's shares through a pricing inquiry [11] - Haitai Technology expects a net profit increase of 226.86% to 323.97% in 2025, driven by high industry demand and increased orders [13] - Northern Rare Earth anticipates a net profit increase of 116.67% to 134.6% in 2025 due to successful market expansion [14] Group 5 - Lanke Technology forecasts a net profit increase of 52.29% to 66.46% in 2025, benefiting from the AI industry trend [15] - Keda expects a net profit increase of 52.21% to 67.43% in 2025, driven by growth in data center and new energy sectors [16] - Cambridge Technology predicts a net profit increase of 51% to 67% in 2025, supported by strong demand in core business areas [17] Group 6 - China Electric Research anticipates a net profit of 533 million yuan in 2025, a 14.04% increase year-on-year [18] - China Automotive Research expects a net profit of 1.06 billion yuan in 2025, a 17.85% increase year-on-year [19] - Zhongcheng Co. forecasts a net profit of 276 million to 414 million yuan in 2025, recovering from a previous loss [20] Group 7 - Junda Co. expects a net loss of 1.2 billion to 1.5 billion yuan in 2025, worsening from a previous loss of 591 million yuan [21] - Guangdian Network anticipates a net loss of 1.29 billion to 1.55 billion yuan in 2025, attributed to declining traditional business revenue [22] - Jiugang Hongxing predicts a net loss of approximately 1.879 billion yuan in 2025, an improvement from a previous loss of 2.617 billion yuan [23] Group 8 - Jinbo Co. expects a net loss of around 1.4 billion yuan in 2025, worsening from a previous loss of 815 million yuan [24] - Dongjiang Environmental anticipates a net loss of 1.05 billion to 1.35 billion yuan in 2025, due to ongoing industry adjustments [25] - Daqing Energy forecasts a net loss of 1 billion to 1.3 billion yuan in 2025, despite improvements in production costs [26] Group 9 - Dongzhu Ecology expects a net loss of 935 million to 1.135 billion yuan in 2025, impacted by macroeconomic factors [27] - Weiyuan Co. anticipates a net loss of 950 million to 1.05 billion yuan in 2025, turning from profit to loss [28] - Huanghe Xuanfeng predicts a net loss of 850 million yuan in 2025, an improvement from a previous loss of 983 million yuan [29] Group 10 - Fushun Special Steel expects a net loss of 770 million to 870 million yuan in 2025, turning from profit to loss [30] - China First Heavy Industries anticipates a net loss of 310 million to 460 million yuan in 2025, significantly reducing losses compared to the previous year [31] - Jishi Media forecasts a net loss of 364 million to 455 million yuan in 2025, with overall revenue expected to remain stable [33] Group 11 - Guangxi Energy expects a net loss of 170 million to 220 million yuan in 2025, turning from profit to loss [34] - Baike Bio anticipates a net loss of 220 million to 280 million yuan in 2025, turning from profit to loss due to declining vaccine sales [35] - Zhongtai Auto expects to remain in a loss position for 2025, with a projected positive net asset value by year-end [36] Group 12 - Nasda anticipates a loss for 2025 due to significant asset sales and industry policy adjustments [37] - Rongsheng Development expects to report a loss for 2025, with the amount not exceeding the previous year's audited net assets [38] Group 13 - China National Materials signs a contract worth 299 million Canadian dollars for engineering services in Canada [40] - Dayu Water-saving's subsidiary wins a project worth 133 million yuan for water source guarantee engineering [41] - Hailu Heavy Industry reports new orders totaling 1.941 billion yuan for 2025 [42]