XJEC(000400) 国信证券·2024-11-04 02:00Investment Rating - The investment rating for the company is "Outperform the Market" [6][4][20]. Core Insights - The company's business structure optimization has improved profitability, with a non-net profit growth of 20% year-on-year, despite a slight revenue decline of 11.49% [1][8]. - The company is expected to benefit significantly from the peak operation of ultra-high voltage direct current (UHVDC) projects from 2025 to 2027, as it is a leading manufacturer of converter valves [2][15]. - The urgent demand for digital upgrades in distribution networks positions the company as a leading player in the secondary distribution sector, with a strong market position in monitoring, protection, and dispatching [3][16]. Summary by Sections Financial Performance - In the first three quarters, the company achieved revenue of 9.586 billion yuan, a year-on-year decrease of 11.49%, while the net profit attributable to shareholders was 895 million yuan, an increase of 10.41% [1][8]. - The gross profit margin for the first three quarters was 21.94%, up 3.22 percentage points year-on-year, and the net profit margin was 10.67%, up 2.17 percentage points [1][8]. - In Q3, the company reported revenue of 2.75 billion yuan, a year-on-year decrease of 24.17%, but the net profit increased by 10.56% year-on-year to 267 million yuan [12][1]. Market Opportunities - The company is expected to see a significant increase in project openings and tenders for UHVDC projects from 2023 to 2025, with a peak in operations anticipated from 2025 to 2027 [2][15]. - The company won the bid for the Gansu-Zhejiang UHVDC flexible converter valve, which is expected to enhance its market value significantly [2][15]. Profit Forecast - The profit forecast for the company has been raised, with expected net profits of 1.252 billion yuan, 1.776 billion yuan, and 2.226 billion yuan for 2024, 2025, and 2026 respectively [4][16]. - The current stock price corresponds to a price-to-earnings ratio (PE) of 25, 18, and 14 for the years 2024, 2025, and 2026 respectively [4][16].