SMHC(SH:600131) EBSCN·2025-08-29 06:10Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Views - The company reported a revenue of 3.525 billion yuan for the first half of 2025, a year-on-year decrease of 4.55%, with a net profit attributable to shareholders of 266 million yuan, down 11.01% year-on-year [1]. - The company has a strong revenue contribution from its subsidiaries, with nearly 70% of revenue coming from high-profitability subsidiaries, leading to an overall improvement in gross margin [2]. - The company has secured over 90% of the market share in communication equipment procurement for the State Grid, indicating a resolution of competitive issues within the industry [3]. - The company has increased its R&D investment to approximately 482 million yuan in the first half of 2025, enhancing its technological innovation capabilities [3]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 2.413 billion yuan, a decrease of 9.77% year-on-year, with a net profit of 240 million yuan, down 16.42% year-on-year [1]. - The overall gross margin improved to 22.13% in the first half of 2025, up from 20.02% in the first half of 2024 [2]. Market Position - The company and its subsidiary, Yili Technology, won contracts totaling 803 million yuan in the State Grid's procurement processes, achieving a combined market share of 93.25% [3]. - The company is positioned as a key subsidiary of the State Grid, benefiting from the rapid deployment of digital power solutions [4]. Profit Forecast and Valuation - The net profit forecasts for 2025, 2026, and 2027 have been adjusted to 844 million yuan, 1.025 billion yuan, and 1.253 billion yuan respectively, with corresponding EPS of 0.70 yuan, 0.85 yuan, and 1.04 yuan [4][8]. - The company is expected to maintain a PE ratio of 26, 21, and 18 for the years 2025, 2026, and 2027 respectively [4][10].