China XD(SH:601179) Changjiang Securities·2025-09-02 23:30Investment Rating - The investment rating for the company is "Buy" and is maintained [5]. Core Views - The company reported a significant improvement in gross margin and achieved rapid growth in performance, with total revenue of 11.33 billion yuan in the first half of 2025, representing a year-on-year increase of 8.9%. The net profit attributable to shareholders reached 600 million yuan, up 30.1% year-on-year [3][8]. - In Q2 2025, the company achieved a total revenue of 6.07 billion yuan, a year-on-year increase of 7.2% and a quarter-on-quarter increase of 15.4%. The net profit attributable to shareholders was 300 million yuan, reflecting a year-on-year increase of 20.2% and a quarter-on-quarter increase of 2.9% [3][8]. Revenue Analysis - In the first half of 2025, the company's revenue from transformers was 4.935 billion yuan, up 10.5% year-on-year; switch revenue was 4.245 billion yuan, up 4.0%; power electronics revenue was 399 million yuan, up 517.5%; R&D and testing revenue was 371 million yuan, up 51.1%; capacitor revenue was 291 million yuan, up 5.3%; and insulators and lightning arresters revenue was 110 million yuan, down 29.8%. The significant increase in power electronics revenue is mainly attributed to the delivery of ultra-high voltage direct current converter stations [8]. - The company's overseas revenue reached 2.171 billion yuan, a year-on-year increase of 64.0%, indicating strong growth [8]. Margin and Cost Management - The gross margin for the first half of 2025 was 21.82%, an increase of 2.15 percentage points year-on-year. In Q2 2025, the gross margin was 22.29%, up 1.82 percentage points year-on-year and 1.02 percentage points quarter-on-quarter. The improvement in gross margin is expected to be due to product mix optimization and cost reduction in transformer products [8]. - The company's expense ratio for the first half of 2025 was 12.55%, a decrease of 0.41 percentage points year-on-year, with the sales expense ratio at 2.87%, down 0.57 percentage points; management expense ratio at 6.29%, roughly unchanged; R&D expense ratio at 3.81%, up 0.25 percentage points; and financial expense ratio at -0.42%, down 0.10 percentage points [8]. Inventory and Contract Liabilities - As of the end of Q2 2025, the company's inventory was 4.998 billion yuan, a year-on-year increase of 29.2% and a quarter-on-quarter increase of 2.7%. Contract liabilities reached 5.319 billion yuan, up 38.1% year-on-year and 28.3% quarter-on-quarter, indicating a positive trend in future deliveries [8]. Future Outlook - With the delivery of ultra-high voltage orders in the second half of the year and ongoing cost reduction and efficiency improvements, the company is expected to achieve sustained rapid growth in operations. The estimated net profit attributable to shareholders for 2025 is approximately 1.5 billion yuan, corresponding to a PE ratio of about 23 times [8].