HPEC(SH:600312) HTSC·2025-10-22 04:57Investment Rating - The report maintains a "Buy" rating for the company with a target price of 22.80 RMB [7][5]. Core Insights - The company reported a revenue of 8.436 billion RMB for Q1-Q3 2025, representing a year-on-year increase of 6.98%, and a net profit attributable to shareholders of 982 million RMB, up 14.62% year-on-year [1][7]. - The strong domestic bidding for power transmission and transformation equipment, along with a robust order backlog in ultra-high voltage projects, is expected to improve the company's revenue and order structure [1][3]. - The company has maintained high levels of R&D investment, focusing on various advanced technologies and product certifications, which is anticipated to enhance its profitability [2][4]. Summary by Sections Financial Performance - For Q3 2025, the company achieved a revenue of 2.740 billion RMB, down 3.63% year-on-year and 13.98% quarter-on-quarter, with a net profit of 318 million RMB, reflecting a year-on-year decline of 1.83% but a quarter-on-quarter increase of 3.63% [2]. - The gross profit margin for Q3 2025 was 25.84%, an increase of 4.28 percentage points from the previous quarter, while the net profit margin was 12.41%, up 2.01 percentage points [2]. Market Outlook - The report highlights ongoing strong demand for ultra-high voltage projects, with significant bidding activity expected in the coming months, potentially exceeding 150 billion RMB in the fourth round of bidding alone [3][4]. - The company has successfully developed the world's first 800 kV 80 kA circuit breaker, which is expected to advance high-capacity switch technology in China [4]. Profit Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 has been adjusted downwards by 4.67%, 3.69%, and 7.58% respectively, with projected figures of 1.260 billion RMB, 1.546 billion RMB, and 1.751 billion RMB [5][11]. - The company is expected to trade at a PE ratio of 20 times in 2026, with a target price of 22.80 RMB, reflecting a valuation adjustment from the previous target of 20.37 RMB [5][11].