China XD(SH:601179) HTSC·2025-10-23 02:44Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 8.25 [7][5]. Core Insights - The company has shown steady revenue growth, with Q3 2025 revenue reaching RMB 5.672 billion, a year-over-year increase of 17.17% [1]. - The gross profit margin for Q3 2025 improved to 23.19%, up 1.07 percentage points quarter-over-quarter, indicating enhanced profitability [2]. - The company has successfully supplied solid-state transformers (SST) for data center projects, which are expected to contribute to future revenue growth [3]. - Strong demand for domestic power transmission and transformation equipment is evident, with significant tender amounts for high-voltage projects [4]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved revenue of RMB 17.004 billion, a year-over-year increase of 11.54%, and a net profit of RMB 939 million, up 19.29% year-over-year [2]. - The overall expense ratio for Q1-Q3 2025 was 13.09%, a decrease of 0.21 percentage points year-over-year, reflecting effective cost management [2]. Market Demand and Supply - From January to August 2025, China's grid construction investment reached RMB 379.6 billion, a 14.0% increase year-over-year, with strong tender demand for power transmission equipment [3]. - The company has a robust pipeline of high-voltage projects, with expected tender amounts exceeding RMB 150 billion for the fourth round of equipment procurement [4]. Profit Forecast and Valuation - The company’s net profit forecasts for 2025-2027 have been adjusted downwards by 10.31%, 9.23%, and 4.68% respectively, with projected net profits of RMB 1.331 billion, RMB 1.681 billion, and RMB 2.034 billion [5]. - The estimated EPS for 2025, 2026, and 2027 are RMB 0.26, RMB 0.33, and RMB 0.40 respectively, with a projected PE ratio of 25 times for 2026 [5].