XJEC(SZ:000400) HTSC·2025-10-28 03:43Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 32.40 [7][5]. Core Insights - The company reported a Q3 revenue of RMB 3.006 billion, representing a year-over-year increase of 9.30% but a quarter-over-quarter decrease of 26.66%. The net profit attributable to the parent company was RMB 268 million, with a year-over-year increase of 0.26% and a quarter-over-quarter decrease of 37.25% [1][2]. - The company's gross margin improved due to quality enhancement and revenue structure optimization, with a gross margin of 23.88% for the first three quarters of 2025, up 1.94 percentage points year-over-year. This trend is expected to continue [2][3]. - The company is well-positioned to benefit from the ongoing investment in the national grid, with significant growth in its direct current transmission business linked to the peak construction cycle of ultra-high voltage projects [1][3]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved a total revenue of RMB 9.454 billion, a slight year-over-year decrease of 1.38%. The net profit attributable to the parent company was RMB 901 million, reflecting a year-over-year increase of 0.75% [2][5]. - The Q3 results showed a revenue of RMB 3.006 billion and a net profit of RMB 268 million, indicating fluctuations primarily due to the timing of project revenue recognition [2][3]. Market Opportunities - The report highlights ongoing ultra-high voltage construction and planning, with several projects approved and operational, indicating a robust pipeline of orders for the company. The total expected bidding amount for the fourth round of equipment procurement is projected to exceed RMB 15 billion [3][4]. - The company has maintained a leading position in both domestic and international markets, with significant growth in overseas revenues from products like mobile substations and charging stations [4][5]. Profit Forecast and Valuation - The profit forecasts for 2025-2027 have been adjusted downwards by 8.77%, 9.13%, and 8.54% respectively, with expected net profits of RMB 1.288 billion, RMB 1.655 billion, and RMB 1.940 billion [5][11]. - The report assigns a PE ratio of 20 times for 2026, reflecting the company's competitive edge in flexible direct current transmission, leading to a target price of RMB 32.40 [5][11].