Core Viewpoint - After four consecutive years of losses, Kelu Electronics, a subsidiary of Midea Group, has reported a significant turnaround in its financial performance for the first half of 2025, with a revenue increase of 34.66% and a net profit surge of 579.14% compared to the previous year [1][3]. Financial Performance - Kelu Electronics achieved a revenue of 2.573 billion yuan in the first half of 2025, marking a year-on-year growth of 34.66% [1]. - The net profit attributable to the parent company reached 190 million yuan, reflecting a remarkable year-on-year increase of 579.14% [1]. - In Q1 2025, the company reported a revenue of 1.214 billion yuan and a net profit of 67 million yuan, indicating that the net profit for Q2 doubled compared to Q1 [3]. Business Segments - The two main business segments of Kelu Electronics are smart grid and energy storage, with the energy storage segment showing significant growth. In the first half of 2025, the energy storage business generated 1.282 billion yuan in revenue, a year-on-year increase of 177.15%, accounting for nearly half of the company's total revenue [3]. - The contribution from overseas markets has also increased significantly, with foreign market revenue reaching 1.281 billion yuan, a year-on-year growth of 126.84%, making up 49.78% of total revenue [3]. Company Background and Ownership Changes - Kelu Electronics was founded in 1996 by entrepreneur Rao Luhua and has been a prominent player in the domestic energy storage sector. The company faced severe losses due to aggressive expansion, leading to a change in ownership to Shenzhen State-owned Assets [3]. - In 2022, Midea Group acquired Kelu Electronics, marking another significant investment in the energy storage sector following its acquisition of Hong Kong New Energy in 2020 [3]. Future Outlook - Kelu Electronics has been undergoing a long process of turning around its financial performance since Midea's acquisition. The company reported cumulative losses of nearly 1.8 billion yuan from 2021 to 2024 [3]. - The company has set performance targets for its stock option incentive plan, aiming for net profits of no less than 20 million yuan in 2025, 110 million yuan in 2026, and 370 million yuan in 2027 [4]. Challenges - Kelu Electronics continues to face challenges, including ongoing litigation and the impact of being "blacklisted" by a key client, Southern Power Grid. The company was ordered to pay 33.16 million yuan due to a contract dispute, which negatively affected its cash flow [5]. - The market ban imposed by Southern Power Grid, which lasts for 18 months starting from July 29, 2024, restricts Kelu Electronics from participating in any bidding activities within the Southern Power Grid system, significantly impacting its revenue from this important client [5].