Core Viewpoint - The company believes that the trend of shifting from UPS to HVDC for data center power supply is unclear, and it remains optimistic that UPS will continue to be the mainstream backup power source for data centers in the future [1] Group 1: Company Strategy - The company has been continuously upgrading its UPS products, achieving significant improvements in efficiency, footprint, and cost [1] - The company has maintained relevant technological reserves for HVDC products and plans to launch new HVDC products at an appropriate time to meet the differentiated needs of various scenarios and customers [1]

Investment Rating - The report maintains a "Recommended" rating for Zhongyuan Neipei (002448.SZ) [6] Core Views - The company achieved a revenue of 3.31 billion yuan in 2024, a year-on-year increase of 15.6%, while the net profit attributable to shareholders was 204 million yuan, a decrease of 34.4% [1] - In Q1 2025, the company reported a revenue of 950 million yuan, up 13.8% year-on-year, and a net profit of 111 million yuan, an increase of 25.9% [1] - The gross margin for 2024 and Q1 2025 was 25.7% and 27.8%, respectively, with fluctuations mainly due to changes in the business structure [2] Summary by Sections Financial Performance - The company’s gross margin fluctuated due to changes in domestic and overseas business proportions, with overseas revenue declining by 8% in 2024 due to economic downturns, while domestic revenue increased by 49% [2] - The expense ratio for 2024 and Q1 2025 was 14.5% and 12.6%, respectively, showing a continuous decline over five years, indicating improved cost control [2] Profit Impact - The profit was significantly impacted by a goodwill impairment of 120 million yuan related to the acquisition of Incodel Holding LLC in the U.S., leading to a net profit margin of 6.2% for 2024, down 4.7 percentage points year-on-year [3] - Excluding the goodwill impairment, the net profit for 2024 would have shown an approximate growth of 10% year-on-year [3] Business Development - The company maintains stable partnerships with major clients in the cylinder sleeve and piston product sectors, with sales growth of 17% and 23% for these products in 2024 [4] - New business ventures, such as the brake system and hydrogen energy projects, are progressing, with the brake system generating revenue of 473 million yuan and a net profit of 33.73 million yuan in its first full year [4] - The company is accelerating the construction of a production base in Thailand for cylinder sleeves, aiming for an annual output of 7 million units [3] Future Outlook - The company is expected to achieve revenues of 3.76 billion, 4.24 billion, and 4.78 billion yuan in 2025, 2026, and 2027, respectively, with year-on-year growth rates of 13.6%, 12.9%, and 12.7% [5] - Projected net profits for the same years are 377 million, 433 million, and 490 million yuan, with significant growth anticipated in 2025 [5]

Core Viewpoint - The global lithium battery industry is experiencing a new wave of capacity expansion since 2025, driven by the increasing demand in the power battery and energy storage markets, with major companies accelerating their investments and production plans [2][3]. Group 1: Capacity Expansion - Major companies like CATL, Ganfeng Lithium, and Samsung SDI are disclosing expansion plans across various regions including China, Southeast Asia, and Europe, targeting diverse applications such as power, energy storage, and electric tools [2]. - CATL has announced a new 40GWh battery capacity in Dongying, Shandong, adhering to "zero-carbon factory" standards and utilizing a high proportion of green electricity [3]. - By the end of 2024, CATL's total capacity is expected to reach 676GWh, with over 200GWh under construction, indicating a strong market growth outlook [3]. Group 2: Market Trends and Innovations - The expansion is not limited to battery production; it also includes upstream materials like silicon-based anodes and high-pressure lithium iron phosphate, which are becoming new investment focuses [3][6]. - Ganfeng Lithium is accelerating the industrialization of solid-state batteries, with a new 10GWh project in Nanchang, aiming to become a comprehensive manufacturing base for various battery types [5]. - The demand for cylindrical batteries is rising, with companies investing in new production capacities in Southeast Asia to meet the needs of electric tools and emerging applications [6]. Group 3: Financial and Operational Efficiency - As capacity utilization improves, the depreciation pressure from expansion is alleviating, with CATL's utilization rate reaching 80% in the second half of 2024, a 20 percentage point increase from the first half [4]. - CATL is leveraging technologies like super drawlines to enhance investment returns, aiming for capital expenditure growth to be lower than capacity growth [3]. Group 4: Market Sentiment and Caution - Despite the optimistic demand outlook, there are differing views on the growth of lithium battery demand, with some suggesting that the industry's sales and production have remained around 70%, indicating a need for cautious assessment of the expansion driven by optimistic demand expectations [7].