Core Viewpoint - The company reported a revenue of 433 million yuan in Q1 2025, a year-over-year decrease of 7.40% and a quarter-over-quarter decrease of 10.29%, while net profit attributable to shareholders was 175 million yuan, showing a year-over-year increase of 56.05% and a quarter-over-quarter increase of 42.18% [1] Group 1: Financial Performance - The company achieved a gross profit margin of 42.52% and a net profit margin of 40.67% in Q1 2025, reflecting an increase of 1.13% and 17.36% year-over-year, indicating a significant improvement in profitability [2] - The company’s operating expenses ratio was 5.00%, with sales, management, financial, and R&D expense ratios at 2.67%, 3.01%, -5.76%, and 5.09% respectively, showing year-over-year changes of -0.23, -0.04, -2.98, and +1.47 percentage points [2] - Other income for the company was 40 million yuan, primarily due to an increase in government subsidies, and fair value changes resulted in a gain of 9.26 million yuan, a significant improvement from a loss of 40.62 million yuan in the same period last year [2] Group 2: Market Expansion - The company’s overseas market expansion has been successful, with exports of electric meters reaching 2.44 billion yuan in Q1 2025, a year-over-year increase of 8.4% [3] - The company has been actively developing markets in Africa, Southeast Asia, and Central Asia, which are expected to further drive revenue growth [3] - The domestic market is currently experiencing a peak in the replacement cycle for smart electric meters, with expectations that this cycle will continue until 2026 [3] Group 3: Profit Forecast and Valuation - The company maintains profit forecasts for 2025-2027, estimating net profits of 794 million, 899 million, and 989 million yuan, with corresponding EPS of 1.54, 1.75, and 1.92 yuan, reflecting year-over-year growth rates of 19.49%, 13.21%, and 9.95% [4] - The company is assigned a target price of 18.48 yuan based on a 12x PE ratio for 2025, considering the accelerated breakthrough in overseas markets [4]

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of 18.48 RMB [7][8]. Core Views - The company achieved a significant increase in net profit in Q1 2025, with a year-on-year growth of 56.05% and a quarter-on-quarter growth of 42.18%, despite a revenue decline of 7.40% year-on-year [1][2]. - The domestic market is currently experiencing a peak in the smart meter replacement cycle, which is expected to drive demand for electric meters [1][4]. - The company is successfully expanding its overseas market, with a 56.04% year-on-year increase in overseas revenue in 2024 [3][4]. Summary by Sections Financial Performance - In Q1 2025, the company reported revenues of 433 million RMB, a decrease of 7.40% year-on-year and a decrease of 10.29% quarter-on-quarter. The net profit attributable to the parent company was 175 million RMB, reflecting a year-on-year increase of 56.05% and a quarter-on-quarter increase of 42.18% [1]. - The gross and net profit margins for Q1 2025 were 42.52% and 40.67%, respectively, showing improvements of 1.13% and 17.36% year-on-year [2]. - The company’s expense ratio for Q1 2025 was 5.00%, with significant reductions in financial expenses due to increased bank deposit interest [2]. Market Outlook - The smart metering and collection system is the main source of revenue and profit for the company, with a revenue of 1.641 billion RMB in 2024, up 14.31% year-on-year [4]. - The company is well-positioned to benefit from the ongoing smart meter replacement cycle, which is expected to last until 2026 [4]. Profit Forecast and Valuation - The company’s projected net profits for 2025-2027 are 794 million RMB, 899 million RMB, and 989 million RMB, respectively, with corresponding EPS of 1.54, 1.75, and 1.92 RMB [5][6]. - The report assigns a PE ratio of 12 times for 2025, reflecting the company's strong overseas market growth potential [5].