Core Viewpoint - The "14th Five-Year Plan" period is crucial for Dongfang Electronics to anchor national strategies, deepen technological breakthroughs, and expand industrial boundaries, transitioning from a leader in power automation to a comprehensive solution provider in the "source-network-load-storage + AI" full-chain service, laying the foundation for high-quality development and value enhancement [1] Group 1: Business Focus and Strategy - Dongfang Electronics has been deeply engaged in the power equipment sector for over 40 years, focusing on three core business areas: smart grid, smart energy, and smart cities, while exploring technology and market practices in various directions such as scheduling and cloud services, power transmission and transformation automation, new distribution network solutions, comprehensive energy, and virtual power plants [1] - The company has established a complete industrial chain covering the "source-network-load-storage" model, with a product system that spans all links of smart grid "generation, transmission, transformation, distribution, and consumption" [1] Group 2: Technological Innovation and Achievements - The virtual power plant technology independently developed by Dongfang Electronics was recognized as "internationally leading" by an expert group led by an academician from the Chinese Academy of Sciences in 2024 and was selected as a "green and low-carbon advanced technology demonstration project" by the National Development and Reform Commission in April 2025 [2] - The virtual power plant business has been practically applied in various scenarios, including State Grid, Southern Grid, power generation groups, energy groups, and urban and park-level applications [2] Group 3: Future Outlook and Financial Performance - With the recent introduction of national policies supporting virtual power plants, the demand for digital virtual power plant construction is increasing, highlighting economic benefits and social impacts, which assist in achieving the goals of the new energy system and new power system construction [2] - Over the past three years, Dongfang Electronics has distributed a total cash dividend of 337 million yuan to shareholders, sharing the fruits of development [2] - Looking ahead to the next five years, the company plans to deepen its "one main and two wings" strategic layout, focusing on six industrial directions, increasing R&D investment in green low-carbon and grid AI fields, and accelerating the expansion of new green low-carbon industries and digital transformation tracks [2]

Investment Rating - The investment rating for the company is "Buy" and is maintained [7] Core Views - The company reported a revenue of 5.69 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 6.0%. However, the net profit attributable to shareholders decreased by 8.6% to 350 million yuan, while the net profit excluding non-recurring items was 290 million yuan, down 1.1% year-on-year [2][5] - In Q3 2025, the company achieved a revenue of 2.16 billion yuan, which is a significant year-on-year increase of 29.2%, although it decreased by 10.4% compared to the previous quarter. The net profit attributable to shareholders was 90 million yuan, a slight decrease of 0.3% year-on-year, and a substantial decline of 64.4% quarter-on-quarter [2][5] - The gross profit margin for the first three quarters of 2025 was 19.84%, down 2.04 percentage points year-on-year, while the gross profit margin for Q3 2025 was 16.14%, down 4.99 percentage points year-on-year and 6.92 percentage points quarter-on-quarter, primarily due to a higher proportion of hardware equipment deliveries [10] - The company’s operating cash flow for the first three quarters of 2025 reached 1.347 billion yuan, turning positive year-on-year, although Q3 2025 saw a decline of 3.9% year-on-year and a significant drop of 91.2% quarter-on-quarter [10] Summary by Sections Financial Performance - For the first three quarters of 2025, total revenue was 5.69 billion yuan, with a year-on-year growth of 6.0%. The net profit attributable to shareholders was 350 million yuan, down 8.6% year-on-year, and the net profit excluding non-recurring items was 290 million yuan, down 1.1% year-on-year [2][5] - In Q3 2025, the company reported a revenue of 2.16 billion yuan, a year-on-year increase of 29.2%, but a quarter-on-quarter decrease of 10.4%. The net profit attributable to shareholders was 90 million yuan, a year-on-year decrease of 0.3% and a quarter-on-quarter decrease of 64.4% [2][5] Cost and Expenses - The gross profit margin for the first three quarters of 2025 was 19.84%, down 2.04 percentage points year-on-year. In Q3 2025, the gross profit margin was 16.14%, down 4.99 percentage points year-on-year and 6.92 percentage points quarter-on-quarter [10] - The total expense ratio for the first three quarters of 2025 was 14.08%, down 2.07 percentage points year-on-year. In Q3 2025, the total expense ratio was 12.25%, down 4.32 percentage points year-on-year and 1.03 percentage points quarter-on-quarter [10] Inventory and Cash Flow - As of the end of Q3 2025, the company's inventory reached 1.343 billion yuan, an increase of 99.1% year-on-year and 43.6% quarter-on-quarter. The contract liabilities were 147 million yuan, down 12.2% year-on-year and up 36.6% quarter-on-quarter [10] - The company’s asset-liability ratio at the end of Q3 2025 was 54.19%, an increase of 5.37 percentage points year-on-year and a decrease of 2.32 percentage points quarter-on-quarter [10]

Investment Rating - The investment rating for the company is "Buy" and it is maintained [7]. Core Views - The company's 2024 full-year revenue is projected at 7.32 billion yuan, a year-on-year decrease of 4.7% - The net profit attributable to shareholders is expected to be 680 million yuan, down 17.6% year-on-year - The first quarter of 2025 shows a revenue increase of 9.1% year-on-year, reaching 1.11 billion yuan, with a net profit increase of 117.2% to 30 million yuan [2][5]. Financial Performance Summary - For 2024, the company's digital infrastructure revenue is 3.365 billion yuan, up 1.56% year-on-year, while power digitalization revenue is 2.254 billion yuan, up 7.45% year-on-year - The company’s gross margin for 2024 is 20.17%, a decrease of 1.39 percentage points year-on-year, with a gross margin of 19.14% in Q4 2024, down 3.48 percentage points year-on-year [10]. - The company expects a revenue of 8.22 billion yuan for 2025, representing a year-on-year increase of 12.3% [10].