Core Viewpoint - The company reported a strong performance in Q1 2025, with revenue and net profit showing significant year-on-year growth, aligning with expectations [1] Group 1: Financial Performance - Q1 2025 revenue reached 1.089 billion yuan, representing a year-on-year increase of 15.53% [1] - The net profit attributable to shareholders was 103 million yuan, up 15.15% year-on-year [1] - The non-recurring net profit attributable to shareholders was 100 million yuan, reflecting a 15.92% increase year-on-year [1] Group 2: Development Trends - The renewable energy sector is expected to maintain high growth, while the decline in real estate-related business is anticipated to narrow [2] - As of the end of March, the installed capacity for solar and wind power in China increased by 43.4% and 17.2% year-on-year, respectively [2] - The company is likely to benefit from the high demand in wind and energy storage products, which are expected to enhance profit margins [2] - In the infrastructure and smart building sectors, the decline in housing completion area was -14.3% in Q1 2025, an improvement from -20.4% in the same period of 2024 [2] Group 3: Market Opportunities - The data center sector is experiencing accelerated domestic substitution, presenting significant growth opportunities [3] - The company has over 20 years of experience in the data center field, offering a range of products and solutions [3] - With the acceleration of AIDC construction, the company is positioned to capture market share in high-end segments [3] Group 4: Profitability and Cash Flow - The company's gross margin increased by 3.9 percentage points to 31.6% in Q1 2025, attributed to improved cost control and a higher proportion of high-margin product deliveries [3] - Operating cash flow reached 53.89 million yuan, marking an 86.94% year-on-year increase [3] Group 5: Profit Forecast and Valuation - The company maintains its profit forecasts for 2025 and 2026, with the current stock price corresponding to P/E ratios of 21.0x and 17.0x for those years [4] - The target price has been raised by 12.6% to 9.8 yuan, indicating a potential upside of 20.4% from the current stock price [4]

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company is expected to hit a bottom in operations in 2024, with a potential recovery in 2025. The growth in new energy, smart distribution, and data center businesses is anticipated to contribute significantly to revenue [10][4]. Financial Performance Summary - In 2024, the company achieved total revenue of 4.24 billion yuan, a year-on-year decrease of 7.6%. The net profit attributable to shareholders was 310 million yuan, down 38.9% year-on-year, while the net profit excluding non-recurring items was 260 million yuan, a decline of 41.6% [2][4]. - For Q4 2024, the company reported revenue of 1.11 billion yuan, a decrease of 1.4% year-on-year and 0.1% quarter-on-quarter. The net profit attributable to shareholders was 1 million yuan, down 98.5% year-on-year and 98.0% quarter-on-quarter, with a slight loss in net profit excluding non-recurring items [2][4]. - The revenue breakdown by segment for 2024 shows: - Distribution electrical appliances: 2.759 billion yuan, down 1.8% - Terminal electrical appliances: 835 million yuan, down 23.9% - Control electrical appliances: 458 million yuan, up 3.9% - Electrical products: 156 million yuan, down 29.3% - Other businesses: 29 million yuan, up 67.1% [10]. - The gross margin for 2024 was 30.36%, a decrease of 2.09 percentage points year-on-year. The gross margin for Q4 2024 was 27.66%, down 1.35 percentage points year-on-year and 1.98 percentage points quarter-on-quarter [10]. - The total expense ratio for 2024 was 23.28%, an increase of 3.00 percentage points year-on-year, with specific increases in sales, management, and R&D expense ratios [10]. Future Projections - The company is projected to achieve a net profit of 450 million yuan in 2025, corresponding to a price-to-earnings ratio of approximately 20 times [10].