Summary of TBEA Co (600089.SS) Conference Call Company Overview - **Company**: TBEA Co (600089.SS) - **Industry**: Transformer manufacturing and electrical equipment - **Market Position**: Leading transformer maker in China with over 20% market share in 2025 based on State Grid tendering [1][2] Key Points Financial Performance - **1H25 Segmental Gross Profits**: - Coal Sales: 29% - Electrical Equipment: 28% - Electricity Sales: 19% - Gold Sales: 5% [1] - **2026-27E Net Profits**: Expected to increase by 5% with significant contributions from transformer and gold sales [1] - **DCF Target Price**: Increased by 38% to Rmb36/share due to profit rises and rollover [1] - **2025-27E Net Profits**: Projected to be 11-17% above consensus estimates [1] Market Dynamics - **State Grid Investment**: - Budgeted Rmb4 trillion in capex for the 15th Five-Year Plan, a 40% increase from the previous plan, leading to a 7% CAGR from 2025-2030E [2] - TBEA holds approximately 30% market share in transformers for UHV power transmission projects in China [2] - **Export Growth**: - PRC transformer export value rose by 36% YoY to Rmb64.6 billion in 2025, with unit export prices increasing by 33% YoY to Rmb205,000 [2] - New overseas power T&D equipment orders surged 88% YoY to US$1.24 billion in 9M25 [2] Business Segments - **Polysilicon Business**: Expected to return to profitability in 2026E with a market price of Rmb52.5/kg and 30-40% capacity utilization [3] - **Gold Sales**: - Annual output capacity goal of 2.5-3 tons - Gross profit from gold sales increased by 74.4% YoY to Rmb420 million in 1H25, with average gold prices rising significantly [4] Valuation Metrics - **Current Price**: Rmb27.55 - **Target Price**: Rmb36.00, indicating a potential upside of 30.7% [5] - **Market Capitalization**: Rmb139.204 billion (US$20.061 billion) [5] - **Expected Dividend Yield**: 2.1% [5] Earnings Summary - **2023-2027E Net Profit Forecast**: - 2023: Rmb10.703 billion - 2024: Rmb4.135 billion - 2025E: Rmb7.411 billion - 2026E: Rmb9.107 billion - 2027E: Rmb10.362 billion [6] Growth Projections - **Sales Revenue Growth**: - 2025E: Rmb99.159 billion - 2026E: Rmb112.476 billion - 2027E: Rmb125.358 billion [19] Risks and Considerations - **Polysilicon Market Volatility**: The turnaround of the polysilicon business is contingent on market prices and capacity utilization [3] - **Global Demand Fluctuations**: The company's growth is also dependent on global demand for transformers and electrical equipment [2] Conclusion - TBEA Co is positioned for growth with strong demand in the transformer market, a potential recovery in polysilicon, and increased profitability from gold sales. The company's valuation remains attractive compared to global peers, making it a compelling investment opportunity.