Core Viewpoint - Haixing Electric's net profit for H1 2025 was 396 million yuan, a year-on-year decrease of 25.74%, while Q2 2025 net profit was 255 million yuan, down 20.16% year-on-year, attributed to demand fluctuations in certain overseas markets, although short-term disruptions do not alter long-term trends [1] Group 1: Financial Performance - Haixing Electric achieved a net profit of 396 million yuan in H1 2025, reflecting a 25.74% decline compared to the previous year [1] - In Q2 2025, the company reported a net profit of 255 million yuan, marking a 20.16% decrease year-on-year [1] Group 2: Business Development - In the overseas market, the company is focusing on "global layout and localized operation" to accelerate marketing channel deployment in key countries and new markets [1] - The South African smart ultrasonic water meter factory commenced operations during the reporting period [1] Group 3: Domestic Market Performance - The company enhanced its competitiveness in product and service offerings within the State Grid and Southern Grid [1] - Haixing Electric won a bid for 140 million yuan in the State Grid's electricity metering product procurement [1] - The company secured a total of 149 million yuan in bids for integrated products in the first batch of regional joint bidding for distribution networks [1] - In the Southern Grid's procurement for distribution equipment, the company won a bid worth 38.46 million yuan [1] - Additionally, it won a bid for 96.39 million yuan from Inner Mongolia Electric Power Group for marketing equipment [1] Group 4: New Energy Business - The company is accelerating the establishment of local operating entities and the digitalization of the WMS logistics system in key regions to build an efficient global supply chain collaboration system [1] - Haixing Electric is focusing on expanding its new energy channel business in Europe, Asia, Africa, and Latin America [1]

Core Viewpoint - HaiXing Electric's net profit for H1 2025 reached 396 million yuan, a year-on-year decrease of 25.74%, while Q2 2025 net profit was 255 million yuan, down 20.16% year-on-year, attributed to demand fluctuations in certain overseas markets, although short-term disruptions do not alter the long-term trend [1] Group 1: Financial Performance - In H1 2025, the company achieved a net profit of 396 million yuan, reflecting a year-on-year decline of 25.74% [1] - For Q2 2025, the net profit was 255 million yuan, showing a year-on-year decrease of 20.16% [1] Group 2: Business Development - In the overseas market, the company adheres to a strategy of "global layout and localized operation," accelerating the deployment of marketing channels in key countries, new markets, and new businesses [1] - The company's smart ultrasonic water meter factory in South Africa officially commenced operations during the reporting period [1] Group 3: Domestic Market Performance - The company continues to enhance its product and service competitiveness in the State Grid and Southern Grid [1] - The company won a bid for 140 million yuan in the State Grid's electricity metering product procurement [1] - In the first batch of regional joint bidding for distribution network products, the company secured a total of 149 million yuan for integrated products [1] - The company won a bid of 38.46 million yuan in the Southern Grid's distribution network equipment procurement [1] - In the Inner Mongolia Electric Power Group's marketing equipment bidding, the company won 96.39 million yuan [1] Group 4: New Energy Business - The company is accelerating the construction of local operating entities and a WMS warehousing logistics digital system in key regions, focusing on building an efficient collaborative global supply chain [1] - The company is promoting the penetration of new energy channel businesses in Europe, Asia, Africa, and Latin America [1] Group 5: Investment Rating - The company maintains a "buy" rating [1]

Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [2][7][8] Core Views - The company reported a revenue of 1.924 billion yuan for the first half of 2025, a year-on-year decrease of 15%, and a net profit attributable to shareholders of 396 million yuan, down 26% year-on-year. The gross margin was 41.6%, down 2.6 percentage points, and the net margin was 20.5%, down 3.1 percentage points [3][5] - The company has made significant progress in its overseas expansion, including the launch of a smart ultrasonic water meter factory in South Africa and successful bids for distribution products in Asia, Africa, and Latin America [5][6] - Domestic business remains stable with over 400 million yuan in orders secured in the first half of the year, including significant wins in power metering and distribution equipment [6] - The company is investing in new energy solutions, having developed key equipment and systems for microgrid solutions, with successful bids in Africa and Latin America [6] Financial Summary - The company expects net profits for 2025-2027 to be 1.016 billion, 1.165 billion, and 1.3 billion yuan respectively, with year-on-year growth rates of 1.4%, 14.7%, and 11.7% [3][7] - Earnings per share (EPS) are projected to be 2.09, 2.40, and 2.68 yuan for the same period, with corresponding valuations of 13.4, 11.6, and 10.4 times [3][7] - The company reported a second-quarter revenue of 1.14 billion yuan, a year-on-year decrease of 15% but a quarter-on-quarter increase of 45%, with a net profit of 255 million yuan, down 20% year-on-year but up 81% quarter-on-quarter [5]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [5]. Core Insights - The company reported a total revenue of 1.92 billion RMB for the first half of 2025, a year-on-year decrease of 14.7%, and a net profit attributable to shareholders of 400 million RMB, down 25.7% year-on-year [2]. - The decline in revenue and profit is attributed to delays in domestic project execution, fluctuations in demand in certain overseas markets, and increased counter-cyclical investments leading to higher expenses [2]. - The company is a leader in the global smart meter market, with significant growth potential in smart distribution and renewable energy sectors, benefiting from the global upgrade of power grids [5]. Summary by Sections Performance Review - In Q2 2025, the company achieved total revenue of 1.14 billion RMB, a decrease of 15.8% year-on-year, with a net profit of 250 million RMB, down 20.2% [2]. Operational Analysis - The company is deepening its overseas strategic layout while maintaining a solid domestic base. In overseas markets, it has launched a smart ultrasonic water meter factory in South Africa and secured transformer orders in Central Asia and Africa [3]. - Domestically, the company has won over 400 million RMB in new orders, including significant contracts for power metering products and distribution equipment [3]. New Energy Business - The company is transitioning from product sales to system integration and scenario-based solutions in the renewable energy sector, having developed key equipment and EMS systems for microgrid projects in Africa and Latin America [3]. Investment in Sales and R&D - The company has increased its sales and R&D expenses by 11.6% and 6.1% year-on-year, respectively, highlighting its commitment to market expansion and technological innovation [4]. Profit Forecast and Valuation - The company is expected to achieve net profits of 1.04 billion RMB, 1.16 billion RMB, and 1.38 billion RMB for the years 2025, 2026, and 2027, respectively, with growth rates of 3%, 12%, and 19% [5]. - The current stock price corresponds to a PE valuation of 13, 11, and 10 times for the years 2025, 2026, and 2027 [5].

Group 1: Cost Control and Financial Management - The company implements strict evaluation of raw material suppliers based on qualifications, supply capacity, and quality control measures to manage costs effectively [2] - Continuous cash flow management and optimization of fund allocation are prioritized to enhance capital efficiency and reduce overall costs [2] - The company aims for refined cost control to ensure stable and sustainable operations [2] Group 2: Opportunities and Challenges in Smart Distribution - The smart distribution business faces both opportunities and challenges under the "dual carbon" goals, with increasing state grid investments and growing electricity demand [3] - Competition is intensifying due to the rising number of new entrants and changes in bidding processes by the state grid, making it harder to win bids [3] - The company focuses on developing integrated products, environmentally friendly gas-based ring network cabinets, and digital equipment [3] Group 3: Future Development in Renewable Energy - The company plans to expand its photovoltaic business by maintaining project stability and actively seeking market opportunities through partnerships with local governments and commercial users [3] - In the marine engineering sector, the focus will be on deep-sea wind turbine installation and operation, exploring new business models for profit growth [3] - The company is committed to enhancing its comprehensive competitiveness in the renewable energy sector [3] Group 4: Response to Market Fluctuations - The company has strategies in place to mitigate the impact of raw material price fluctuations, including adjusting procurement plans and establishing price linkage mechanisms with suppliers [4] - Weather-related disruptions in marine construction are managed by maximizing operational windows while ensuring safety [4] Group 5: Strategic Growth Plans - The company has not disclosed any immediate plans for mergers or acquisitions but will comply with legal requirements for information disclosure if such plans arise [4] - The current market capitalization is below 2 billion, indicating potential for growth through strategic initiatives [4]