Core Viewpoint - The article highlights Jiangsu Shennma Electric Power Co., Ltd.'s innovative approach to addressing critical pain points in the power insulation industry, emphasizing the importance of new materials and technologies in reducing operational costs and enhancing safety in power grids [5][6][7]. Group 1: Industry Pain Points - The power grid is a crucial infrastructure that faces significant challenges due to environmental factors and mechanical stress, with traditional insulation products accounting for only 2% to 3% of initial construction costs but consuming 60% to 70% of annual maintenance costs [5][6]. - Global losses due to traditional insulation issues exceed 100 billion yuan annually, indicating a substantial market opportunity for innovative solutions [5]. Group 2: Company Innovations - Shennma Electric Power has developed nine categories of innovative products, including rubber sealing components and composite insulation products, which have filled domestic and international technological gaps [5][7]. - The company has achieved a 70% market share in domestic sealing components and has become a key player in setting industry standards [7]. Group 3: Business Performance - In 2024, Shennma Electric Power reported a revenue of 1.345 billion yuan, a year-on-year increase of 40.22%, with net profit reaching 311 million yuan, up 96.17% [12]. - The company anticipates a compound annual growth rate of 30% over the next decade, driven by increasing demand for high-reliability and high-performance electrical products [13]. Group 4: Talent and R&D Investment - The company employs over 2,000 staff, with more than 20% holding bachelor's degrees or higher, and commits at least 4% of its revenue to R&D annually [14]. - Shennma Electric Power emphasizes talent acquisition and retention, implementing incentive mechanisms linked to performance to align employee goals with company objectives [14].

Investment Rating - The report maintains a "Hold" rating for the company [7] Core Views - The company achieved impressive performance in 2024, with total revenue of 1.345 billion yuan, a year-on-year increase of 40.22%, and a net profit attributable to shareholders of 311 million yuan, up 96.17% year-on-year [1] - The company has a strong order backlog, with new orders amounting to 1.528 billion yuan by the end of 2024, representing a year-on-year increase of 38.31% [3] - The company is expanding its overseas market presence, with significant growth in overseas contract revenue, particularly in the U.S. and Europe [4] Financial Performance Summary - In 2024, the company reported revenue of 1.345 billion yuan, with a gross margin of 43.62% and a net margin of 23.10% [1] - The breakdown of revenue by business segment in 2024 includes: - Substation composite insulators: 879 million yuan, up 34.71% year-on-year, with a gross margin of 46.98% - Rubber seals: 223 million yuan, up 14.10% year-on-year, with a gross margin of 46.86% - Power transmission and distribution composite insulators: 209 million yuan, up 126.57% year-on-year, with a gross margin of 25.95% [2] - The company’s revenue forecast for 2025-2027 has been adjusted to 1.87 billion, 2.62 billion, and 3.53 billion yuan, respectively [5] Order Backlog and Market Expansion - As of the end of 2024, the company had a robust order backlog, with new orders of 1.528 billion yuan, including 786 million yuan from domestic markets and 742 million yuan from overseas markets [3] - The company is making significant progress in building a factory in the U.S., expected to be operational by 2027, which will further enhance its overseas market capabilities [4]