Core Viewpoint - Shun'an Environment reported a strong Q1 performance with revenue of 3.02 billion yuan, a year-on-year increase of 15.0%, and a net profit attributable to shareholders of 220 million yuan, up 4.3% year-on-year, driven by the old-for-new subsidy policy stimulating domestic air conditioning sales [1][2] Group 1: Financial Performance - Q1 revenue reached 3.02 billion yuan, reflecting a 15.0% year-on-year growth [1] - Net profit attributable to shareholders was 220 million yuan, representing a 4.3% year-on-year increase [1] - The company's net profit margin for Q1 was 7.2%, down 0.7 percentage points year-on-year, primarily due to rising copper prices [2] Group 2: Market Dynamics - The old-for-new subsidy policy has positively impacted air conditioning sales, leading to increased demand for upstream valve components [1] - Industry sales data shows that the sales of key components like shut-off valves, four-way valves, and electronic expansion valves increased by 7.1%, 7.5%, and 14.4% year-on-year, respectively [1] - Looking ahead, the combination of national subsidy policies and the peak season for air conditioning is expected to further stimulate sales performance [1] Group 3: Operational Efficiency - Q1 operating cash flow net amount was 150 million yuan, a significant year-on-year increase of 118.4% [2] - The company managed to reduce cash payments for goods and services by 18.2% year-on-year, while cash received from sales increased by 1.0% [2] - The company's cash balance at the end of the period was 2.9 billion yuan, up 7.4% year-on-year, indicating a strong liquidity position [2] Group 4: Future Outlook - The company is expected to continue its rapid revenue growth, with projections for EPS of 1.05, 1.17, and 1.35 yuan for 2025 to 2027 [2] - The company is actively expanding into high-margin commercial refrigeration components and automotive thermal management businesses, which is anticipated to improve profitability [2] - A target price of 15.68 yuan is set based on a 15 times dynamic price-to-earnings ratio for 2025 [2]

Investment Rating - The investment rating for the company is maintained at "Buy-A" with a target price of 15.68 yuan for the next six months [5]. Core Views - The company reported a Q1 revenue of 3.02 billion yuan, representing a year-over-year increase of 15.0%, and a net profit attributable to shareholders of 220 million yuan, up 4.3% year-over-year [1][2]. - The growth in revenue is attributed to the continued stimulus from the old-for-new subsidy policy, which has boosted domestic air conditioning sales [1]. - Despite the revenue growth, the company's profitability has been under pressure due to rising raw material prices, particularly copper [2]. Summary by Sections Q1 Performance - Q1 revenue increased significantly, driven by the old-for-new subsidy policy, with upstream valve component demand also improving [1]. - The company’s Q1 net profit margin was 7.2%, a decrease of 0.7 percentage points year-over-year, primarily due to rising copper prices [2]. Financial Metrics - The company’s operating cash flow for Q1 was 150 million yuan, a substantial increase of 118.4% year-over-year, attributed to a decrease in cash paid for goods and services [2]. - The company’s cash balance at the end of the period was 2.9 billion yuan, reflecting a year-over-year increase of 7.4% [2]. Future Outlook - The company is expected to continue expanding its high-margin commercial refrigeration components and automotive thermal management business, which may improve profitability [2]. - Forecasted EPS for 2025, 2026, and 2027 are 1.05 yuan, 1.17 yuan, and 1.35 yuan respectively, with a projected revenue growth rate of approximately 12.1% for 2025 [4][13].