Core Insights - The competitive landscape of energy storage PCS has shifted from a "blue ocean" to a "red ocean," with a decisive question emerging: where will the key competitive points lie in the second half of the industry? The answer is increasingly clear: it is not about marginal efficiency improvements or extreme cost reductions, but rather a network-forming technology that can reshape the value of PCS and transition energy storage systems from "passive execution" to "active support" [2] Group 1: Market Dynamics - By 2025, new policies from the National Energy Administration and mandatory ratios in regions like Xinjiang indicate that grid-forming energy storage is rapidly moving from a "technical alternative" to a "market necessity" [4] - According to CESA data, from January to September 2025, the newly installed capacity of grid-forming energy storage in China reached 2.9GW/9GWh, surpassing the total of 8.9GWh for the entire year of 2024, with a cumulative operational capacity of 6GW/19.1GWh, nearly five times the growth from 2023 [7] Group 2: Technological Advancements - Leading companies like Sungrow, Huichuan Technology, and NARI Technology are strategically positioning themselves around grid-forming technology, indicating that the market positioning and commercial value of PCS are being redefined [2][4] - Sungrow emphasizes that PCS will increasingly focus on the overall grid dimension, enhancing its foundational support for safety and improving the intelligent response level for economic aspects [7] - Huichuan Technology is prioritizing grid-forming technology, enhancing the stability of power systems through active participation in frequency and voltage regulation [7] Group 3: Challenges and Opportunities - Grid-forming energy storage faces multiple challenges in scaling up, including technical, standardization, and economic issues [10] - The complexity of adapting to various operational conditions is a significant hurdle for grid-forming PCS, requiring high responsiveness, control precision, and overload capacity [12] - The lack of unified technical standards for grid-forming PCS in China has led to market credibility issues, with some "pseudo-grid" products causing operational failures [14] Group 4: Future Outlook - The industry is at a critical stage of deep integration of "source-grid-load-storage," with collaborative efforts to draft a white paper analyzing storage development trends, set to be released in January 2026 [14]

Investment Rating - The report maintains an "Overweight" rating for the company in both A-shares and H-shares [6][8]. Core Insights - The company achieved significant revenue and net profit growth in the first half of 2025, with revenue reaching CNY 119.76 billion, a year-on-year increase of 33.0%, and net profit attributable to shareholders of CNY 7.25 billion, up 72.5% [2]. - The railway equipment business saw a revenue increase of 42.2% year-on-year, driven by a recovery in passenger demand and growth in the high-speed train segment [3]. - The company secured new orders worth CNY 146 billion in the first half of 2025, reflecting a stable growth trend in its order book [4]. - Large-scale tenders for high-speed trains and locomotives have opened up market opportunities, with the National Railway Group planning to significantly increase high-speed rail mileage by 2035 [5]. Summary by Sections Financial Performance - In H1 2025, the company reported a revenue of CNY 119.76 billion, a 33.0% increase year-on-year, and a net profit of CNY 7.25 billion, reflecting a 72.5% growth [2]. - The gross margin improved to 21.8%, up 0.4 percentage points, while the net margin increased to 7.4%, up 1.3 percentage points [2]. Business Segments - The railway equipment segment generated CNY 59.71 billion in revenue, with notable growth in various categories: locomotives (19.8%), passenger cars (66.8%), and freight cars (74.3%) [3]. - New industries, particularly clean energy equipment, contributed CNY 40.73 billion, marking a 35.6% increase [3]. Orders and Market Outlook - The company signed new orders totaling CNY 146 billion in H1 2025, with overseas orders amounting to CNY 30.9 billion [4]. - The National Railway Group's plans for extensive tenders in high-speed trains and locomotives are expected to benefit the company's business significantly [5]. Earnings Forecast - The report forecasts net profits of CNY 13.57 billion, CNY 14.74 billion, and CNY 15.85 billion for 2025, 2026, and 2027, respectively, with corresponding EPS of CNY 0.47, CNY 0.51, and CNY 0.55 [6][7].