Group 1 - The company XJ Electric (000400) stated on August 15 that its UHV converter valves are being produced according to order delivery schedules and are dynamically adjusted, indicating that production has not reached full capacity [1]

Investment Rating - The report maintains a "Positive" investment rating for the industry [5] Core Viewpoints - The report emphasizes the expected acceleration in the approval of ultra-high voltage (UHV) projects in the second half of 2025, with several key transmission corridors likely to be approved [10][15] - The current pace of construction for UHV direct current projects is increasing, with several projects nearing completion and others in the early stages of construction [15][16] - The report highlights a significant potential for equipment bidding in the second half of 2025, estimating a total bidding volume of approximately 55 billion yuan, with a substantial portion allocated for UHV converter valve equipment [28][30] Summary by Sections UHV Project Approvals - The 2025 National Energy Work Conference proposed the active promotion of several UHV transmission corridors, indicating a likely increase in project approvals in the latter half of 2025 [10] - Currently, only two projects have received approval, but expectations are high for a surge in approvals later in the year [10][15] UHV Direct Current Projects - Several UHV direct current projects are nearing completion, with the Jinshang-Hubei and Longdong-Shandong projects already operational [15] - Projects such as the Ningxia-Hunan and Shaanxi-Anhui are in advanced stages of construction, with expectations for operational readiness by 2026 [15][16] UHV Alternating Current Projects - The report notes that UHV alternating current projects are also in a peak construction phase, with several projects expected to commence in 2025 [16][18] Equipment Bidding Trends - In the first half of 2025, equipment bidding has been relatively low, totaling 2.48 billion yuan, while material bidding reached 17.87 billion yuan [25] - The report anticipates a rapid increase in bidding activity in the second half of 2025, driven by the approval of multiple UHV projects [28][30] Market Dynamics - The report indicates that the UHV equipment market remains concentrated, with leading companies expected to benefit from increased order volumes as the market expands [35]

Core Viewpoint - The company achieved a revenue of 17.089 billion in 2024, with a year-on-year growth of 0.2%, and a net profit attributable to shareholders of 1.117 billion, reflecting an 11.1% increase year-on-year [1] Financial Performance - In Q4 2024, the company reported a revenue of 7.503 billion, a year-on-year increase of 20.4% and a quarter-on-quarter increase of 172.8% [1] - The net profit attributable to shareholders for Q4 2024 was 222 million, showing a year-on-year growth of 13.9% but a quarter-on-quarter decline of 16.9% [1] - For Q1 2025, the company recorded a revenue of 2.348 billion, a year-on-year decrease of 16.4% and a quarter-on-quarter decrease of 68.7% [1] Profitability Metrics - The company’s gross profit margin and net profit margin for 2024 were 20.8% and 7.6%, respectively, with year-on-year changes of 2.8 percentage points and 0.6 percentage points [2] - In Q1 2025, the gross profit margin and net profit margin improved to 23.5% and 10.1%, with year-on-year changes of 5.2 percentage points and 0.7 percentage points [2] Business Segments - The company is a leading player in the domestic ultra-high voltage converter valve market, benefiting from increased industry demand [2] - The direct current transmission system business generated revenue of 1.44 billion in 2024, a significant year-on-year increase of 101.6% [2] - The smart meter business achieved revenue of 3.87 billion in 2024, with a year-on-year growth of 11% [3] - The company’s overseas business revenue reached 310 million in 2024, reflecting a year-on-year increase of 102% [3] Future Outlook - Revenue projections for 2025, 2026, and 2027 are 19.7 billion, 22.56 billion, and 25.1 billion, respectively, with expected net profit growth rates of 28.5%, 20.9%, and 14.6% [4] - The company’s core product advantages in smart grids and ultra-high voltage sectors, along with flexible direct current and EPC business, are expected to drive future growth [4]