Summary of Key Points from Conference Call Industry Overview - The conference call focuses on the ultra-high voltage (UHV) power transmission industry in China, highlighting significant developments and future projects related to UHV construction and technology. Core Insights and Arguments - **Investment and Project Launches**: The fourth batch of UHV equipment bidding is expected to exceed 15 billion yuan, with the converter valve portion estimated at approximately 9.86 billion yuan, marking an important industry advancement [1][2] - **Upcoming Projects**: Key UHV direct current lines, such as those from Gansu to Zhejiang and Shaanxi to Anhui, are anticipated to commence operations between late 2025 and 2026, significantly enhancing regional power interconnectivity [1][2][4] - **Converter Valve Pricing**: Conventional converter valve prices are projected to be around 165 million yuan per set, while the latest 5,000 ampere flexible direct current converter valves may reach up to 400 million yuan due to advanced IGBT chip technology [1][5][9] - **Profit Margins**: The expected gross margin for related companies is projected to remain around 40%, supported by the high pricing of converter valves and the increasing complexity of construction [1][13] - **Domestic Supplier Support**: Domestic suppliers like TBEA and Xidian are expected to receive more support to reduce reliance on foreign companies, thereby increasing the market share of domestic chips and equipment [3][10] - **Impact on Regional Economy**: UHV construction is set to significantly enhance regional power interconnectivity, providing robust support for economic development across various regions, including aiding Vietnam's manufacturing sector [1][7] Additional Important Content - **Delayed Bidding**: The bidding for UHV projects has faced delays due to economic uncertainties and national decision-making, with recent projects finally starting to bid [2][17] - **Future Engineering Plans**: Several important UHV projects are planned for the coming years, including the Qin-Gui direct current project and various inter-provincial interconnection projects [6][11] - **International Projects**: The State Grid Corporation has won a bid for a German offshore wind power integration project, expected to be operational by 2027, showcasing China's competitive edge in the global market [3][19] - **Market Dynamics**: The competition among domestic suppliers is expected to intensify, with traditional leaders maintaining significant market shares while new entrants target overseas markets [25][27] - **Technological Development**: The development of different amperage IGBT chips is crucial for the UHV projects, with 3,000 ampere chips being widely used and 5,000 ampere chips still in the testing phase [12][14][15] This summary encapsulates the essential points discussed in the conference call, providing a comprehensive overview of the UHV industry, its current status, and future outlook.

Core Insights - A group of "invisible champion" companies in Jiangsu is steadily expanding globally, showcasing "China's intelligent manufacturing" through their core technology advantages in various sectors such as automotive lightweight components, ultra-high voltage equipment, and power semiconductors [1] Group 1: Company Developments - Xinan Technology, a high-tech enterprise specializing in automotive lightweight components, recently went public and has established a factory in Thailand to enhance its global manufacturing footprint [2] - Borui Electric, a leader in power automation equipment, has successfully delivered products to over 70 countries, marking a significant achievement for Chinese ultra-high voltage technology [4] - Yangjie Technology, a national champion in the semiconductor industry, has expanded its overseas presence and is the first in its sector to issue Global Depositary Receipts (GDR), raising $220 million for further development [6][7] Group 2: Financial Support and Risk Management - Financial institutions are providing tailored financial services to support these companies' global expansion, including customized foreign exchange risk management solutions [2][3] - Jiangsu's financial sector has implemented a "one enterprise, one policy" approach to address the foreign exchange risk management needs of high-tech and specialized enterprises, with a significant increase in the proportion of companies utilizing foreign exchange hedging [3] - The People's Bank of China in Jiangsu is promoting cross-border trade and simplifying processes for enterprises, resulting in a substantial volume of trade foreign exchange business [5] Group 3: Policy and Market Trends - Jiangsu Province is advancing its cross-border trade high-level opening pilot, enhancing the efficiency of fund settlement for enterprises [5] - The province has seen a notable increase in the number of quality enterprises engaging in foreign exchange business, positioning itself as a leader in this area [5] - The ongoing support from financial institutions and favorable policies is crucial for these companies as they transition from "China's intelligent manufacturing" to becoming global brands [7]

Core Insights - A group of "invisible champion" companies in Jiangsu is steadily expanding globally, showcasing "China's intelligent manufacturing" through their core technology advantages in various sectors such as automotive lightweight components, ultra-high voltage equipment, and power semiconductors [1] Group 1: Company Developments - Xinan Technology, a high-tech company specializing in automotive lightweight components, has recently gone public and is expanding its global footprint with a new factory in Thailand expected to start production in Q1 2024 [2] - Borui Electric, a leader in power automation equipment, has successfully delivered products to over 70 countries, marking a significant achievement for Chinese ultra-high voltage technology [4] - Yangjie Electronics, a national champion in the semiconductor industry, has established a strong international presence, with overseas sales projected to account for 25% of total sales by 2024 [7] Group 2: Financial Support and Risk Management - Financial institutions are providing tailored foreign exchange risk management solutions to companies like Xinan Technology, which relies heavily on exports [2] - The People's Bank of China in Jiangsu has implemented a targeted approach to assist high-tech and specialized enterprises with foreign exchange hedging, resulting in a 9 percentage point increase in the proportion of companies engaging in hedging activities [3] - Jiangsu's cross-border trade pilot program has facilitated over $347.4 billion in transactions for 6,902 quality enterprises, enhancing the efficiency of fund settlement [5][6] Group 3: Policy and Market Trends - The Jiangsu government is promoting high-level openness in cross-border trade, simplifying processes and reducing documentation requirements for enterprises [5] - The financial support for Yangjie Electronics includes significant loans for technology upgrades and stock repurchase plans, demonstrating the critical role of financial services in supporting high-tech companies [8] - Jiangsu has established a cross-border cash pool business for multinational companies, allowing for efficient capital management and resource allocation [8]

Core Viewpoint - The development of UHVDC (Ultra High Voltage Direct Current) technology is becoming a significant aspect of China's international presence, with companies like Borui Electric leading the way in overseas projects [1][2]. Group 1: UHVDC Technology and Projects - UHVDC technology is crucial for large-capacity, long-distance power transmission and interconnection of power grids, widely applied in major domestic and international projects [2]. - China has completed 23 UHVDC projects domestically, with Borui Electric supplying core equipment for 19 of them, including the world's highest voltage level project, Changji-Guquan ±1100kV UHVDC project [3]. - Borui Electric has established a strong reputation internationally, attracting many countries to choose Chinese manufacturers for UHVDC projects, as seen in the Brazil Belo Monte Phase II ±800kV UHVDC project [3][4]. Group 2: International Expansion and Innovations - Many countries are opting for Chinese manufacturers for the renovation of existing UHVDC projects, such as Borui Electric's first overseas UHVDC converter valve renovation project at Brazil's Itaipu Hydropower Station [4]. - Borui Electric and other companies from Changzhou are promoting "Changzhou manufacturing" globally, further solidifying Changzhou's position in the UHV transmission and transformation equipment manufacturing sector [4]. Group 3: Flexible DC Technology - The increasing share of renewable energy in the power grid poses challenges for stability, leading to the emergence of flexible DC transmission technology [5]. - By 2025, it is projected that wind and solar power installations in China will reach approximately 1.65 billion kilowatts, accounting for 46% of total power installations, necessitating UHVDC for long-distance transmission [5]. - The world's first UHV flexible DC project, Gansu to Zhejiang ±800kV, began construction in July 2024, with Borui Electric participating in the world's largest flexible DC back-to-back project in Dongguan [6]. Group 4: Future Developments and Innovations - Borui Electric is accelerating the development of grid-forming energy storage systems, intelligent pumped storage, and flexible low-frequency transmission technologies to support the new power system [6]. - The company has successfully developed grid-forming energy storage and other technologies, which are essential for the rapid development of new power systems [6].

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]