Core Viewpoint - Xuji Electric (000400) reported a decline in revenue for its smart distribution and transmission system segment, primarily due to the timing of revenue recognition from order deliveries [2][3]. Financial Performance - For the first half of 2025, Xuji Electric's main revenue was 6.447 billion yuan, a decrease of 5.68% year-on-year; net profit attributable to shareholders was 634 million yuan, an increase of 0.96% year-on-year; and net profit excluding non-recurring items was 618 million yuan, up 1.13% year-on-year [3]. - In Q2 2025, the company achieved a single-quarter main revenue of 4.099 billion yuan, an increase of 1.81% year-on-year; net profit attributable to shareholders was 426 million yuan, up 9.12% year-on-year; and net profit excluding non-recurring items was 415 million yuan, an increase of 7.64% year-on-year [3]. Business Segments - The smart distribution system segment's revenue decreased by 700 million yuan year-on-year, attributed to the timing of revenue recognition rather than a reduction in total order volume [2]. - The direct current transmission system segment had a gross margin of 40.76%, influenced by the product business structure affecting revenue recognition [2]. - The low-margin new energy business accounted for 10.79% of the company's half-year revenue, down 3.83 percentage points year-on-year, with a reported revenue of 696 million yuan, a decline of 30.38% year-on-year [2]. Marketing and Sales Strategy - The company has strengthened its marketing system design since Q2 2024, increasing frontline marketing personnel while reducing middle and back-office staff to enhance market development capabilities [2]. Institutional Ratings and Predictions - Over the past 90 days, 10 institutions have rated the stock, with 8 buy ratings and 2 hold ratings; the average target price from institutions is 27.71 yuan [3].

Investment Rating - The report assigns an "Accumulate" rating to the company, marking its first coverage [4][7]. Core Viewpoints - The company is a leading player in the smart grid sector, with a comprehensive layout across the entire new power system, including source, network, load, storage, and data [1][11]. - The domestic grid investment is on an upward trend, with significant R&D investments supporting growth. In the first five months of 2025, grid project investments reached 204 billion, a year-on-year increase of 19.8% [2][24]. - The global grid investment is also rising, with the company's overseas business revenue growing from 920 million to 3.28 billion from 2019 to 2024, reflecting a CAGR of 29% [3][44]. Summary by Sections 1. Smart Grid Leadership and Comprehensive Layout - The company is recognized as a pioneer in the domestic power automation sector, covering all aspects of the new power system [11]. - The smart grid business is the main contributor to revenue, with projected revenue of 28.47 billion in 2024, a year-on-year increase of 10.7% [13]. 2. Domestic Grid Investment and R&D Support - The report highlights the increasing investment in the domestic grid, with expectations for 2025 to exceed 650 billion [2][24]. - The company maintains high R&D spending, which reached 4.032 billion in 2024, a year-on-year increase of 15.94% [40]. 3. Global Investment and Rapid Overseas Expansion - The company has successfully expanded its overseas business, with significant projects in Saudi Arabia, South America, and Mexico [44]. - The overseas revenue is expected to continue growing, contributing positively to overall performance [3][44]. 4. Financial Projections and Valuation - Revenue projections for 2025-2027 are 645.03 billion, 719.67 billion, and 799.99 billion, with year-on-year growth rates of 12.3%, 11.6%, and 11.2% respectively [4][47]. - The expected net profit for the same period is 84.01 billion, 94.56 billion, and 106.14 billion, with corresponding growth rates of 10.4%, 12.6%, and 11.3% [4][47].