Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative increase in stock price of over 20% compared to the benchmark index within the next six months [6][11]. Core Views - The company's performance in the first half of 2025 was below expectations, with revenue of 730 million yuan, a year-on-year increase of 0.4%, and a net profit attributable to shareholders of 110 million yuan, a year-on-year decrease of 13.1% [4]. - The decline in profit is attributed to delays in product delivery cycles, while increased R&D expenses have impacted profitability [4]. - The investment climate for the power grid sector is improving, with a 12.5% year-on-year increase in completed investments in power grid projects from January to July 2025 [5]. - The company continues to secure orders and expand its product offerings, including successful bids for its 550kV GIS in national grid procurement [5]. Summary by Sections Company Overview - The latest closing price is 7.22 yuan, with a total market capitalization of 4.5 billion yuan and a circulating market capitalization of 3.7 billion yuan [3]. Financial Performance - In the first half of 2025, the company's gross margin was 37.2%, and net margin was 14.4%, with a rise in sales expense ratio to 6.4% and an increase in R&D expense ratio to 8.4% [4]. - The company forecasts revenues of 2.09 billion yuan, 2.50 billion yuan, and 3.00 billion yuan for 2025, 2026, and 2027 respectively, with net profits of 360 million yuan, 460 million yuan, and 560 million yuan for the same years [6][9]. Market Outlook - The report highlights the ongoing development of new products, including 750kV GIS and energy-efficient transformers, which are expected to contribute positively to future revenue growth [5][6].

Investment Rating - The report assigns a "Buy" rating for Sieyuan Electric, indicating a positive outlook for the company's stock performance [4][8]. Core Insights - Sieyuan Electric reported a net profit increase of 45.7% year-on-year to Rmb1,293 million in 1H25, surpassing market expectations [1][11]. - Revenue grew by 37.8% year-on-year to Rmb8,497 million, significantly exceeding the company's target of over 20% growth for 2025 [1][11]. - The net profit surge was attributed to both revenue growth and net margin expansion, which increased by 0.8 percentage points to 15.2% [1][11]. - The company aims for new orders to grow over 25% year-on-year in 2025, with a focus on international markets and non-grid customers [2][8]. - Sieyuan's R&D expenses were 7% of revenue in 2024, supporting new business developments such as energy storage systems and advanced switchgear [6][8]. Summary by Sections Financial Performance - In 2025E, net profit is forecasted to reach Rmb2,660 million, reflecting a growth of 29.8% year-on-year [3][12]. - The company's return on equity (ROE) improved to 9.89%, an increase of 1.72 percentage points year-on-year [1][11]. Market Position - Sieyuan's overseas orders accounted for approximately 30% of total orders, with significant growth from regions like the Middle East and South America [2][8]. - The company has established a strong presence in the UHV gas insulated switchgear market, enhancing its market recognition [6][8]. Valuation - The target price for Sieyuan Electric is set at Rmb87.00 per share, based on a discounted cash flow model, indicating a potential upside of 24.3% from the current price [4][12]. - The expected total return, including dividend yield, is projected at 25.2% [4].

Performance Summary - In the first half of 2025, the company achieved revenue of 8.45 billion yuan, a year-on-year increase of 37.8%, and a net profit attributable to shareholders of 1.29 billion yuan, up 45.7% year-on-year [1] - In Q2 2025, revenue reached 5.27 billion yuan, reflecting a year-on-year growth of 50.2%, with a net profit of 850 million yuan, an increase of 61.5% year-on-year, significantly exceeding expectations [1] Operational Analysis - The main network construction exceeded expectations, transformer exports maintained high prosperity, and non-network new energy installations saw significant growth [2] Domestic Market Insights - From January to May 2025, investment in power grid projects reached 204 billion yuan, a year-on-year increase of 20% [3] - The third batch of bids for State Grid's transmission and transformation equipment amounted to 21.19 billion yuan, up 38% year-on-year, setting a new record for single-batch bid amounts [3] - Cumulatively, the first three batches totaled 54.06 billion yuan, a year-on-year increase of 25%, driven by unexpected growth in the Northwest power grid construction [3] International Market Insights - From January to May 2025, China's power transformer exports reached 2 billion USD, a year-on-year increase of 45%, maintaining rapid growth [4] - The company achieved breakthroughs in markets such as the UK, Italy, Saudi Arabia, and Kuwait, and passed various national certifications, indicating potential benefits from overseas power equipment demand [4] Non-Network Business Growth - From January to May, new installations of wind and solar power reached 46 GW and 198 GW, respectively, with year-on-year increases of 134% and 150% [4] - The company is actively developing non-network businesses in power generation, rail transit, petrochemicals, and metallurgy [4] Profitability Improvement - In the first half of 2025, the company's operating profit margin was 18.0%, an increase of 0.9 percentage points year-on-year, and the net profit margin was 15.2%, up 0.8 percentage points year-on-year [5] - The improvement in profitability is primarily attributed to high-margin ultra-high voltage equipment and an increase in the proportion of overseas revenue [5] - The company aims to achieve new orders of 26.8 billion yuan (excluding tax) in 2025, a year-on-year increase of 25%, and expects to exceed its operational targets for 2025 [5] Forecast and Valuation - The company's development strategy is clear, and its business planning is well-defined, with expectations for continued revenue growth across various products due to accelerated domestic grid investment and sustained overseas demand [6] - Projected net profits for 2025-2027 are 2.75 billion yuan, 3.48 billion yuan, and 4.34 billion yuan, representing year-on-year growth of 34%, 27%, and 25%, respectively [6] - The current stock price corresponds to a PE valuation of 20, 16, and 13 times for the years 2025, 2026, and 2027, respectively, maintaining a "buy" rating [6]