Summary of Shenzhen Envicool Technology Co Ltd Conference Call Company Overview - **Company**: Shenzhen Envicool Technology Co Ltd - **Ticker**: 002837.SZ - **Industry**: China Industrials - **Market Cap**: Rmb76,058.5 million - **Stock Rating**: Overweight - **Price Target**: Rmb74.00 - **Current Price**: Rmb78.60 Key Financial Results (3Q25) - **Revenue**: Rmb1,453 million, a 25% increase year-over-year (YoY) and a 11% decrease quarter-over-quarter (QoQ) [3][8] - **Gross Profit**: Rmb427 million, a 22% increase YoY, with a gross margin of 29.4% [3][8] - **Net Profit**: Rmb183 million, an 8% increase YoY, slightly below market expectations [3][8] - **Operating Profit**: Rmb197 million, a 17% increase YoY [3][8] - **Operating Cash Flow**: -Rmb85 million, compared to +Rmb202 million in 3Q24 [8] Expense Analysis - **Cost of Goods Sold (COGS)**: Increased by 44% YoY to Rmb2,926 million [3] - **Selling Expenses**: Increased by 42% YoY to Rmb59 million [3] - **R&D Expenses**: Increased by 22% YoY to Rmb102 million [3] - **Administrative Expenses**: Increased by 21% YoY to Rmb58 million [3] Operational Metrics - **Contract Liabilities**: Increased by 42% compared to the end of 2024 [8] - **Inventory**: Increased by 39% compared to the end of 2024 [8] - **Operating Expense Ratio**: Stable at 15.0% YoY [8] Market Outlook - **Growth Drivers**: Anticipated growth from data center cooling business and potential breakthroughs with overseas clients [8] - **Future Expectations**: Investors are expected to look beyond 2H25 results, with revenue growth anticipated from 2026 [8] Valuation and Risks - **Valuation Methodology**: 83x P/E applied to 2026 EPS estimate, forecasting 39% YoY EPS growth in 2026 [9] - **Risks to Upside**: Faster-than-expected AI investment, falling raw material prices, margin improvement [11] - **Risks to Downside**: Global economic slowdown, rising raw material prices, margin contraction [11] Additional Insights - **Gross Margin**: Decreased by 0.8 percentage points YoY but increased by 3.4 percentage points QoQ [8] - **EPS Forecast**: Expected to grow from Rmb0.61 in FY24 to Rmb1.19 in FY27 [6] - **P/E Ratio**: Projected to decrease from 107.9 in FY25 to 66.2 in FY27 [6] This summary encapsulates the key points from the conference call, highlighting the financial performance, operational metrics, market outlook, and valuation considerations for Shenzhen Envicool Technology Co Ltd.