Summary of Nari Technology - A Conference Call Company Overview - **Company**: Nari Technology - A - **Industry**: Power Equipment and Utilities Key Points Financial Performance - **3Q25 Results**: Recurring profit increased by 7% year-over-year (yoy) [2][8] - **Revenue Growth**: Revenue grew by 17% yoy in 3Q, attributed to higher contributions from non-grid customers [3][9] - **Operating Expenses**: Opex growth was lower than expected, with selling, general, and administrative (SG&A) expenses rising by approximately 2% yoy [3][9] - **Impairment Charges**: Controlled at Rmb 40 million, significantly lower than Rmb 170 million in 1H and Rmb 80 million in 3Q24 [3][9] Margins and Costs - **Gross Margin**: Decreased by 3 percentage points (ppt) yoy to 27% in 3Q [4][9] - **Operating Margin**: Fell by 2 ppt yoy to 14% [4][9] - **R&D Expenses**: Increased by 17% yoy in 3Q, with expectations of ~20% growth in FY25 [4][9] Future Outlook - **Earnings Growth**: Expected to be lower than 10% for FY25 due to increased R&D spending, but anticipated to pick up in FY26E driven by lower opex growth and strong new orders growth (>20% in 9M) [2][11] - **Government Support**: Positive outlook supported by government initiatives for smart grid development and renewable capacity growth [2][11] Investment Thesis - **Overweight Rating**: Nari Technology is rated as Overweight with a price target of Rmb 26.00, based on a 22x 2026E P/E ratio [11][12] - **Revenue Dependency**: The company is 57%-owned by State Grid, which accounted for over 60% of revenue in FY24 [11] Risks - **Downside Risks**: Include lower-than-expected grid capital expenditures and margins, as well as reduced investments in ultra-high voltage (UHV) projects [13][11] Market Reaction - **Expected Stock Reaction**: Anticipated to be muted due to profit growth being in line with consensus expectations [8][5] Additional Insights - **Investment Income**: Increased significantly by 976% from Rmb 13 million to Rmb 141 million [9] - **Profit Before Taxation**: Grew by 8% yoy, indicating stable operational performance despite margin pressures [9] This summary encapsulates the key financial metrics, strategic outlook, and potential risks associated with Nari Technology - A, providing a comprehensive overview for investors and stakeholders.