许继电气20240514

Summary of XJ Electric Conference Call Company Overview - Company: XJ Electric - Industry: Electric Equipment and Renewable Energy Key Points Business Structure Adjustment - XJ Electric is adjusting its business structure, leading to revenue growth in the State Grid segment while experiencing a decline in revenue from low-margin businesses in the new energy sector [2][3] - The company aims to enhance profitability and improve accounts receivable and inventory turnover rates [2][3] High Voltage Direct Current (HVDC) Projects - As of now, there are no new HVDC line announcements from the State Grid tender platform; however, XJ Electric won the Lingbao back-to-back DC transformation project in April 2025, with six planned lines expected to be released in June [2][4] - The current HVDC orders on hand amount to approximately 4 billion RMB (including tax), with expected non-tax revenue of about 2 billion RMB from these orders in 2025 and beyond [2][6] Revenue Projections - For 2025, XJ Electric anticipates total revenue of 18.3 billion RMB, representing a year-on-year growth of approximately 7% [5][20] - The HVDC segment is expected to generate 1.2 billion RMB in revenue, while the new energy and system integration segments are projected to remain stable compared to 2024 [5][20] Distribution Network Business - The company is building a secondary marketing system, which has led to a year-on-year increase in new orders despite price declines due to joint procurement policies [9] - The market share for certain products has increased by 1-2 percentage points compared to the previous year, although competition has intensified, leading to price reductions [9] New Energy Sector Developments - XJ Electric is expanding its distributed energy business with products like photovoltaic tracking systems and flexible control conversion switches, along with a digital management cloud platform for distributed energy [11][12] - The new energy segment's revenue structure is being controlled to improve margins, as the total package revenue is expected to shrink [17] International Expansion - The company expects to secure approximately 1.5 billion RMB in new overseas orders in 2025, with a growth rate of about 10% compared to 2024 [21] - Significant growth is noted in South America and Africa, particularly in smart meters, with ongoing projects in Europe [22][23] Future Plans and Strategies - XJ Electric plans to maintain a focus on single-machine business rather than EPC total package projects, with strict controls on domestic EPC projects based on scale and risk assessment [26][28] - The company has no immediate plans to establish offices or factories in Europe, focusing instead on markets in Asia, Africa, and Latin America [25] Financial Performance and Margins - The gross margin for the HVDC segment is expected to fluctuate based on final revenue and project confirmations, with a target to improve overall gross margin by one percentage point in 2025 [19][15] Market Outlook - The first batch of smart meter tenders in 2025 is expected to see a slight decrease compared to 2024, but the second batch is anticipated to positively impact volume and pricing [10] Additional Insights - The company is actively managing risks associated with overseas EPC projects, focusing on smaller, less risky projects while avoiding large-scale high-risk ventures [28]