KSTAR(SZ:002518)2025-08-29 02:19Summary of Shenzhen Kstar Science & Tech (002518.SZ) Conference Call Company Overview - Company: Shenzhen Kstar Science & Tech (002518.SZ) - Industry: Electric power conversion technology, focusing on data centers and energy storage systems (ESS) Key Financial Highlights - 2Q25 Results: - Revenue: Rmb1,219 million, +15% YoY - Gross Profit: Rmb350 million, +7% YoY - EBIT: Rmb141 million, +82% YoY - Net Profit: Rmb144 million, +70% YoY - Gross Margin: 29%, -2pp YoY - Operating Margin: 12%, +4pp YoY - Net Profit Margin: 12%, +4pp YoY - Comparison to Guidance: Results were largely in line with expectations, with slight deviations in gross profit and net profit compared to guidance estimates [1][21] Growth Projections - Revenue Growth: - Targeting 15%-20% sales growth in the data center segment for full-year 2025, implying 21%-30% growth in 2H25 [2] - Revised 2025E-2030E net profit estimates increased by 7% on average due to solid data center demand and overseas expansion potential [19] - Price Target: Updated 12-month price target raised to Rmb35.3 from Rmb30.9, based on a higher target multiple reflecting improved growth and return profiles [19] Segment Performance - Data Center Products: - Sales in 1H25: Rmb1,329 million, +8% YoY - Significant order growth (>20% YoY) expected in 2Q25, with many orders scheduled for delivery in 2H25 [2] - Energy Storage Systems (ESS): - Sales in 1H25: Rmb265 million, +80% YoY - Targeting to double ESS sales growth in full-year 2025 [17] - Solar Inverters: - Sales in 1H25: Rmb450 million, +5% YoY - Anticipated domestic demand headwinds in 2H25, but low profitability expected to limit impact on overall earnings [18] Market Expansion and Strategic Initiatives - Overseas Markets: Contributed approximately 55% of segment sales in 1H25, primarily driven by Southeast Asia and Europe [2] - New Partnerships: Collaborating with a UPS brand for potential ODM business targeting high-power UPS products for AI data centers in North America [2] - Domestic Market: Domestic sales accounted for about 45% of segment sales in 1H25, with key customers including Alibaba and Bytedance [20] Risks and Challenges - Downside Risks: - Lower-than-expected data center revenue growth - Lower-than-expected new energy revenue outlook - Lower-than-expected new energy margins [19][23] Conclusion - Investment Rating: Maintain Buy rating based on attractive P/E valuation and long-term growth potential [19][22] - Future Outlook: Positive growth outlook driven by data center demand, overseas expansion, and recovery in new energy business, with a focus on improving margins and profitability [22]