KEHUA HENGSHENG(SZ:002335)2025-09-01 03:21Summary of Kehua Data Co. (002335.SZ) Conference Call Company Overview - Company: Kehua Data Co. (002335.SZ) - Industry: Industrial Technology & Machinery, specifically focusing on Uninterruptible Power Supply (UPS) and power management solutions Key Financial Results - 2Q25 Financial Performance: - Revenue: Rmb2,516 million, down 1% YoY - Gross Profit: Rmb567 million, up 7% YoY - EBIT: Rmb218 million, up 24% YoY - Net Profit: Rmb175 million, up 15% YoY - Gross Profit Margin (GPM): 23%, up 2 percentage points YoY - Operating Profit Margin (OPM): 9%, up 2 percentage points YoY - Net Profit Margin (NPM): 7%, up 1 percentage point YoY - Comparison to Guidance: Results were largely in line with expectations, excluding credit impairment losses of Rmb47 million [1][19][20] Revenue Segmentation - Data Center Products: - Sales: Rmb784 million, up 34% YoY - Smart Power Products: - Sales: Rmb439 million, down 23% YoY - Total Sales for 1H25: Rmb1,224 million, up 6% YoY, compared to Kstar's Rmb1,299 million, up 8% YoY [2][10] Growth Outlook - 2H25 Expectations: Anticipated 30% YoY growth in data center products driven by strong demand and order delivery schedules [2] - Overseas Expansion: Limited contribution in 1H25, but management is actively expanding the overseas customer base, with expectations for more business progress in 2026E [10] - Domestic Demand: Solid growth in 2025 YTD, maintaining high wallet share with major clients like Tencent [10] Product Development - New Products: Development of high-voltage direct current (HVDC) products and next-generation technologies [10][16] - Cooling Solutions: Offering liquid-cooled modular data centers and racks for AI applications, primarily serving Chinese telecom operators [16] Financial Projections - Revised Net Income Forecasts: Adjusted by -1% on average for 2025-2030E [1][19] - 12-Month Price Target: Updated to Rmb42.6 from Rmb42.8, maintaining a Neutral rating due to current valuation levels [1][19] Risks and Considerations - Downside Risks: - Lower-than-expected data center revenue growth - Weaker new energy revenue outlook - Reduced margins in new energy products - Upside Risks: - Better-than-expected customer capital expenditures - Faster product expansion and market share gains - Price competition in data center and renewable energy products [19][26] Valuation Metrics - Market Cap: Rmb29.8 billion / $4.2 billion - P/E Ratios: 34x for 2026E, 28.5x for 2027E - CAGR: 14% for 2027-2030E earnings [1][4][11] Conclusion - Kehua Data Co. is positioned as a leader in the UPS market with a focus on expanding its product offerings and market reach. The company is navigating a solid domestic demand landscape while actively pursuing international opportunities. The current valuation reflects a balanced risk/reward scenario, leading to a Neutral rating from analysts.