SIEYUAN(SZ:002028)2025-10-20 01:19Sieyuan Electric (002028.SZ) 3Q25 Earnings Call Summary Company Overview - Company: Sieyuan Electric - Ticker: 002028.SZ - Date of Call: 17 Oct 2025 Key Financial Highlights - Net Profit: Increased by 45.7% year-over-year (YoY) to Rmb1,293 million in 9M25, with 3Q25 net profit rising by 48.7% YoY to Rmb899 million, surpassing market expectations [1][2] - Revenue: Grew by 32.9% YoY to Rmb13,827 million, significantly exceeding the company's target of over 20% growth for 2025E [1][2] - Net Margin: Expanded by 1.5 percentage points YoY to 15.8% [1] - Earnings Per Share (EPS): Increased by 46.4% YoY to Rmb2.81 [1] - Return on Equity (ROE): Rose by 2.83 percentage points YoY to 16.11% [1] Order and Revenue Growth - New Orders: Sieyuan targets over 25% YoY growth in new orders for 2025E, with a significant portion expected from overseas markets [2] - Revenue Sources: Anticipated revenue growth primarily from switchgears, coil products, and reactive compensation products [2] - Geographic Distribution: Approximately two-thirds of new orders are from China, with the remaining one-third from overseas, particularly from Latin America, the Middle East, Southeast Asia, Europe, and Africa [2] Cash Flow and Financial Health - Free Cash Flow: Positive free cash flow quadrupled YoY to Rmb728 million in 3Q25, with operating cash flow turning positive at Rmb432 million in 9M25 [3][6] - Cash Flow Outlook: The company expects to maintain positive free cash flow in 2025E, driven by increased operating cash inflow from product deliveries [6] Research and Development - R&D Investment: R&D expenses accounted for 7% of revenue in 2024, with expectations to maintain this ratio in 2025E to support new business developments [7][8] - New Product Launches: Key developments include breakthroughs in UHV gas insulated switchgear (GIS) sales and the introduction of new energy storage system (ESS) products [7] Market Position and Valuation - Market Cap: Rmb82,744 million (approximately US$11,615 million) [4] - Target Price: Rmb100.00 per share, based on a discounted cash flow (DCF) model, equating to a 2025E P/E of 28.3x and P/B of 5.2x [11] - Investment Rating: Reiterated as a "Buy" due to strong earnings performance, positive cash flow, and competitive product positioning [8] Risks and Considerations - Downside Risks: Include lower-than-expected PRC grid capital expenditures, reduced overseas new orders, and higher raw material costs [12] Conclusion - Sieyuan Electric demonstrates robust financial performance with significant profit and revenue growth, a strong order pipeline, and a commitment to R&D, positioning itself favorably within the power grid equipment sector in China. The company is well-placed to capitalize on increasing demand for renewable energy and electric vehicle infrastructure.