ZTT(SH:600522)2025-10-28 03:06Summary of Jiangsu Zhongtian Technology Co. Ltd. Conference Call Company Overview - Company: Jiangsu Zhongtian Technology Co. Ltd. (ZTT) - Industry: Utilities in China - Stock Rating: Overweight - Market Capitalization: Rmb61,160 million - Current Share Price: Rmb17.92 (as of October 27, 2025) - Price Target: Rmb22.07, indicating a potential upside of 23% from the current price [6][66] Financial Performance - 9M25 Results: - Net Profit: Rmb2,338 million, up 1.2% year-over-year - Revenue: Rmb38.0 billion, up 10.7% year-over-year - Gross Profit Margin (GPM): 14.6%, down 1.2 percentage points year-over-year [3][4] - 3Q25 Results: - Net Profit: Rmb771 million, down 9.4% year-over-year and down 18.0% quarter-over-quarter - Revenue: Rmb14.4 billion, up 11.4% year-over-year and up 3.8% quarter-over-quarter - GPM: 13.9%, down 0.5 percentage points year-over-year and down 1.5 percentage points quarter-over-quarter [3][4] - Investment Gains: - Investment gains from share disposal increased by 557% year-over-year to Rmb259 million, partially offset by a fair value loss of Rmb202 million [3] Order Backlog and Future Guidance - Order Backlog (as of October 24, 2025): - Marine Systems: Rmb13.1 billion - Power Transmission: Rmb16.2 billion - New Energy: Rmb2.5 billion - Submarine Cable Order Backlog: Rmb10 billion [4][8] - Future Expectations: - Anticipated revenue growth and GPM improvement due to a high-voltage product mix in the submarine cables order backlog, expected to be recognized from 4Q25 to FY26 [4][10] - Expected margin tailwinds with 60-70% of the backlog being high-voltage products [8][10] Product Mix and Market Dynamics - Product Contribution to 3Q25 Net Profit: - Power Transmission: ~40% - Marine: ~35% - Optical: ~20% [8] - Challenges: - GPM decline attributed to a low-margin product mix from submarine cables and unfavorable revenue mix from lower optical installation and commissioning [8] Valuation and Risks - Valuation Methodology: Discounted cash flow model with a 20% conglomerate discount applied [11] - Key Assumptions: - WACC: 9.67% - Terminal Growth: 2% - Risks include competition in the submarine cable market, operating cost management, and capital expenditure increases [13] Conclusion - Jiangsu Zhongtian Technology Co. Ltd. shows a modest growth trajectory with a solid order backlog and expectations for improved margins in the coming quarters. However, challenges in product mix and market competition pose risks to its financial performance. The stock is rated as overweight, indicating a favorable outlook compared to its peers in the utilities sector [6][66].