NARI-TECH(SH:600406)2025-11-03 02:36Summary of Nari Technology - A Conference Call Company Overview - Company: Nari Technology - A - Industry: Power Equipment and Utilities Key Points Financial Performance - 3Q25 Results: Recurring profit increased by 7% year-over-year (yoy) [2][8] - Revenue Growth: Revenue grew by 17% yoy in 3Q, attributed to higher contributions from non-grid customers [3][9] - Operating Expenses: Opex growth was lower than expected, with selling, general, and administrative (SG&A) expenses rising by approximately 2% yoy [3][9] - Impairment Charges: Controlled at Rmb 40 million, significantly lower than Rmb 170 million in 1H and Rmb 80 million in 3Q24 [3][9] Margins and Costs - Gross Margin: Decreased by 3 percentage points (ppt) yoy to 27% in 3Q [4][9] - Operating Margin: Fell by 2 ppt yoy to 14% [4][9] - R&D Expenses: Increased by 17% yoy in 3Q, with expectations of ~20% growth in FY25 [4][9] Future Outlook - Earnings Growth: Expected to be lower than 10% for FY25 due to increased R&D spending, but anticipated to pick up in FY26E driven by lower opex growth and strong new orders growth (>20% in 9M) [2][11] - Government Support: Positive outlook supported by government initiatives for smart grid development and renewable capacity growth [2][11] Investment Thesis - Overweight Rating: Nari Technology is rated as Overweight with a price target of Rmb 26.00, based on a 22x 2026E P/E ratio [11][12] - Revenue Dependency: The company is 57%-owned by State Grid, which accounted for over 60% of revenue in FY24 [11] Risks - Downside Risks: Include lower-than-expected grid capital expenditures and margins, as well as reduced investments in ultra-high voltage (UHV) projects [13][11] Market Reaction - Expected Stock Reaction: Anticipated to be muted due to profit growth being in line with consensus expectations [8][5] Additional Insights - Investment Income: Increased significantly by 976% from Rmb 13 million to Rmb 141 million [9] - Profit Before Taxation: Grew by 8% yoy, indicating stable operational performance despite margin pressures [9] This summary encapsulates the key financial metrics, strategic outlook, and potential risks associated with Nari Technology - A, providing a comprehensive overview for investors and stakeholders.