KSTAR(SZ:002518)2025-11-10 03:34Summary 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 Points and Arguments 1. Target Price Revision: - The 12-month target price (TP) is raised to Rmb55.4 from Rmb48.5, reflecting a 13.7% upside from the current price of Rmb48.73 [1][18] - The new TP is based on a 30x 2026E P/E, considering a long-term EPS CAGR of 28% from 2026E to 2030E [18] 2. Positive Business Developments: - Positive read-across from SolarEdge's 3Q25 earnings indicates healthy ESS demand in Europe, with SolarEdge's revenue growing by 55% quarter-over-quarter [3][18] - Kstar launched a new MW-level UPS product, enhancing its product offerings [1][19] - Potential AIDC power system orders from European and Taiwanese customers for North American data center projects [1][19] 3. Market Position and Growth Potential: - Kstar is positioned as a key beneficiary of overseas data center buildout and residential/C&I ESS demand [2] - The company is expanding its customer base through an ODM model across Europe, Taiwan, and Southeast Asia [2] - There is potential for wallet share gain from domestic cloud hyperscalers like Alibaba and Bytedance [2] 4. Financial Forecasts: - 2025E revenue is projected at Rmb5,331.6 million, with a significant increase to Rmb8,998.7 million by 2027E [5] - EBITDA is expected to grow from Rmb794.0 million in 2025E to Rmb1,762.8 million in 2027E [5] - EPS is forecasted to increase from Rmb1.14 in 2025E to Rmb2.52 in 2027E [5] 5. Margin Improvement: - An improving margin profile is anticipated due to rising overseas sales contributions, with gross profit margins for high-power UPS expected to be between 35%-40% [18] - Overall data center products segment gross profit margin was 33.3% in 1H25 [18] 6. Product Innovations: - Kstar is developing in-house Solid-State Transformer (SST) products, with a launch expected around the end of 2026 [17][19] - The new 1250kW UPS product can scale up to 5MW and supports various backup energy sources, targeting AI data centers [19] Additional Important Information - Risks: - Potential risks include lower-than-expected data center revenue growth and new energy revenue outlook [24] - Market Capitalization: The market cap is Rmb28.4 billion (approximately $4.0 billion) [5] - Investment Rating: The stock is rated as a Buy, with a potential upside of 14% [2][18] This summary encapsulates the key insights from the conference call regarding Shenzhen Kstar Science & Tech, highlighting its growth prospects, financial forecasts, and market positioning within the electric power conversion technology sector.