KSTAR(SZ:002518)2026-01-19 02:32Summary 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 Financial Highlights - FY25 Net Income: Expected in the range of Rmb600 million to Rmb660 million, representing a year-over-year increase of 52% to 67%, with a midpoint growth of 60% [5] - Recurring Net Income: Projected between Rmb550 million and Rmb620 million, indicating a 60% to 80% year-over-year increase, with a midpoint growth of 70% [5] - 4Q25 Net Income: Estimated between Rmb154 million and Rmb214 million, showing a significant year-over-year increase of 313% to 473% [5] - Sales Growth: Anticipated total sales CAGR of 27% from 2025 to 2030, driven by overseas high-power electrical sales [1][9] Revenue and Earnings Forecast - Revenue Forecast: - 2025E: Rmb5,332 million - 2026E: Rmb7,527 million - 2027E: Rmb9,761 million - 2028E: Rmb11,861 million - 2029E: Rmb14,334 million - 2030E: Rmb17,384 million [6] - Net Income Forecast: - 2025E: Rmb632 million - 2026E: Rmb1,046 million - 2027E: Rmb1,451 million - 2028E: Rmb1,865 million - 2029E: Rmb2,356 million - 2030E: Rmb2,940 million [6] Strategic Initiatives - Overseas Expansion: Kstar is focusing on increasing its overseas sales, particularly in high-power electricals, which are expected to rise from Rmb100 million in 2025E to Rmb800 million in 2026E [1] - Product Development: The company is actively developing next-generation products, including 800V DC systems, to capitalize on the architecture upgrade cycle expected from 2026 [1][11] - ODM Model: The overseas ODM model is projected to command a pricing premium of 25% to 50% compared to domestic orders, enhancing profitability [1] Margin and Return Expectations - Gross Profit Margin (GPM): Expected to expand to 33% by 2028E, supported by a higher mix of overseas sales [1] - Operating Profit Margin (OPM): Anticipated to reach 18% by 2028E [1] - Return on Equity (ROE): Projected average ROE of 25% from 2026 to 2030 [1] Investment Thesis - Growth Drivers: - Expansion into overseas markets, particularly North America - Increased domestic data center revenue due to higher capital expenditures from state-owned and private enterprises - Recovery in overseas ESS business driven by normalized channel inventories and demand [19] - Valuation: The 12-month price target is set at Rmb67.6, based on a P/E ratio of 26x for 2028E, indicating a potential upside of 26% from the current price [2][7] Risks - Key Risks: - Lower-than-expected growth in US ODM orders - Delays in new product launches, particularly the 800V DC products - Slower growth in overseas ESS and associated margins [20] Conclusion - Recommendation: Maintain a Buy rating on Kstar, given its strong growth prospects, attractive valuation, and ongoing transition into a key ODM partner for global data center electrical players [2][19]