Key takeaway

The company released its 2025 annual report. In 2025, operating revenue increased by 17.87%, and net profit attributable to the parent company's shareholders increased by 15.84%, achieving steady performance growth. Revenue from grid automation products grew steadily, while businesses such as power plant and industrial automation grew rapidly, leading to a steady improvement in operating performance. On the grid side, State Grid's fixed asset investment during the "16th Five-Year Plan" period is expected to reach 4 trillion yuan, a 40% increase compared to the "14th Five-Year Plan" period, indicating high industry prosperity. On the power generation side, the company's new energy business benefits from the sustained high scale of wind and solar power installations under the backdrop of clean energy construction. On the electricity consumption side, the company actively seizes new opportunities brought by the development of the data center industry. The company is expected to continue benefiting from the strong demand driven by the prosperity of the power equipment industry.

Event

The company released its 2025 annual report. In 2025, it achieved operating revenue of 8.193 billion yuan, a year-onyear increase of 17.87%; net profit attributable to the parent company's shareholders was 829 million yuan, a year-onyear increase of 15.84%; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses was RMB800mn, up 14.64% YoY.

Brief analysis

2025 performance achieved steady growth

1) In 2025, the company's net profit attributable to shareholders of the parent company and net profit excluding non-recurring gains and losses were 829 million yuan and 800 million yuan respectively, up 15.84% and 14.64% YoY. This was mainly due to steady growth in revenue from grid automation products and rapid revenue growth from products such as power plant and industrial automation, leading to a steady improvement in operating performance.

2) In the single fourth quarter of 2025, the company achieved operating revenue of 2.062 billion yuan, a year-on-year increase of 11.0%; net profit attributable to the parent company's shareholders was 125 million yuan, a year-on-year increase of 17.4%; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses was 120 million yuan, up 15.5% YoY.

Power plant and industrial automation business grew rapidly, while grid-related revenue maintained growth.

1) In 2025, the company's grid automation business revenue was 3.679 billion yuan, a year-on-year increase of 11.2%; power plant and industrial automation revenue was 3.826 billion yuan, a year-on-year increase of 22.5%.

2) In 2025, the company's gross profit margin on sales was 30.22%, a year-on-year decrease of 2.11 pct, which is expected to be due to changes in product mix and the continuous expansion of products outside the grid system.

3) In 2025, the company's selling expense ratio and administrative expense ratio decreased by 0.7 pct and 0.9 pct year-on-year, respectively. This is expected to be due to economies of scale and enhanced management, demonstrating the company's cost control capabilities and improved operational efficiency.

Firmly expanding into overseas markets, actively seizing opportunities in industries such as data centers.

1) Continue to deepen focus on the power grid. State Grid's fixed asset investment during the "16th Five-Year Plan" period is expected to reach 4 trillion yuan, a 40% increase compared to the "14th Five-Year Plan" period, indicating high industry prosperity. The company ranked among the top in terms of the scale of winning bids in both State Grid's centralized tenders and China Southern Power Grid's framework tenders.

2) Non-grid business continues to expand. ① In the new energy sector, from January to December 2025, the cumulative newly installed solar capacity was 315 GW, a year-on-year increase of 14%; the cumulative newly installed wind power capacity was 120 GW, a year-on-year increase of 51%, maintaining a high scale of new energy installations. Centered on the dual-drive strategy of "technology leadership + deep sector expertise," the company continues to consolidate its leading industry position, maintaining a top-tier market share in segments such as offshore wind power and large-scale wind-solar bases. ② In traditional power generation, the company successfully won bids for multiple projects including Zhejiang Guotou Jineng (Zhoushan), Zhejiang Guoneng Anji Meixi, Jiangsu Huaneng Tongzhou Bay, and Jiangsu Datang Lüsi Port Power Plant, and disrupted the traditional model by undertaking the entire electrical secondary system including NCS, generator-transformer unit protection, and grid-connected automation and protection, further consolidating its market position. The company's non-grid power generation side business will continue to benefit.

3) Actively seize opportunities in industries such as data centers. Deeply integrating energy management with digital technology, the company has established large-scale application scenarios in regions such as Northwest and North China, and has deeply participated in multiple projects including China Mobile Hohhot Data Center, Beijing-Tianjin Computing Power Industrial Park, and Wuhu ByteDance Phase II Volcano Engine Computing Power Center, helping customers achieve balanced development between computing power expansion and energy consumption control. Simultaneously, closely track the application of direct green power connections and DC power distribution in data center construction. It is expected that the company will continue to achieve new breakthroughs in AIDC-related scenarios in the future.

4) Firmly expand into international markets. The company actively promotes its international development strategy. In the future, it will deepen its market presence in core regions such as Southeast Asia, South Asia, Central Asia, and Africa, while simultaneously exploring and expanding into markets like Europe, South America, and Australia. During the reporting period, the company won the bid for the stability control system of the 500kV Nama Substation on the Laos side of the China-Laos interconnection project, achieving a performance breakthrough in the Laos stability control market; won bids for overseas projects including the Terra 3.5GW photovoltaic and 4.5GWh energy storage project, and the 4GVar largecapacity SVG batch procurement project; won the bid and commissioned a 10MW grid-forming energy storage project in Pakistan; distribution switchgear took solid steps in the international market, with continuous project wins in the Democratic Republic of the Congo, Kenya, Laos, and other countries.

Earnings forecast

The company's estimated net profit attributable to the parent company for 2026 is 980 million yuan, with a PE of 36.8x.

Risks

1) Demand: Changes in national infrastructure policies lead to a smaller-than-expected investment size in power generation; size of investment in power grid is smaller than expected; lower growth rate of new energy installed capacity leads to a decline in demand for power equipment; the growth rate of overall electricity consumption declines; tender progress of China Southern Power Grid (CSG) and National Grid (NG) fails to meet expectations; construction progress of UHV is slower than expected, etc.

2) Supply: The prices of commodities such as copper and steel increase; the supply of power electronic devices becomes tight, and the progress of localization misses expectations.

3) Policies: Supportive policies for new energy fall short of expectations; promotion of new electricity pricing mechanism misses expectations; the power spot market development is slower than expected; the peak-valley price differences in electricity do not meet expectations.

4) International situation: The energy crisis is alleviated rapidly and energy prices fall rapidly; international trade barriers become higher, etc.

5) Markets: The competitive landscape sees significant changes; intensified competition leads to lowerthan- expected profitability in the entire power equipment industry; and costs such as transportation increases.

6) Technology: The progress of technology cost reduction is lower than expected; technical reliability is difficult to see further improvement.