Dongwu Securities: Grant a Buy rating to HeWang Electric

Soochow Securities Co., Ltd. researchers Zeng Duohong and Guo Yanan recently conducted research on Hope Power Electrical and released a research report titled “2025 Annual Report Review: New Energy and Transmission Businesses Grow Together, and Data Center and Overseas Business Are Worth Anticipating,” assigning a “Buy” rating to Hope Power Electrical.

Hope Power Electrical (603063)

Key Investment Points

The company released its 2025 annual report, achieving revenue of RMB 4.17 billion, up +12% year over year, and attributable net profit of RMB 530 million, up +21% year over year; of this, 25Q4 achieved revenue of RMB 1.39 billion, down -2.3% year over year, and up +55% quarter over quarter; attributable net profit was RMB 200 million, up +5% year over year, and up +115% quarter over quarter.

A dual-engine of new energy & transmission drives revenue growth. In 25, the company’s new energy electrical control business revenue was RMB 3.3 billion, up +15% year over year, with a gross margin of 33.4%, down -0.2 percentage points year over year; of this, Q4 revenue was RMB 1.01 billion, down -4% year over year, and up +34% quarter over quarter, with a gross margin of 34.1%, up +1.5 percentage points year over year, and down -0.5 percentage points quarter over quarter. We believe that new energy revenue growth is mainly attributable to the strong shipment growth of energy storage inverters and wind power converters, resulting in stable overall gross margin. Project transmission business revenue was RMB 630 million, up +12% year over year, with a gross margin of 51.6%, up +7 percentage points year over year; of this, Q4 revenue was RMB 320 million, up +29% year over year, and up +272% quarter over quarter; gross margin was 56.2%, up +7.6 percentage points year over year, and up +11.2 percentage points quarter over quarter. We believe the transmission business gross margin improvement is mainly influenced by product structure.

Potential in data center power supplies and overseas business to be unlocked. The company is continuously rolling out innovative solutions in special power supply systems such as high-voltage AC, high-voltage DC, and pulsed power, as well as data center power supply systems, and is actively carrying out engineering applications; the future looks promising. In 2025, overseas business revenue was RMB 370 million, up +42% year over year; gross margin was 50.3%, down -3.9 percentage points year over year. Service outlets cover more than 30 countries including Brazil, Türkiye, South Korea, etc. Internationalization is still in an early stage, and future growth potential remains to be unlocked.

Period expense ratio stays stable but trends downward, with impairment affecting profits. In 25, period expenses were RMB 930 million, up 5.3% year over year, with an expense ratio of 22.2%, down -1.3 percentage points year over year. Of this, Q4 period expenses were RMB 250 million, with quarter-over-quarter/year-over-year changes of -16.9%/-4%, and an expense ratio of 17.9%, with quarter-over-quarter/year-over-year changes of -3.2/-11.1 percentage points. In 25, operating net cash flow was RMB 420 million, up +52.7% year over year. Of this, Q4 operating cash flow was RMB 400 million, up +26.9%/+80.2% quarter over quarter/year over year, mainly due to an increase in cash received from sale of goods and the provision of services. In 25, the company recognized asset impairment losses of RMB 33 million and credit impairment losses of RMB 95 million; if reversals are considered, full-year performance could reach RMB 660 million.

Earnings Forecast and Investment Rating: Given that the company’s new energy electrical control business maintains steady growth—among which the energy storage inverter business is expected to benefit from downstream market conditions and achieve high growth; the downstream AI-related large-power power supply equipment market is broad, and overseas markets are continually making breakthroughs. We expect the company’s attributable net profit in 2026–2027 to be RMB 710 million/820 million (maintaining the original forecasts of 7.1/8.2), and the forecast for 2028 attributable net profit is RMB 940 million, up +34%/+14%/+15% year over year, corresponding to PE of 22/19/17x. We maintain the “Buy” rating.

Risk Warning: Intensifying competition, policy changes, and product expansion falling short of expectations, etc.

Latest earnings forecast details are as follows:

In the past 90 days, this stock received ratings from 5 institutions in total, including 5 “Buy” ratings; the average target price set by institutions in the past 90 days was 40.79.

The above content has been compiled by Securities Star based on publicly available information and generated by an AI algorithm (Netxin Suan Bei 310104345710301240019), and does not constitute investment advice.