Event: The company released its 24-year annual report, with revenue of 6.90 billion yuan in 24, +3.5% year-on-year, net profit attributable to the parent company of 570 million yuan, +13.8% year-on-year, and non-net profit of 550 million yuan, +14.6% year-on-year, of which 24Q4 revenue was 2.10 billion yuan, +11.0% year-on-year, and net profit attributable to the parent company was 170 million yuan, -0.45% year-on-year. 24-year gross profit margin of 24.3% (+1.5pct), net profit margin of 8.3% (+0.7pct), 24Q4 gross margin of 24.6%, +0.1pct year-on-year; Net profit margin was 8.1%, -0.9pct year-on-year.

The company's performance is in line with market expectations as a whole.

New energy is dragging down or bottoming out, and AIDC demand is jumping to add new momentum to growth. 1) The new energy market was slightly under pressure, and the company's downstream revenue in the new energy field was 3 billion yuan in 24 years, a year-on-year increase of -19%, mainly due to the significant reduction in the industry's new production capacity due to the surplus of polysilicon. In 24 years, the demand for polysilicon expansion has bottomed out, and the company's 66kV wind power products are expected to be applied in offshore wind projects, and wind power is expected to become an important downstream for the growth of the new energy sector. 2) New infrastructure blossomed and came to fruition, with revenue from non-new energy areas reaching 3.7 billion yuan in 24, +31% year-on-year, and the proportion of revenue exceeding that of new energy for the first time. Among them, the demand for AIDC construction has jumped, with customers covering Byte, Alibaba, Baidu, Huawei and other leading manufacturers and operators, with new orders +604% year-on-year.

Solidly promote the internationalization strategy and enhance the growth potential of digitalization + energy storage. 1) The globalization strategy is an important development strategy that Kinpan adheres to, with export revenue of 1.981 billion yuan in 24 years, +68% year-on-year, and 3.324 billion yuan of new orders, +67% year-on-year. Overseas new energy + AIDC demand is booming, the Polish factory opens the door to the European market, and the Mexican base + U.S. local production capacity (to be built) to undertake the North American market, and the localization strategy is expected to alleviate the negative impact of U.S. trade tariffs. 890 new customers from 20 countries in '24 provide strong support for future revenue growth. 2) Digitalization + energy-related businesses have entered the cash-out period. In 24 years, the revenue of energy storage/digital factory was +26%/74% year-on-year, and the AI model empowered the digital factory, tapped the potential of production and management, and drove Jinpan to achieve industrial upgrading. Energy storage orders have been fulfilled one after another, and a new generation of products is ready to go, looking forward to energy storage going overseas to enhance the long-term growth potential.

Expenses improved significantly in Q4 and cash flow was slightly under pressure for the full year. The expense ratio for the 24-year/24Q4 period was 14.45%/13.75%, +1.08pct/-1.29pct year-on-year, and the selling/administrative/R&D/financial expense ratio was 3.82%, 5.1%, 5.11%, and 0.41% for the 24-year period, +0.51, +0.91, -0.15, and -0.18pct year-on-year. Net cash from operating activities in '24 was -37 million yuan, a year-on-year increase of -242 million yuan, of which cash from the sale of goods was 5.535 billion yuan, a year-on-year increase of +9%. Contract liabilities were RMB644 million, +9% from the beginning of the year. Accounts receivable was 2.676 billion yuan, +2% from the beginning of the year.

Profit Forecast and Investment Rating: Considering that the delivery of short-term orders due to the increase in tariffs in the United States in 25 years may not be able to meet the price in time, we revised down the company's 25-year net profit attributable to the parent company to 813 million yuan (the previous value was 817 million yuan), and the profitability of downstream customers is expected to recover after the completion of the price, and we revised the net profit attributable to the parent company in 26 years to 1.071 billion yuan (the previous value was 1.036 billion yuan), and the company's 27-year net profit attributable to the parent company is expected to be 1.350 billion yuan, +41%/32%/26% year-on-year respectively The corresponding PE at the current price is 21x, 16x, and 13x respectively, maintaining a "buy" rating.

Risk warning: overseas business progress is less than expected, raw material prices fluctuate sharply, competition intensifies, etc.