CICC: Maintains WASION HOLDINGS (03393) Outperform Rating, Raises Target Price to HK$30.0

CICC issued a research report stating that considering product upgrades and cost reduction efficiency, it raised the net profit forecast for WASION HOLDINGS (03393) in 2026/2027 by 8%/6% to 1.33/1.62 billion yuan. The current stock price corresponds to a price-earnings ratio of 18.8/15.3 times in 2026/2027. It maintains an outperform rating, taking into account the valuation switching to 2026, the industry valuation pivot shifting upwards, the inclusion in the Hong Kong Stock Connect enhancing liquidity and valuation premium. The bank raised its target price by 150% to 30.0 Hong Kong dollars, corresponding to a price-earnings ratio of 20.0/16.2 times in 2026/2027, with the current stock price still having a 6% upside potential. CICC's key points are as follows: - Net profit attributable to shareholders in 2025 increased by 50% year-on-year, exceeding the bank's expectations. The company announced its 2025 annual report: total revenue of 10.07 billion yuan, a year-on-year increase of 15.6%; net profit attributable to shareholders of 1.06 billion yuan, a year-on-year increase of 50.0%; dividend payout ratio of 40%. The company's 2025 performance exceeded the bank's expectations, mainly due to: 1) the launch of new products such as relays and current transformers, the performance of domestic smart grid business revenue outperformed the meter bidding situation; 2) significant cost reduction effects internally, offsetting the impact of rising raw material prices and falling meter prices, with gross margin/net profit margin increasing by 0.9ppt/2.4ppt year-on-year. - Overseas revenue and orders maintained high growth, deep localization driving impressive performance in Asia and Europe. In 2025, the company's overseas revenue increased by 25.2% year-on-year to 3.0 billion yuan, accounting for 29.8% of total revenue; by region, Asia increased by 104.1% year-on-year to 1.16 billion yuan, mainly benefiting from the commissioning of new factories in Indonesia and Malaysia, rapid development of overseas data center business; Europe increased by 84% year-on-year to 680 million yuan, deepening European layout with Hungary as a base, Americas increased by 18.9% year-on-year to 1.32 billion yuan. In 2025, the company's new overseas contract orders amounted to 4.07 billion yuan, an increase of 17.2% year-on-year. - Breakthroughs in domestic and overseas data centers, actively expanding the high-end North American market. In 2025, the company won bids in the data center field amounting to 1.564 billion yuan, an increase of 99.5% year-on-year. The company has product lines for power distribution modules and IT cabins, rapid cooling system research and development, and aims to build a comprehensive digital infrastructure solution covering key power supply, power distribution, cooling systems, and management software. In the market, the company has successfully developed large cloud computing, internet enterprises, and COLO operators in the domestic market, and won orders for telecom operators; meanwhile, it has deep cooperation with Day One overseas, with full order books extending to 2028-2029. In addition, the company has released a new generation of power meters for the North American market, and the bank is optimistic about the company gradually expanding its products, such as meters and power distribution, to the North American market. Risk warning: Domestic meter bidding falls short of expectations, intensifying overseas competition, overseas business operational risks.