Everbright Securities has reaffirmed its "Buy" rating on Shanghai Electric (601727.SH, 02727). While the scale of new orders for coal-fired power has slowed, and pressures such as asset impairment have somewhat impacted the company's performance, leading to a prudent downward revision of profit forecasts, Everbright Securities anticipates net profits attributable to shareholders of 1.5 billion, 2.4 billion, and 2.9 billion yuan for 2026-2028, respectively. The current A-share and H-share prices correspond to a price-to-earnings ratio of 83 and 35 times for 2026. Against the backdrop of China's energy structure transformation and industrial adjustment, the company is poised to leverage its leading position to further increase market share in its traditional stronghold businesses. Concurrently, supported by its technological R&D strengths, emerging sectors like nuclear fusion, fourth-generation reactors, hydrogen energy, and robotics are expected to become new growth drivers.
The company released its 2025 annual report, showing operating revenue of 126.679 billion yuan, a year-on-year increase of 9.03%, and a net profit attributable to shareholders of 1.206 billion yuan, surging 60.3% year-on-year. In the fourth quarter of 2025, revenue reached 44.402 billion yuan, up 12.15% year-on-year, with a net profit of 141 million yuan, turning a profit compared to the same period last year but decreasing 42.42% sequentially. The company proposed a cash dividend of 0.1425 yuan per 10 shares (tax inclusive).
Revenue from the energy equipment segment maintained strong growth, while industrial equipment and integrated services operated steadily. In 2025, the company continued to focus on its core high-end equipment manufacturing business. Within its various operations, the energy equipment segment performed notably, with revenue rising 21.48% year-on-year to 75.024 billion yuan, primarily driven by continued growth in coal-fired power revenue. However, an increase in revenue from the relatively lower-margin wind power business also somewhat impacted the segment's profitability, leading to a gross margin decrease of 1.25 percentage points to 18.44%. The industrial equipment segment saw revenue decline by 1.49% year-on-year to 38.074 billion yuan, affected by a drop in elevator business revenue due to the real estate sector, with the gross margin falling 0.47 percentage points to 16.22%. The integrated services business demonstrated stable operation, with segment revenue slightly decreasing by 0.41% year-on-year to 20.649 billion yuan, and the gross margin declining by 2.56 percentage points to 11.12%.
The value of new orders continued to reach record highs, with the wind and nuclear power segments performing strongly. In 2025, the company's new orders increased by 12.5% year-on-year to 172.8 billion yuan, hitting a five-year high. All three major business segments saw growth in order value. The growth rate for energy equipment orders slowed, mainly due to a deceleration in new coal power orders, which decreased 18.5% year-on-year to 26.59 billion yuan. However, the wind power and nuclear power segments stood out, with new orders surging 32.2% and 25.3% year-on-year to 22.97 billion yuan and 9.89 billion yuan, respectively. New orders for industrial equipment grew steadily by 5.2% year-on-year to 44.48 billion yuan. New orders for integrated services jumped 62.9% year-on-year to 36.19 billion yuan, providing strong potential support for future revenue growth.
The company continues to focus on achieving breakthroughs in emerging industries such as nuclear fusion and robotics. It is actively promoting the development of strategic emerging industries and future industries. In the field of nuclear fusion, Shanghai Electric is deeply involved in national key fusion projects, having successfully delivered the world's first ITER project magnet cryogenic test dewar and the TF coil case for the CRAFT project, with plans to deliver core components for multiple host systems, including the BEST project. In fourth-generation reactor technology, the company achieved a breakthrough by producing the first set of large forgings for key nuclear island equipment like the pressure vessel, internal components, and steam generator for high-temperature gas-cooled reactors. In robotics, the company launched its first self-developed humanoid robot, "Suyuan." Through a dual-drive strategy of independent R&D and ecosystem collaboration, it has initially built an industrial chain covering segments such as industrial robots, special-purpose robots, and intelligent robots.
Risks include potential cost pressures from rising raw material prices, risks associated with overseas operations due to geopolitical factors, and foreign exchange rate fluctuations.
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