WASION HOLDINGS (03393) saw its shares rebound by more than 5%. At the time of writing, the stock was up 4.1%, trading at HKD 25.92, with a turnover of HKD 203 million. On the news front, Citi's latest research report noted that the decline in WASION HOLDINGS' share price on April 28 likely reflected market concerns over a potential price reduction in the State Grid's smart meter tenders. However, the company's subsidiary, WASION Info, reported a 6.4% year-on-year increase in first-quarter net profit to RMB 139 million, outperforming its peers. Citi indicated that the gross profit margin for WASION's smart meter business dropped by 4 to 5 percentage points in the first quarter from 40% in 2025 to approximately 35%-36%, but it is expected to recover in the second half of 2026. The bank has decided to end its previous positive short-term view and initiate a new 90-day upside catalyst watch. This catalyst watch is based on three main reasons: firstly, expectations of strong profit growth in the distribution business and overseas smart meter sales from 2026 to 2027; secondly, WASION's in-house capability to manufacture meter relays, a key component whose price has surged 2 to 4 times in 2026, which should help mitigate potential profit pressure on the smart meter business; and thirdly, the current valuation is attractive, with a projected 2026 price-to-earnings ratio of 16.4 times, price-to-book ratio of 3.2 times, and a dividend yield of 2.4%.
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