High-Speed Rail Electrical 2025 Annual Report Interpretation: Revenue Increased by 17.16%, Operating Cash Flow Plunged by 81.20%

Core Profitability Indicators Analysis

Operating Revenue: Up 17.16% Year-over-Year, Significant Business Structure Differentiation

In 2025, the company achieved an operating revenue of 1.18B yuan, a year-over-year increase of 17.16%, mainly driven by a 25.11% growth in electrified railway catenary product revenue to 700 million yuan, becoming the core growth driver; however, urban rail transit power supply equipment revenue only increased slightly by 1.22% to 312 million yuan. Revenue from off-track products grew 16.37% to 142 million yuan but still remains in loss (gross profit margin -10.04%).

Net Profit and Non-Recurring Net Profit: Profit Quality Needs Improvement

Net profit attributable to shareholders of the listed company was 51.4615 million yuan, up 14.02%; non-recurring net profit was 43.6346 million yuan, up 9.29%, with a growth rate lower than net profit, mainly due to non-recurring gains and losses contributing 7.8269 million yuan, accounting for 15.21% of net profit, indicating profit stability relies on non-recurring income.

Earnings Per Share: Synchronized Growth with Net Profit

Basic earnings per share were 0.1368 yuan/share, up 14.10%; non-recurring earnings per share were 0.1160 yuan/share, up 9.33%, matching the growth rates of net profit and non-recurring net profit, reflecting that earnings per share increase in tandem with company profitability.

Cost Control: Clear Structural Differentiation

Sales Expenses: Up 20.19%, Increased Market Expansion Efforts

Sales expenses amounted to 43.1898 million yuan, up 20.19%, outpacing revenue growth, mainly due to increases in employee compensation, agency service fees, and travel expenses by 15.97%, 72.70%, and 3.22%, respectively, indicating the company has increased staffing and market service efforts to seize market orders.

Management Expenses: Down 11.69%, Effectiveness of Control Evident

Management expenses totaled 30.7454 million yuan, down 11.69%, mainly due to decreases in employee compensation and other expenses by 10.12% and 86.99%, respectively. The company has optimized management processes and reduced unnecessary expenditures to control costs.

Financial Expenses: Up 70.45%, Mainly Due to Decline in Interest Income

Financial expenses were 3.86M yuan, a significant increase of 70.45%, mainly because interest income dropped sharply from 5.3789 million yuan to 3.0333 million yuan, while interest expenses decreased from 6.3772 million yuan to 5.4424 million yuan but could not offset the income decline. Additionally, fee expenses increased by 11.90%.

R&D Expenses: Slight Decrease of 2.40%, Investment Structure Optimized

R&D expenses totaled 50.8812 million yuan, a slight decrease of 2.40%, but the structure of R&D investment has been optimized. Employee compensation, design and testing fees, and agency service fees increased by 1.42%, -15.26%, and -27.78%, respectively, while material costs increased by 15.98%. This shows the company is maintaining core R&D personnel investment while reducing external service procurement and increasing self-developed material input.

R&D Personnel and Technical Reserves: Core Team Stable

R&D Staff: Stable Team Size, Salary Increase

The company has 113 R&D personnel, accounting for 14.51% of total staff, remaining stable compared to last year. Total R&D staff salary is 15.0228 million yuan, with an average salary of 132.9k yuan, up 13.49%, reflecting the company’s emphasis on core R&D talent. The company applied for 41 patents (including 10 invention patents) and was granted 48 patents (including 14 invention patents). It holds 364 valid intellectual property rights, among which 82 are invention patents, indicating ongoing rich technical reserves.

Cash Flow: Operating Cash Flow Significantly Under Pressure

Operating Activities Cash Flow: Plummeted 81.20%, Surge in Procurement Expenditure

Net cash flow from operating activities was 132.9k yuan, a sharp decline of 81.20%, mainly due to cash paid for purchasing goods and receiving labor services increasing from 744 million yuan to 839 million yuan, up 12.79%, far exceeding revenue growth. Meanwhile, cash received from sales of goods decreased from 32.04M yuan to 1.14B yuan, leading to a significant contraction in operating cash flow.

Investing Activities Cash Flow: Outflows Reduced

Net cash flow from investing activities was -38.5414 million yuan, a reduction of nearly 1 billion yuan compared to last year’s loss of 996 million yuan, mainly because cash paid for the purchase and construction of fixed assets, intangible assets, and other long-term assets decreased from 138 million yuan to 39 million yuan, significantly reducing investment expenditure.

Financing Activities Cash Flow: Slight Net Outflow

Net cash flow from financing activities was -18.83M yuan, roughly the same as last year, mainly due to debt repayment and dividend distribution leading to cash outflows. The company’s financing mainly relies on rolling short-term borrowings.

Risk Warnings

2. Technology Iteration Risk: The rail transit industry is moving toward simplification, lightweight, environmental protection, and intelligence. If the company cannot keep pace with technological upgrades, its product market share may decline.
3. Customer Concentration and Related-Party Transaction Risks: The top five customers account for 65.03% of sales, with related-party sales making up 37.02%. Changes in related-party operations or cooperation adjustments could impact order stability.
4. Accounts Receivable and Inventory Risks: Accounts receivable at the end of the period totaled 1.31B yuan, up 6.70%; inventory was 434 million yuan, up 27.78%. If downstream customers face liquidity issues or projects are delayed, there is a risk of bad debts or inventory impairment.
5. Industry Cycle Risks: Railway and urban rail transit construction are heavily influenced by macro policies and local fiscal conditions. Fluctuations in construction cycles could lead to order volatility.

Executive Compensation

• Chairman Zhang Chanyu: Pre-tax remuneration during the reporting period was 455.5k yuan, consistent with General Manager Chen Minhua, reflecting aligned compensation for core management.
• General Manager Chen Minhua: Pre-tax remuneration was 455.5k yuan, equal to the Chairman’s.
• Vice Presidents: Compensation ranges from 302.6k to 442.4k yuan, with Li Yuanbo earning the highest at 442.4k yuan; Yan Junfang 347.6k yuan; Chen Yongrui 328.2k yuan; Feng Delin 302.6k yuan. Compensation is linked to management responsibilities and performance contributions.
• Chief Financial Officer Wang Xuce: Pre-tax remuneration was 305.1k yuan, slightly higher than some vice presidents, matching core financial management responsibilities.

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