Third-Quarter Revenue Hits Record High for the Period
TECO (1504) posted third-quarter revenue of 168.5 billion yuan this year, up 15.9% year-on-year and 1.5% quarter-on-quarter, a record high for the period, but below the brokerage's original forecast of 189 billion yuan. The brokerage noted the miss was mainly due to the time lag between order intake and actual shipment for AI data center projects, which dragged on near-term revenue recognition. However, electromechanical systems sustained growth momentum in Asia and North America, coupled with contributions from power and energy businesses, keeping overall operations at a steady level. TECO shares rose 1.2 yuan yesterday (28th), up 1.74%, closing at 70.2 yuan.
Fourth-Quarter Operations Expected to Recover
Looking to the fourth quarter, the brokerage expects TECO quarterly revenue to reach 179.6 billion yuan, with gross margin of about 23.7% and quarterly EPS estimated at 0.77 yuan. As project shipment schedules move forward, related revenue will be recognized in sequence, and operating performance should recover accordingly. The brokerage believes the near-term timing gap in revenue does not affect the medium- to long-term order trend, with AI data center and power infrastructure demand remaining key drivers for further growth, and momentum from the fourth quarter into next year warrants continued observation.
Deepening Presence in Southeast Asia With One-Stop Solutions
In its AI data center布局, the brokerage said TECO continues to expand Southeast Asian capacity, targeting AIDC and power infrastructure opportunities, and strengthening its one-stop solution capabilities integrating power systems, cooling equipment and prefabricated electromechanical modules. At the same time, the company is focusing on Singapore, Thailand, Indonesia and other Southeast Asian markets, actively cultivating overseas demand. Through local capacity and system integration strengths, TECO is expected to win more data center power and electromechanical turnkey orders, expanding its overseas footprint and diversifying single-market fluctuation risks.
MDC Technology Aims to Cut Build-Out Costs
In addition, the brokerage noted TECO's 2.7MW modular data center (MDC) proof-of-concept is scheduled for shipment this quarter. The technology can compress data center build time from 15 to 20 months to under 9 months, and reduce capital expenditure by 15 to 20%. The brokerage believes the business should gradually contribute from this year's fourth quarter into next year, becoming one of the future growth drivers. On valuation, the brokerage trimmed its EPS forecasts for TECO for this year and next to 3.27 yuan and 3.67 yuan, and forecasts 4.45 yuan for 2028. Considering competition in traditional electromechanical business and initial costs, it cut the target price to 88 yuan, while maintaining a Buy rating.