Financial Performance of Listed Companies in the Frequency Converter Industry in 2013

**1. Invt (Shenzhen Invt Electric Co., Ltd.):** Net profit growth in 2013 is expected to remain around 10%.  

The company is a comprehensive product and service provider engaged in the R&D, manufacturing, and sales of low-voltage, medium-voltage, and high-voltage frequency converters. Focusing on electrical drive and industrial control fields, it is one of the few domestic frequency converter enterprises that have successfully developed and commercialized vector-type frequency converters. With independent technological R&D capabilities, comprehensive manufacturing capacities, and a nationwide marketing network, Invt is also one of the few domestic brands offering low-voltage, medium-voltage, and high-voltage frequency converter product lines. It has independently developed five major series—CHV, CHE, CHF, CHA, and CHH—comprising over a hundred high-performance frequency converter models. The voltage range spans from 220V to 10kV, and the power range extends from 0.4 kW to 7,100 kW, forming a diverse product line covering high-, medium-, and low-end markets. The products are widely used in industries such as lifting machinery, coal mining, plastics, machine tools, power generation, metallurgy, petrochemicals, oil and gas drilling, and municipal engineering.  

Due to a noticeable decline in the overall industrial automation sector in 2012—estimated by industry insiders at around 10%—the economic data from the fourth quarter of 2012 indicated a more optimistic market outlook for 2013. Notably, the foreign giant Danfoss set a growth target of 15% for 2013. Invt’s fourth-quarter report further supported the judgment that the industry was beginning to recover.  

Based on this, securities analysts predict that under conditions of weak industry recovery and similar growth in company expenses, Invt’s revenue growth is expected to increase to around 20% in 2013. However, due to investments in subsidiaries, net profit growth is projected to remain around 10%.  

---

**2. Inovance Technology:** Benefiting from the macroeconomic rebound, order performance in the first half of the year is promising.  

The downturn in China’s macroeconomy affected the overall industry. Following a rebound from the bottom in the fourth quarter of 2012, indicators such as the HSBC PMI and industrial electricity consumption reflected improvement. As a leading domestic enterprise in industrial control, Inovance’s main downstream industries include metal products, plastics, textiles, packaging, and real estate—all cyclical sectors. Therefore, securities analysts believe that visibility for the first half of the year is relatively good, while the outlook for the second half will depend on order data from March to make a better judgment for the full year.  

For 2013, Inovance Technology passed the "Resolution on the Initial Grant of Stock Options Under the Company’s First Stock Option Incentive Plan" in January, indicating that equity incentives are expected to drive company growth. Additionally, Inovance has been strategically developing new products and seeking new growth areas, particularly in photovoltaic inverters, new energy vehicle motors, and large-drive systems. Looking back at 2012, there were no major breakthroughs in market development due to challenges in the overall photovoltaic market and the underperformance of new energy vehicles and railway traction converters (affected by high-speed rail accidents). However, in 2013, the photovoltaic industry is expected to expand domestic demand under policy guidance, and the new energy vehicle sector aims for 500,000 units in operation by 2015, with railway investments recovering in the fourth quarter of 2012. Therefore, Inovance Technology is anticipated to achieve breakthroughs in new products and business areas.  

---

**3. Rongxin Co., Ltd.:** 2013 is expected to witness a comprehensive recovery.  

Compared to other companies, most industry insiders are optimistic about the market outlook for 2013. Rongxin Co., Ltd. is also expected to benefit from industry recovery and gradually realize the dividends of its management reforms. It is projected that the company will achieve an organic compound growth rate of over 40% in 2013 and 2014, while partially recognizing gains from the disposal of equity in affiliated companies (e.g., Hengshun Electric).  

Organic growth will primarily come from traditional business and the expansion of new product segments. The traditional business focuses on reactive power compensation (SVG + SVC), with downstream markets benefiting from industries such as power generation, metallurgy, and power grids. Industry analysis suggests that downstream demand is expected to recover steadily in 2013. Additionally, the company plans to increase its export efforts in 2013. Accordingly, orders for reactive power compensation are projected to grow by 20%.  

New products mainly include frequency converters and lightweight HVDC transmission. In the third quarter of 2012, Rongxin completed the integration of its general-purpose frequency converter team. Due to its excellent product quality and well-established sales channels, the company is expected to potentially double its orders to approximately 400 million yuan in 2013. Lightweight HVDC transmission is also expected to secure orders exceeding 100 million yuan from the Southern Power Grid. As this technology is still in the popularization stage domestically, Rongxin will benefit from its leading position in the field.  

---

**4. Hiconics:** Growth declined in 2012; focus on enhancing the high-voltage frequency converter industry position.  

Under the current economic situation, Hiconics must carefully select customers in 2013 while ensuring contract quality, improving payment collection management, strengthening internal controls, increasing R&D investment, and expanding market efforts to enhance its core competitiveness. This will help steadily elevate the company’s position in the high-voltage frequency converter industry. During the reporting period, the company’s low- and medium-voltage frequency converter products were still in the cultivation stage and did not experience explosive growth. Recently, Hiconics has intensified sales and promotion efforts for its low- and medium-voltage products to prepare for the upcoming production capacity release after the Wuhan base becomes operational.  

---

**5. Jiuzhou Electric:** Selling its high-voltage frequency converter business to focus on new fields.  

In 2012, Jiuzhou Electric initiated its asset restructuring by selling its high-voltage frequency converter business to the international electrical giant Rockwell Automation. This transaction increased Jiuzhou Electric’s cash reserves. The deal also retained the Jiuzhou brand, with Rockwell producing "Jiuzhou-brand" high-voltage frequency converters under an OEM arrangement, allowing the business to continue contributing to Jiuzhou Electric’s performance.  

Leveraging its professional expertise and industry experience in power electronics and electrical control, Jiuzhou Electric is striving to transform its business and explore new market areas. The company has become a well-known domestic supplier of intelligent complete electrical equipment and energy efficiency management system solutions. For its future development, Jiuzhou Electric plans to gradually expand its business around power electronics technology, penetrating fields such as renewable distributed power generation, microgrids, process industrial automation, power quality management, harmonic control, energy storage technologies, and energy efficiency management systems.  

According to external analysis, Jiuzhou Electric’s performance has been relatively平淡 in recent years, lacking notable highlights. Company representatives stated that funds would be used for industrial chain extension or capacity expansion, but suitable timing and projects are currently lacking, leading the company to adopt a cautious观望 approach.  

---

**6. Zhiguang Electric:** 2013 may benefit from continued focus on energy-saving service business.  

Due to the impact of macroeconomic downturn, overall market demand has declined, leading to intense competition in the high-voltage frequency converter industry—Zhiguang Electric’s main business. The continuous decline in sales prices of general-purpose high-voltage frequency converters has resulted in reduced sales毛利率. Additionally, Zhiguang Electric has continued to build its core competitiveness by investing in the R&D of超大容量 high-voltage frequency converters, power quality reactive power compensation products, and power informatization. The company has also expanded into new market regions and application fields while establishing new product marketing teams, leading to increased sales expenses.  

In recent years, to achieve long-term sustainable development, Zhiguang Electric has increased its investment in the energy-saving service business to create future profit growth points. However, some energy-saving service projects are still under construction and not yet operational. As these projects gradually come online, they are expected to provide stable cash flow and operating revenue for the company in 2013.