Summary of Conference Call Records Industry Overview - **Industry**: China Hardware and Semiconductors - **Quarter**: 2Q25 Key Points and Arguments 1. Performance Highlights - 35% of 2Q25 results beat expectations, an increase from 20% in 1Q25, primarily driven by AI, optics, and tariff pull-in demand [1] - Among 37 tech hardware and semiconductor stocks, 13 reported results that beat expectations, 8 were in-line, and 16 missed [2] 2. Inventory Levels - The China tech inventory tracker indicates healthy inventory levels for consumer electronics hardware in 2Q25, while AI hardware remains high due to strategic stocking [1] - Downstream hardware showed low Days Inventory Outstanding (DIO) for passive components and optical fiber, while optical communications and networking saw high DIO [3] 3. Market Dynamics - AI continues to be a high-growth vertical, with expectations of rotation within the AI supply chain in 2H25 [2] - The Apple supply chain may experience profit-taking post-iPhone launch, but foldable iPhone beneficiaries are expected to remain resilient [2] - The camera supply chain is anticipated to see new edge device launches in 2H25 [2] 4. Company-Specific Insights - **Sunny Optical**: Expected to benefit from multiple growth engines including automotive multi-cam trends and AI smart glasses [10] - **Lens Tech**: Anticipated to gain from iPhone cover glass upgrades and new product rollouts [10] - **Xiaomi**: Positioned as a long-term structural growth name with promising EV growth and a recovering smartphone landscape [10] - **FII**: Expected to see significant revenue growth from AI server deployments, with a target price based on strong profitability metrics [10] 5. Semiconductor Sector - Chinese semiconductor makers are improving inventory balance due to demand pull-in ahead of tariffs and industry recovery [11] - Localization efforts are increasing, particularly in smartphone and automotive sectors, driven by geopolitical tensions and supply uncertainties [11] 6. Future Outlook - Global smartphone shipments grew by 1.4% YoY, with expectations of flat growth in 3Q25 due to pull-forward demand [7] - AI infrastructure demand is expected to drive multi-year growth, particularly in datacenters and servers [11] - The semiconductor sector is seeing strong demand growth, particularly in AI-related applications [11] 7. Risks and Challenges - Power discrete components face challenges due to industry oversupply and increasing local competition [2] - Smartphone makers may experience margin pressure due to rising memory prices [7] - The semiconductor industry is still grappling with uncertainties related to tariffs and geopolitical tensions [11] 8. Analyst Recommendations - **Upgrades**: BYDE upgraded to Buy; Goodix upgraded to Buy due to anticipated ASP and margin upside [2][11] - **Downgrades**: BOEVx downgraded to Sell due to macro uncertainties and profitability concerns [2] 9. Key Metrics - AI server revenue is expected to grow by over 170% YoY in 3Q25, with significant contributions from rack shipments [8] - Sunny Optical's target price set at HK$103.0 based on a 23x 2026E EPS [10] 10. Conclusion - The overall sentiment in the China hardware and semiconductor industry remains positive, with strong growth prospects in AI and consumer electronics, despite facing challenges from inventory management and geopolitical factors [1][11]

Market Overview - On September 11, major indices including the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, and STAR Market Index experienced a rebound, with the ChiNext Index and STAR Market Index rising over 5% [2] - The Shanghai Composite Index closed at 3875.31 points, up 1.65%, with a trading volume of 10,168 billion yuan; the Shenzhen Component Index closed at 12,979.89 points, up 3.36%, with a trading volume of 14,209.25 billion yuan; the ChiNext Index closed at 3053.75 points, up 5.15%, with a trading volume of 7,042.61 billion yuan; the STAR Market Index closed at 1326.03 points, up 5.32%, with a trading volume of 1,060 billion yuan [2] Sector Performance - The market saw more sectors rising than falling, with notable gains in electronics, securities, telecommunications, computers, agriculture, insurance, power equipment, machinery, and non-ferrous metals [4] - Concepts such as CPO, PCB, copper cable high-speed connections, optical communication modules, laser radar, NVIDIA, liquid cooling, storage chips, computing power, and synchronous reluctance motors showed active performance [4] - Only a few sectors, including precious metals, jewelry, and tourism, experienced declines [4] Fund Flow Analysis - The net inflow of main funds in the Shanghai and Shenzhen markets was 103.09 billion yuan, with the ChiNext seeing a net inflow of 104.83 billion yuan [5][6] - Among the 31 primary industries, 9 sectors had net inflows, with the electronics sector leading at 108.17 billion yuan, followed by telecommunications, computers, and non-bank financials [6] - The pharmaceutical and biological sector had the highest net outflow at 35.68 billion yuan, with other sectors like media, automotive, and non-ferrous metals also seeing significant outflows [6] Individual Stock Performance - A total of 1,903 stocks saw net inflows, with 131 stocks receiving over 1 billion yuan in net inflows, led by Luxshare Precision with 24.76 billion yuan [8] - Conversely, 3,243 stocks experienced net outflows, with 85 stocks seeing over 1 billion yuan in net outflows, the highest being 263 with 7.52 billion yuan [10] Institutional Activity - According to the post-market data, institutional investors had a net sell of approximately 6.66 billion yuan, with 12 stocks seeing net purchases, the highest being Dongshan Precision at about 2.38 billion yuan [11]

Market Overview - The Shanghai Composite Index rose by 1.65% on September 11, with 31 out of 41 sectors experiencing gains, led by the communication and electronics sectors, which increased by 7.39% and 5.96% respectively [1] Fund Flow Analysis - The net inflow of capital in the two markets reached 34.518 billion yuan, with 11 sectors seeing net inflows. The electronics sector topped the list with a net inflow of 21.723 billion yuan, followed by the computer sector with a net inflow of 8.479 billion yuan [1] - Conversely, 20 sectors experienced net outflows, with the pharmaceutical and biological sector leading the outflows at 3.975 billion yuan, followed by the media sector with 2.738 billion yuan [1] Electronics Sector Performance - The electronics sector saw a significant increase of 5.96%, with 443 out of 467 stocks rising, including 28 stocks hitting the daily limit up. Only 23 stocks declined, with 1 stock hitting the daily limit down [2] - Among the stocks in the electronics sector, 280 experienced net inflows, with 41 stocks receiving over 100 million yuan in net inflows. The top stock for net inflow was Luxshare Precision, with 2.788 billion yuan, followed by Haiguang Information and Shenghong Technology with 2.467 billion yuan and 1.361 billion yuan respectively [2] Electronics Sector Capital Outflow - The top stocks with net outflows in the electronics sector included Lens Technology, Tianyue Advanced, and Transsion Holdings, with net outflows of 508 million yuan, 147 million yuan, and 147 million yuan respectively [3]

Core Viewpoint - The company, Lens Technology (300433.SZ), has denied rumors regarding the adoption of a CPI+UTG solution for foldable screens by a North American client, asserting that UTG has become the mainstream trend for foldable screens due to its superior performance metrics compared to CPI [1][3]. Group 1 - The company is a global core supplier of UTG, leveraging its strong technical foundation, comprehensive patent portfolio, and mature mass production capabilities [1]. - The company is actively collaborating with major clients to develop related products and has initiated capacity construction for the next generation of foldable screen UTG [1]. - The company is providing robust support for the mass production of high-end foldable devices for its major clients [1].

Core Viewpoint - The rumors regarding North American major clients adopting the CPI+UTG solution for foldable screens are untrue, as confirmed by the company [1] Group 1: Company Position - The company, Lens Technology, is a global core supplier of UTG (Ultra-Thin Glass) and is actively collaborating with major clients to develop related products [1] - The company has initiated capacity construction for the next generation of foldable screen UTG, providing strong support for the mass production of high-end foldable devices for major clients [1] Group 2: Industry Trends - UTG has become the new mainstream trend for foldable screens, outperforming CPI (Colorless Polyimide) in terms of crease, hardness, light transmittance, and tactile performance [1]

Core Viewpoint - The company has confirmed that it is adequately prepared for the production of a new ultra-thin model for a major client, countering rumors of limited capacity [1] Group 1: Production and Capacity - The company has been working overtime since the second half of the year to arrange production for the new product [1] - Current orders indicate that production capacity is very sufficient, and the market outlook for the ultra-thin model is optimistic [1] Group 2: Product Innovation - The company is enhancing product value significantly by introducing new technologies and processes to create high-end innovative products [1] - These innovations are becoming a crucial growth point for the company's performance [1]

Core Viewpoint - The company has confirmed that it has sufficient production capacity for a new ultra-thin model from a major client, countering rumors of limited supply [1] Group 1: Production and Capacity - The company has been ramping up production since the second half of the year to meet the demand for the new product [1] - Current orders indicate that production capacity is very ample, and the market outlook for the ultra-thin model is positive [1] Group 2: Product Innovation - The company is enhancing product value significantly by introducing new technologies and processes to create high-end innovative products [1] - These innovations are becoming a crucial growth driver for the company's performance [1]

Core Viewpoint - The company, Lens Technology, has confirmed that it is adequately prepared for the production of a new ultra-thin model for a major client, countering rumors of limited capacity [1] Group 1: Production Capacity - The company has arranged for increased production to meet the demand for the new ultra-thin model starting from the second half of the year [1] - Current orders indicate that production capacity is very sufficient, and the market outlook for the ultra-thin model is optimistic [1] Group 2: Product Innovation - The company is implementing new technologies and processes to create high-end innovative products, significantly enhancing product value [1] - This innovation is becoming an important growth driver for the company's performance [1]

Core Viewpoint - Lens Technology announced a share buyback operation on September 9, purchasing 1,003,800 shares as part of a larger buyback plan of 500 million to 1 billion yuan, aimed at stabilizing stock prices and boosting investor confidence in the company's long-term development [1] Summary by Categories - **Share Buyback Details** - The company has cumulatively repurchased 1,487,000 shares recently [1] - The current buyback is part of a planned range of 500 million to 1 billion yuan [1] - **Market Strategy** - The company intends to continue share repurchases based on market fluctuations [1] - The buyback aims to maintain stock price stability and protect the interests of small and medium investors [1]

Core Viewpoint - Lens Technology (300433)(06613) announced a share buyback plan, investing 30.0644 million yuan to repurchase 1.0038 million A-shares on September 9, 2025 [1] Group 1 - The company plans to repurchase shares as part of its financial strategy [1] - The total amount allocated for the buyback is 30.0644 million yuan [1] - The number of A-shares to be repurchased is 1.0038 million [1]