SUNWAY COMM(SZ:300136) Zheng Quan Zhi Xing·2025-06-12 06:33Core Viewpoint - The performance growth of XW Communication has not continued, with a decline in both revenue and profit in Q1 2025, indicating challenges in new business areas and overall profitability [1][8]. Group 1: Financial Performance - In Q1 2025, XW Communication reported revenue of 1.743 billion yuan, a year-on-year decline of 6.19%, and a net profit of 77.49 million yuan, down 48.9% [8]. - The 2024 annual report showed revenue of 8.744 billion yuan, a year-on-year increase of 15.85%, and a net profit of 662 million yuan, up 26.89% [2]. - The contribution from the newly acquired Weishi Technology was significant, accounting for 23% of total revenue and 31% of net profit in 2024 [2]. Group 2: Business Expansion and Acquisitions - XW Communication has expanded its business from mobile terminal antennas to connectors, RF, and acoustic modules through acquisitions, including Weishi Technology in 2023 [1][3]. - The company has made several acquisitions since 2012, including the purchase of antenna supplier Yinzilai and other companies to diversify its product offerings [3]. Group 3: Market Performance - The company’s overseas revenue accounted for over 70% of total revenue in 2024, amounting to 6.402 billion yuan, a year-on-year increase of 4.29% [5]. - Domestic revenue reached 2.342 billion yuan in 2024, showing a significant growth of 66.2% [5]. Group 4: Profitability and Margins - The gross margin for XW Communication has been under pressure, with a decline in gross margins for both domestic and international markets [5][8]. - In Q1 2025, the gross margin was 19.47%, down 0.82 percentage points year-on-year [8]. Group 5: Cash Flow and Expenses - The net cash flow from operating activities in 2024 was 1.076 billion yuan, a decrease of 40.83% year-on-year, attributed to increased production costs [6]. - The growth in selling, research and development, and administrative expenses in Q1 2025 further squeezed the company's profit margins [9]. Group 6: Stock Performance and Market Confidence - XW Communication's stock price has been declining, with a drop of over 30% from its peak of 32 yuan per share in November 2023 to 22.12 yuan per share by June 2025 [10]. - The company initiated a share buyback program to boost market confidence, increasing the buyback amount to between 300 million and 600 million yuan [9][10].