Ge Long Hui·2025-08-21 10:39Core Viewpoint - The company reported better-than-expected adjusted net profit for Q2 2025, driven by strong IoT business performance and higher automotive gross margins [1][2]. Financial Performance - Q2 2025 revenue reached 115.956 billion yuan, a year-on-year increase of 30.5%, slightly below expectations by 1.7% [1]. - Adjusted net profit was 10.831 billion yuan, reflecting a year-on-year growth of 75.4%, exceeding expectations by 6.4% [1]. - IoT revenue grew by 44.7% year-on-year to 38.712 billion yuan, with significant contributions from major appliances, wearables, and tablets [2]. Market Trends - The company maintained its position as the third-largest smartphone vendor globally, with a market share of 14.7% in Q2 2025, despite a slight year-on-year shipment increase of 0.6% to 42.4 million units [1]. - In the high-end smartphone segment in mainland China, the market share for devices priced between 5,000-6,000 yuan increased by 6.5 percentage points to 15.4% [1]. - The average selling price (ASP) of smartphones decreased by 2.7% year-on-year to 1,073 yuan due to a higher proportion of low-ASP models [1]. IoT and Internet Business - The IoT segment's gross margin decreased by 2.7 percentage points to 22.5% in Q2 2025, influenced by promotional activities [2]. - Internet business revenue grew by 10.1% year-on-year to 9.097 billion yuan, with a gross margin decline of 3.0 percentage points to 75.4% [2]. Automotive Sector - The company delivered 81,300 vehicles in Q2 2025, with an ASP of 253,700 yuan, and the gross margin improved by 3.27 percentage points to 26.4% [2]. - The outlook for automotive orders is positive, indicating potential profit elasticity from increased deliveries [2]. Profit Forecast and Valuation - The adjusted net profit forecast for 2025 was lowered by 5.9% to 46.139 billion yuan due to weak smartphone demand and rising raw material costs [2]. - The current stock price corresponds to a price-to-earnings ratio of 27.0 times for 2025 and 18.5 times for 2026, with a target price of 70.0 HKD, indicating a potential upside of 33.6% [2].