Zhi Tong Cai Jing·2025-09-03 03:07Core Viewpoint - The communication sector is experiencing revenue and net profit growth, with profitability metrics reaching new highs since 2022, driven by the burgeoning AI computing power segment [1][2][4]. Group 1: Communication Sector Performance - In the first half of 2025, the A-share communication sector achieved revenue of 13,220.65 billion, a year-on-year increase of 2.99%, while net profit growth outpaced revenue growth at 7.66% [2]. - The comprehensive gross margin for the sector was 29.33%, reflecting a year-on-year increase of 0.11 percentage points, and the net profit margin was 11.08%, up by 0.49 percentage points [2]. - In Q2 2025, both revenue and net profit growth rates improved compared to the same period last year, with gross and net profit margins reaching their highest levels since 2022 [1][2]. Group 2: Subsector Performance - The optical module/device and connector segments showed strong performance in the first half of 2025, leading in revenue and net profit growth rates [3]. - The three major telecom operators in Hong Kong reported a 0.3% year-on-year revenue increase and a 5.1% net profit increase in the first half of 2025, although Q2 saw a slight revenue decline of 0.1% with a net profit growth of 6.0% [3]. Group 3: Institutional Holdings and Valuation - In Q2 2025, public fund holdings in the communication sector reached a record high of 3.85%, an increase of 1.26 percentage points, while northbound capital holdings also hit a record high of 2.18%, up by 0.57 percentage points [4]. - The current PE-TTM for the communication sector is 46.44, placing it at the 99.59th percentile over the past five years and the 74.54th percentile over the past ten years [4]. - The low penetration rate of AI users and the nascent stage of large model development suggest significant potential for capital expenditure growth as revenues from large models increase [4].