Core Viewpoint - CITIC Securities initiates coverage on Jiali International (01050) with a "Buy" rating, projecting revenue growth and profit increases driven by the AI server chassis market expansion [1][2] Group 1: Financial Projections - Expected revenues for Jiali International are projected at HKD 34.5 billion, HKD 45.0 billion, and HKD 54.0 billion for the fiscal years 2025/26, 2026/27, and 2027/28 respectively [1] - The company's attributable profit is forecasted to be HKD 2.5 billion, HKD 4.7 billion, and HKD 6.6 billion for the same fiscal years [1] - For the fiscal year 2024/25, the company is expected to achieve revenue of HKD 32.3 billion, a year-on-year increase of 10.8%, and a profit of HKD 2.04 billion, reflecting a 20.5% year-on-year growth [2] Group 2: Market Dynamics - The AI sector is driving an increase in demand for GPU and ASIC servers, leading to a rise in both volume and price in the server chassis market [1] - The global market for standard server chassis is estimated to be between USD 13.7 billion and USD 20.5 billion, with the potential AI server chassis market estimated at USD 7.5 billion to USD 10 billion based on assumptions of 5 million units each for GPU and ASIC [1] Group 3: Company Positioning and Strategy - Jiali International is one of the earliest entrants in the server chassis market and holds a leading position, serving major clients such as HP, Lenovo, IBM, DELL, and ZTE [2] - The company is actively expanding its AI server product portfolio and has made significant progress with traditional OEMs, NVIDIA, and cloud service providers (CSPs) [2] - Jiali International has been included in NVIDIA's list of qualified suppliers and is working on delivering more prototype products in the coming months [2] Group 4: Challenges and Adjustments - The company faced growth challenges in 2022/23 and 2023/24 due to macroeconomic conditions, rising raw material costs, high industry inventory levels, and weak consumer/investment sentiment [2] - In response to these challenges, the company is adjusting its strategy to capitalize on AI opportunities while continuing to expand its product offerings and customer base [2]