ZHONGTAI SECURITIES·2024-08-20 02:03Investment Rating - The investment rating for the company is "Buy" (maintained) [2][6]. Core Insights - The company has shown steady performance with both revenue and net profit growth. In H1 2024, domestic network business faced pressure due to the overall investment environment, while international business continued to grow at double digits. The company is expanding its enterprise and consumer business, achieving significant revenue growth of 56.1% and 14.3% respectively [4][6]. - The company is actively innovating in the connectivity sector, with 5G-A expected to contribute to new growth. It ranks second globally in the shipment of 5G base stations and core networks, and has launched various innovative technologies in collaboration with operators [4][6]. - The company is transitioning towards a "connection + computing power" model, enhancing its market space by focusing on AI computing power and related products. It has maintained a leading position in the domestic operator market for servers and storage [4][6]. Financial Performance Summary - Revenue (in million CNY) is projected to grow from 124,251 in 2023A to 172,307 in 2026E, with a CAGR of approximately 11% [2][7]. - Net profit (in million CNY) is expected to increase from 9,326 in 2023A to 14,423 in 2026E, reflecting a growth rate of 17% in 2026E [2][7]. - Earnings per share (EPS) is forecasted to rise from 1.95 in 2024E to 3.02 in 2026E [2][6]. Business Strategy and Market Position - The company is positioned as a leader in the ICT sector, actively adapting to the digital economy by expanding into IT and innovative second-line businesses. It emphasizes cost control and improving profitability [5][6]. - The company has a strong focus on R&D, with R&D expenses accounting for 20.4% of revenue in H1 2024, and holds over 90,000 global patent applications, including around 5,000 in AI [4][6].