Investment Rating - The report assigns a "Buy" rating to Huafeng Technology (688629) for the first time [2] Core Views - Huafeng Technology's Q3 2024 revenue increased by 30% YoY, driven by the expansion of its new communication business [2][3] - The company's net profit turned negative due to increased costs in expanding the communication business, including higher labor and manufacturing expenses [3][10] - The company is a core supplier to Huawei and is expected to benefit from the growth in AI computing power demand [5][20] Financial Performance - In Q3 2024, Huafeng Technology achieved revenue of 2.65 billion yuan, up 30.05% YoY, but reported a net loss of 0.31 billion yuan [2][9] - For the first three quarters of 2024, the company's revenue was 7.49 billion yuan, up 21.01% YoY, with a net loss of 0.49 billion yuan [2][9] - The company's gross margin for the first three quarters of 2024 was 16.90%, down 12.52 percentage points YoY [4] Business Development - Huafeng Technology is actively expanding its communication business, with products such as 112G OD Prevail and high-speed line modules [4][15] - The company is a key supplier in the server market, providing high-speed connectors to major manufacturers like Huawei, Inspur, and ZTE [18][20] - The company is also developing products for the new energy and defense sectors, including waterproof FAKRA and non-contact energy transmission modules [15] Industry Outlook - The AI server market in China grew rapidly in H1 2024, with the accelerated server market reaching $5 billion, up 63% YoY [5][18] - The company is expected to benefit from the shift in capital expenditure by operators towards cloud computing and AI infrastructure [20] Profit Forecast - The report forecasts Huafeng Technology's revenue for 2024-2026 to be 13.30/21.24/28.42 billion yuan, with net profits of 1.02/2.22/3.29 billion yuan [21] - The current stock price implies a PE ratio of 79/53X for 2025-2026 [21]
华丰科技：2024年三季报点评：Q3营收同比+30%，加速拓展通讯新业务