LCXX(000977) HTSC·2025-04-30 01:55Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of 71.74 RMB [8][9]. Core Views - The company reported a significant revenue increase in Q1 2025, achieving 46.858 billion RMB, a year-on-year growth of 165.31% and a quarter-on-quarter growth of 48.09%. The net profit attributable to the parent company was 463 million RMB, with a year-on-year increase of 52.78% [1]. - The strong demand in the computing power market, particularly for AI servers, is driving the company's revenue growth. The company is expected to benefit from increased capital expenditures from major internet companies in 2024 [1][4]. - The company's contract liabilities and inventory have increased significantly, indicating robust downstream demand for AI computing power, which is expected to contribute to high revenue growth for the year [3]. Summary by Sections Revenue and Profitability - In Q1 2025, the company achieved a gross margin of 3.45%, a decrease of 4.68 percentage points year-on-year, attributed to a higher proportion of low-margin products from internet clients. The operating cash flow increased by 265.48% year-on-year, reflecting improved collection and payment rhythms [2]. Market Position and Growth Potential - The company is positioned as a leader in the domestic server market, with a market share of 1st in China and 2nd globally. The capital expenditure of major internet companies is expected to accelerate in 2024, providing a favorable environment for the company to increase its market share [4]. Financial Forecasts - Revenue forecasts for 2025 are adjusted upwards due to the anticipated increase in capital expenditures from internet giants. The net profit estimates for 2025-2027 are raised to 3.103 billion RMB, 3.852 billion RMB, and 4.578 billion RMB, respectively, with corresponding EPS of 2.11 RMB, 2.62 RMB, and 3.11 RMB [5][7].