Tianfeng Securities·2025-05-13 09:12Investment Rating - The industry rating is maintained as "Outperform the Market" [9] Core Insights - The communication equipment industry has shown a recovery in revenue growth, with Q4 2024 and Q1 2025 revenues increasing by 2.9% and 12.9% year-on-year, respectively, indicating a successful transition to new growth drivers, particularly AI computing power [2][3] - The net profit for the communication equipment sector saw a decline of 141% in Q4 2024, followed by a 24% increase in Q1 2025, reflecting a positive trend in profitability as the industry adapts to new growth dynamics [2][3] - Key segments such as optical devices and IoT are experiencing significant growth, with optical devices showing revenue growth of 52.6% and 67.5% in Q4 2024 and Q1 2025, respectively, driven by global AI demand [2][3][4] Financial Analysis Communication Equipment - The overall revenue for the communication equipment sector in Q4 2024 was 61.94 billion, with a year-on-year decline of 9.5%, while Q1 2025 saw a recovery with a 9.1% increase [41] - The net profit for the main equipment sector dropped by 66% in Q4 2024 but showed a smaller decline of 11.9% in Q1 2025, indicating ongoing challenges but potential for recovery [41][39] Optical Devices - The optical device segment has shown remarkable growth, with revenues increasing by 52.6% and 67.5% in Q4 2024 and Q1 2025, respectively, and net profits growing by 124.4% and 114.3% [2][3] IoT Sector - The IoT sector continues to validate its recovery, with good revenue and profit growth in Q1 2025, benefiting from the ongoing trend of interconnected devices [2][3] IDC & CDN - The traditional IDC sector faces challenges, but the AIDC market is expected to grow significantly due to the increasing demand for computing power driven by AI applications [3][4] Investment Recommendations - The report suggests focusing on "AI + Overseas Expansion + Satellite" as core investment opportunities, particularly in areas like optical modules, liquid cooling, and domestic computing power lines [5][6] - Specific stocks recommended include Zhongji Xuchuang, Tianfu Communication, and China Mobile, among others, with a focus on companies that are well-positioned to benefit from the AI and digital economy trends [6][13]