HTSC·2025-05-29 10:13Investment Rating - The report maintains a "Buy" rating for the company [8] - The target price is set at HKD 71.20 [8][9] Core Insights - The company's revenue for Q1 2025 reached a historical high of RMB 111.3 billion, with a year-on-year growth of 47% [1] - Adjusted operating profit increased by 114% year-on-year to RMB 9.96 billion [1] - The IoT and automotive business showed strong gross margins, with the smartphone ASP reaching a record high [1] - The launch of self-developed chips is seen as a significant step for the brand in expanding its ecosystem [1] Summary by Sections IoT and Consumer Products - In Q1 2025, IoT and consumer products revenue grew by 58.7% year-on-year to RMB 32.3 billion, with a gross margin of 25.2% [2] - The growth is attributed to the rapid expansion of large home appliances, which saw a revenue increase of 113.8% year-on-year [2] - The forecast for the IoT business is a 24% year-on-year revenue growth in 2025, with an adjusted gross margin prediction of 23.8% [2] Automotive Business - The automotive division reported a gross margin of 23.2%, exceeding previous forecasts [3] - The company delivered 75,869 units of the SU7 series in Q1, although the division incurred an operating loss of RMB 500 million [3] - The first SUV, YU7, is expected to launch in July 2025, with consumer feedback being a key focus [3] Smartphone Business - The smartphone ASP for Q1 2025 was RMB 1,211, marking a 5.8% year-on-year increase [4] - The smartphone business maintained a gross margin of 12.4%, reflecting stability despite a weak overall market [4] - The introduction of self-developed chips is anticipated to enhance the company's market share in the high-end smartphone segment [4] Financial Projections - The company’s projected revenue for 2025 is RMB 495.1 billion, with a year-on-year growth of 35.3% [7] - The net profit attributable to the parent company is forecasted to reach RMB 40.99 billion in 2025, representing a 50.1% increase [7] - The report adjusts the non-GAAP net profit estimates for 2025-2027 to RMB 41.0 billion, RMB 51.3 billion, and RMB 63.2 billion respectively [5] Valuation Methodology - The target price of HKD 71.20 is based on a sum-of-the-parts (SOTP) valuation method, assuming a long-term exchange rate of HKD to RMB at 0.92 [17] - The valuation reflects a 41x PE ratio for the 2025 forecast [17] - The smartphone and IoT business is valued at HKD 44.9 per share, while the automotive business is valued at HKD 26.3 per share [19]