Celestica(US:CLS) SINOLINK SECURITIES·2025-07-29 15:19Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [4]. Core Insights - The company reported Q2 2025 revenue of $2.89 billion, a year-on-year increase of 21%, with a GAAP gross margin of 12.8%, up 2.2 percentage points year-on-year [2]. - The company has raised its full-year revenue guidance for 2025 to $11.55 billion from a previous estimate of $10.85 billion, and expects Non-GAAP EPS to be $5.50, up from $5.00 [2]. - The growth in revenue is primarily driven by the increasing demand for switches, particularly in the communication terminal market, which saw a revenue of $1.641 billion in Q2 2025, a 75% year-on-year increase [3]. - The company anticipates continued growth in the communication terminal market, projecting a year-on-year increase of 60-65% for Q3 2025 [3]. - The company is expected to benefit from the high demand for ASIC servers and Ethernet switches due to the explosion of inference demand [4]. Summary by Sections Performance Review - In Q2 2025, the company achieved a net profit of $211 million, a significant increase of 122% year-on-year [2]. - Non-GAAP net profit for Q2 2025 was $161 million, reflecting a 49% year-on-year growth [2]. Operational Analysis - The company's enterprise terminal market revenue in Q2 2025 was $433 million, down 37% year-on-year, but showed a positive trend compared to Q1 2025 [3]. - The company is positioned to gain more projects as the design and manufacturing complexity of ASIC servers increases [3]. Profit Forecast and Valuation - The projected GAAP net profits for 2025, 2026, and 2027 are $645 million, $781 million, and $1.078 billion, respectively [10]. - The company is expected to maintain a strong customer base, including major clients like Google, Amazon, and Meta, which will support its growth in the data center market [4].