FII(SH:601138) Orient Securities·2025-08-13 15:01Investment Rating - The report maintains a "Buy" rating for the company [3][9]. Core Insights - The company reported a record high revenue of 200.34 billion yuan in Q2 2025, representing a 36% year-on-year growth, and a net profit of 6.88 billion yuan, up 51% year-on-year [2]. - The AI server business continues to drive significant growth, with overall server revenue increasing by over 50% in the first half of 2025, and AI server revenue growing by more than 60% [8]. - The company is expected to benefit from the ongoing demand for high-speed switches and AI mobile phones, with the precision component business seeing a 17% increase in shipment volume in the first half of 2025 [8]. Financial Forecasts - The company’s earnings per share (EPS) are projected to be 1.59 yuan, 2.19 yuan, and 2.59 yuan for 2025, 2026, and 2027 respectively, reflecting an upward adjustment due to the increasing proportion of high-end products [3][9]. - Revenue forecasts for 2025 to 2027 are 797.6 billion yuan, 997.1 billion yuan, and 1,188.1 billion yuan, with year-on-year growth rates of 31%, 25%, and 19% respectively [5]. - The gross margin is expected to stabilize at around 7.3% for 2025 and 2026, with a slight increase to 7.7% in 2027 [5]. Market Position and Competitive Advantage - The company has established a strong competitive position in the AI server market, with significant investments in R&D and manufacturing capabilities [8]. - The demand for high-speed switches is expected to grow significantly, with the market for Ethernet switches in generative AI data centers projected to increase from approximately 640 million USD in 2023 to over 9 billion USD by 2028, representing a compound annual growth rate of 70% [8]. - The company is well-positioned to capitalize on the high-end smartphone market, benefiting from a structural recovery in demand driven by AI mobile phones [8].