CSC SECURITIES (HK) LTD·2025-09-01 06:57Investment Rating - The report maintains a "Buy" rating for the company, indicating a potential upside of 15% to 35% [7][11]. Core Insights - The company reported a revenue of 71.55 billion RMB for the first half of 2025, a year-on-year increase of 14.5%, but a net profit of 5.06 billion RMB, down 11.8% year-on-year [7]. - The decline in net profit is attributed to a continuous decrease in capital expenditure from telecom operators, which aligns with market expectations [7]. - The company's enterprise business, driven by AI server-related growth, saw a significant revenue increase of 110% year-on-year, reaching 19.25 billion RMB [9]. - The gross margin decreased to 32.45%, down 8.02 percentage points year-on-year, primarily due to the lower margins from server and storage businesses compared to traditional telecom operations [9]. Summary by Sections Company Overview - The company operates in the telecommunications industry, with a current A-share price of 45.44 RMB and a market capitalization of 183 billion RMB [2]. Financial Performance - For Q2 2025, the company achieved a revenue of 38.58 billion RMB, a 20.9% increase year-on-year, but a net profit of 2.6 billion RMB, down 12.9% year-on-year [7]. - The company’s earnings per share (EPS) for 2025 is projected to be 1.84 RMB, with a net profit forecast of 8.78 billion RMB [8]. Business Segments - The revenue breakdown shows that the operator network contributes 49% to total revenue, while the enterprise business accounts for 26.91%, and consumer business for 24.09% [3]. - The enterprise business's growth is significantly driven by the demand for AI servers, which now represent 55% of the segment's revenue [9]. Market Position and Future Outlook - The company is positioned to benefit from the growing AI market, with a complete ecosystem of AI products and self-developed chips [9]. - The report anticipates that the company will achieve net profits of 8.78 billion RMB in 2025, 9.26 billion RMB in 2026, and 9.94 billion RMB in 2027, reflecting a steady growth trajectory [9].