Tianfeng Securities·2025-09-30 09:42Investment Rating - The report maintains an investment rating of "Outperform the Market" for the communication industry [10] Core Insights - The communication equipment sector experienced a revenue growth of 12.7% year-on-year in Q2 2025, indicating a recovery since Q4 2023, with AI computing power driving this growth [2] - The overall net profit for communication equipment in Q2 2025 increased by 19.0% year-on-year, reflecting strong profitability amid the transition to new growth drivers [2] - The report emphasizes the sustained high growth potential in the optical communication sub-sector, driven by global AI demand [3] Financial Summary and Outlook - The optical device sub-sector saw a remarkable revenue increase of 72.81% year-on-year in Q2 2025, with net profit growth of 133.5%, indicating a robust demand for optical modules fueled by AI [3] - The Internet of Things (IoT) sector continues to show good revenue growth, validating the ongoing recovery trend, with companies benefiting from the long-term trend of interconnected devices [3] - The optical fiber and cable sub-sector reported a revenue growth of 16.5% year-on-year in Q2 2025, although net profit declined by 9.6% [3] - The IDC & CDN sector faced a revenue decline of 9.2% year-on-year in Q2 2025, marking four consecutive quarters of revenue decline [4] - The main equipment sector showed a revenue turnaround with a growth of 9.1% and 16.5% in Q1 and Q2 2025 respectively, driven by strong demand for computing power [4] - The satellite industry reported a revenue of 1.12 billion yuan in Q2 2025, down 17.0% year-on-year, but is expected to enter a growth phase as satellite internet networks develop [4] - The Beidou and military communication sector experienced a revenue decline of 7.1% year-on-year in Q2 2025, but long-term growth is anticipated with new equipment entering service [5] Investment Recommendations - The report suggests focusing on investment opportunities in "AI + Overseas Expansion + Satellite" core targets, particularly in optical modules and devices, as well as domestic computing power lines [6] - Key recommended stocks include Zhongji Xuchuang, Tianfu Communication, and Zhongtian Technology, among others, with a focus on AI-related sectors [7][14]