Wenzhou Yihua (SZ:002897) SINOLINK SECURITIES·2025-10-31 09:10Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% in the next 6-12 months [5][13]. Core Insights - The company achieved a revenue of 4.962 billion RMB in the first three quarters of 2025, representing a year-on-year growth of 4.62%. The net profit attributable to shareholders was 270 million RMB, up 16.33% year-on-year. In Q3 2025 alone, revenue reached 1.917 billion RMB, marking a 22.0% increase year-on-year and a 14.1% increase quarter-on-quarter. The net profit for Q3 was 108 million RMB, showing an impressive year-on-year growth of 85.28% and a quarter-on-quarter increase of 11.44% [3][4]. Revenue and Profit Analysis - The growth in revenue and profit is primarily driven by the demand for high-speed communication connectors, supported by core clients' investments in high-speed network infrastructure and AI computing needs. The gross margin for Q3 2025 was 19.5%, slightly down by 0.45 percentage points year-on-year and 0.08 percentage points quarter-on-quarter, mainly due to the impact of the solar bracket business. The company has improved its cost control, leading to a decrease in sales, management, and R&D expense ratios, which has positively impacted net profit growth [4]. Market Position and Client Relationships - The company has established strong relationships with top-tier clients, including Huawei and Alibaba, as they accelerate the penetration of ultra-node products. The ultra-node architecture enhances computing cluster performance, which increases the demand for connectors. The company has over 30 years of experience in the connector industry, securing long-term partnerships with high-quality clients, which solidifies its market position [4]. Financial Forecast - The company is projected to achieve revenues of 7.118 billion RMB, 8.720 billion RMB, and 10.535 billion RMB for the years 2025, 2026, and 2027, respectively. The net profit attributable to shareholders is expected to be 402 million RMB, 445 million RMB, and 534 million RMB for the same years, with corresponding P/E ratios of 23, 21, and 17 [5][10].