HSSM(SZ:002290) SINOLINK SECURITIES·2026-03-02 02:50Investment Rating - The report assigns a "Buy" rating to the company with a target price of 91.12 RMB based on a 7x PS valuation for 2026 [3]. Core Insights - The company is a leader in the household appliance exterior composite materials sector, with over 20 years of experience and strong partnerships with major brands like Samsung and LG. The shift towards AI capabilities is seen as a second growth curve for the company [9][19]. - Revenue projections for 2025, 2026, and 2027 are 2.77 billion, 3.22 billion, and 3.68 billion RMB respectively, with year-on-year growth rates of 9.7%, 16.3%, and 14.3%. Net profit is expected to reach 1.66 billion, 2.86 billion, and 3.68 billion RMB, with growth rates of 69.2%, 72.5%, and 28.8% [3][57]. Summary by Sections Company Overview - The company specializes in the research, production, and sales of household appliance exterior composite materials, holding a leading position in capacity and scale within the industry. It has established stable partnerships with numerous well-known appliance brands [15][19]. - The company has recently undergone a change in control, with the major shareholder now being Moer Zhixin, which is expected to enhance the company's AI business strategy [20][22]. Financial Analysis - The company has shown steady revenue growth and significant improvement in profitability, with a gross margin increase of 4.93 percentage points to 15.03% in the first half of 2025. The net profit for the first three quarters of 2025 increased by 68% year-on-year [27][31]. - The company anticipates a gross margin of 16.2%, 17.9%, and 18.9% for 2025, 2026, and 2027 respectively, driven by the core business of household appliance materials and the emerging AI business [57]. AI Business Development - The company is actively investing in AI capabilities, establishing Shanghai Haixi Technology to develop AI servers and integrated machines. It has also made strategic investments in Yizhi Electronics, a high-end server processor design company [19][25]. - The AI business is projected to contribute 2 billion, 5 billion, and 8 billion RMB in revenue for 2025, 2026, and 2027, with expected growth rates of 150% and 60% in the following years [58]. Market Trends - The demand for AI CPUs is expected to surge due to the rise of Agentic AI, which is driving a shift towards CPU-intensive tasks. Yizhi Electronics is positioned to benefit from this trend with its new generation of AI CPUs [34][44]. - The company’s AI products, including integrated machines, are anticipated to see increased market penetration across various sectors such as government, finance, and education [52][53].