Investment Rating - The report assigns a "Buy" rating for Sieyuan Electric, indicating a positive outlook for the company's stock performance [4][8]. Core Insights - Sieyuan Electric reported a net profit increase of 45.7% year-on-year to Rmb1,293 million in 1H25, surpassing market expectations [1][11]. - Revenue grew by 37.8% year-on-year to Rmb8,497 million, significantly exceeding the company's target of over 20% growth for 2025 [1][11]. - The net profit surge was attributed to both revenue growth and net margin expansion, which increased by 0.8 percentage points to 15.2% [1][11]. - The company aims for new orders to grow over 25% year-on-year in 2025, with a focus on international markets and non-grid customers [2][8]. - Sieyuan's R&D expenses were 7% of revenue in 2024, supporting new business developments such as energy storage systems and advanced switchgear [6][8]. Summary by Sections Financial Performance - In 2025E, net profit is forecasted to reach Rmb2,660 million, reflecting a growth of 29.8% year-on-year [3][12]. - The company's return on equity (ROE) improved to 9.89%, an increase of 1.72 percentage points year-on-year [1][11]. Market Position - Sieyuan's overseas orders accounted for approximately 30% of total orders, with significant growth from regions like the Middle East and South America [2][8]. - The company has established a strong presence in the UHV gas insulated switchgear market, enhancing its market recognition [6][8]. Valuation - The target price for Sieyuan Electric is set at Rmb87.00 per share, based on a discounted cash flow model, indicating a potential upside of 24.3% from the current price [4][12]. - The expected total return, including dividend yield, is projected at 25.2% [4].

Investment Rating - The report maintains a "Buy" rating for Montage with a 12-month target price of Rmb106.00, indicating an upside potential of 27.7% from the current price of Rmb83.03 [17][15]. Core Insights - Montage's 2Q25 revenue is expected to grow by 52% year-over-year (YoY) to Rmb1.4 billion, driven by the increasing demand for DDR5 and Gen-3 interface integrated circuits (ICs) [1][4]. - The net income (NI) guidance for 2Q25 is projected to be between Rmb575 million and Rmb675 million, representing a YoY growth of 62% to 90%, which is 18% higher than previous estimates [1][4]. - The company's profitability is improving due to a shift towards higher-margin DDR5 interface ICs and enhanced operating leverage [1][4]. Revenue and Earnings Projections - The report revises earnings estimates upward by 5% for 2025, 3% for 2026, and 3% for 2027, reflecting higher revenues from DDR5 interface ICs and an improved product mix [5][8]. - Revenue projections for Montage are Rmb5.775 billion for 2025, Rmb8.366 billion for 2026, and Rmb10.926 billion for 2027, with corresponding gross profits of Rmb3.489 billion, Rmb5.059 billion, and Rmb6.613 billion respectively [8][17]. Margin Analysis - The report anticipates an increase in gross margin from 60.4% in 2025 to 60.5% in 2027, alongside an improvement in operating margin from 38.9% to 45.1% over the same period [8][9]. - The net margin is expected to rise from 41.4% in 2025 to 43.4% in 2027, indicating a positive trend in profitability [8][9]. Market Dynamics - The strong revenue growth is attributed to the rising penetration of DDR5 interface ICs and the increasing contribution from Gen-2 and Gen-3 products, with expectations that Gen-3 shipments will surpass Gen-2 by 4Q25/1Q26 [4][5]. - The company is set to begin production of Gen-4 DDR5 interface ICs, which are anticipated to offer better pricing and margins [4][5].

Investment Rating - The report maintains a "Buy" rating for Shennan Circuits with a 12-month target price of Rmb132, up from Rmb116.92, reflecting a positive outlook on the company's performance [1][15][21]. Core Insights - Shennan Circuits is expected to see a revenue growth of 19% YoY to Rmb5.2 billion in 2Q25, with net profit remaining relatively flat at -1% YoY due to a high base effect. The gross margin is projected to be 25.3%, slightly increasing QoQ due to product mix improvements [1][3]. - The growth in AI PCB is anticipated to be a significant driver for the company's revenue, with contributions expected to reach 18% and 20% of total revenue in 2025E and 2026E, respectively [12][15]. - The report highlights the optimization of BT substrate pricing, which is expected to positively impact earnings in 3Q25, driven by rising demand and higher raw material costs [7][15]. Summary by Sections Revenue and Profit Forecast - For 2Q25E, revenue is estimated at Rmb5,194 million, representing a 19% YoY increase and a 9% QoQ increase. The net income is projected at Rmb600 million, reflecting a -1% YoY change [3][14]. - The gross margin is expected to be 25.3%, with operating profit at Rmb635 million, indicating an 18% QoQ increase [3][14]. AI PCB Outlook - The demand for AI PCB is confirmed to remain strong, supported by increasing orders from domestic AI customers and steady overseas demand. Shennan's PCB utilization is reported to be close to 90% [2][12]. - AI PCB is projected to be the primary driver of incremental profits for Shennan in 2025E, with significant contributions to gross profit expected [18][15]. Market Position and Competitive Advantage - Shennan Circuits is well-positioned to benefit from the domestic AI infrastructure cycle in China, capturing demand overflow from PCB peers that primarily serve US customers [6][15]. - The company has been expanding its capacity both domestically and internationally to leverage opportunities in the overseas market [6][15].

Investment Rating - The stock rating for Zhejiang Huayou Cobalt Co Ltd is Equal-weight [4] - The industry view is Attractive [4] Core Insights - Zhejiang Huayou Cobalt Co Ltd reported preliminary profit for 1H25 of Rmb2.6-2.8 billion, representing a year-on-year increase of 56-68%, aligning with consensus estimates [1][2] - The net profit for Q2 2025 is estimated to be Rmb1.35-1.55 billion, reflecting an 18-35% year-on-year increase and an 8-24% quarter-on-quarter increase [1] - The substantial profit growth is attributed to the production from the Huafei project, stable operations and cost savings from the Huayue project, increased self-sufficiency in raw materials, rising cobalt prices, and improved operational efficiency [2] Financial Projections - The expected EPS for fiscal years ending in 2023, 2024, 2025, and 2026 are Rmb2.05, Rmb1.34, Rmb1.42, and Rmb2.00 respectively [4] - Revenue projections for the same fiscal years are Rmb65,936 million, Rmb63,642 million, Rmb66,235 million, and Rmb70,900 million respectively [4] - The company is anticipated to benefit from rising cobalt prices in 2H25, which have increased approximately 7% since the DRC announced an extension of the cobalt export ban [3]

Investment Rating - The report maintains an Overweight rating for Daqo, while Xinyi Solar and Flat Glass are rated Neutral, and LONGi and Tongwei are rated Underweight [31][24]. Core Insights - The Chinese solar industry is facing challenges due to aggressive capacity expansion, leading to significant cash losses for many producers. The government is expected to intervene to address low-price competition and promote the exit of outdated production capacity [3][6][5]. - The WIND Solar Power Index, which includes 30 major A-share solar stocks, saw a 3% increase on July 2, 2025, following President Xi's remarks on potential supply-side reforms, while HK-listed solar stocks surged by approximately 10% [5][2]. - Current valuations for major A-share solar manufacturers are at 1.6x forward P/B multiple, while H-share solar glass makers trade at 0.8x, indicating a less attractive risk/reward scenario compared to previous supply-side reform cycles [23][24]. Summary by Sections Market Dynamics - Solar module prices have decreased from approximately Rmb 2.0/W in 2022 to Rmb 0.7/W in July 2025, and polysilicon prices dropped from Rmb 300/kg to Rmb 35/kg, primarily due to an unbalanced supply and demand outlook [6][3]. - The majority of solar manufacturers are currently generating net losses, with over 50% of module sales volume directed to overseas markets, effectively subsidizing global energy transition efforts [6][3]. Trading Implications - The sector has historically rebounded by an average of 7% during four previous instances of government intervention news, but subsequent de-rating trends have been observed [16][4]. - The report suggests a cautious approach to trading in the solar sector, as the market may already be aware of the difficulties in implementing effective policy interventions [16][24]. Company Analysis - Daqo is highlighted as a standout investment opportunity due to its undemanding valuation at 0.2x FY25 P/BV, while LONGi and Tongwei are viewed as unattractive compared to peers even under a potential supply-side reform scenario [24][31]. - The report ranks companies based on risk/reward considerations, with Daqo at the top, followed by Xinyi Solar and Flat Glass, while LONGi and Tongwei are at the bottom of the list [24][31].

Investment Rating - The investment rating for Foxconn Industrial Internet is "Buy" with a target price of Rmb26.00, indicating an expected return of 11.1% [3][20]. Core Insights - Foxconn Industrial Internet (FII) reported a net profit guidance for 2Q25 of Rmb6.73-6.93 billion, representing a year-over-year increase of 48%-52%, which exceeds CitiE and BBGe estimates by 12% and 26% respectively [1][2]. - Cloud computing revenue for FII increased by over 50% in 2Q25, with AI server revenue growing by over 60% year-over-year, although this was below the initial guidance of 100%+ [1][2]. - The revenue from CSP servers rose by more than 150% year-over-year in 2Q25, and significant growth was observed in GPU module and compute tray shipments [2]. Summary by Sections Financial Performance - FII's net profit guidance for 2Q25 is as follows: - High-end: Rmb6.93 billion, a 52% increase year-over-year - Medium: Rmb6.83 billion, a 50% increase year-over-year - Low-end: Rmb6.73 billion, a 48% increase year-over-year [4]. Valuation - The target price of Rmb26.00 is based on a valuation of 17.0x 2025E earnings, which is justified by an earnings upcycle expected in 2025-2026 [6]. - The valuation multiple aligns with a blended P/E approach, applying 15x P/E to the non-AI segment and 20x P/E to the AI segment [6]. Market Context - The market capitalization of FII is approximately Rmb476.23 billion (US$66.46 billion) [3]. - The expected dividend yield is 2.7%, contributing to the overall expected return of 11.1% [3].

Investment Rating - The investment rating for Accelink Technologies is "Sell" with a target price of Rmb24.6, indicating an expected share price return of -46.7% [2][5]. Core Insights - Accelink Technologies expects a net profit growth of 55%-95% YoY for 1H25, with guidance of Rmb323 million to Rmb407 million, driven by strong optical transceiver demand and an improved product mix [1][4]. - The mid-point of the 2Q25 earnings guidance at Rmb215 million is slightly below expectations, suggesting potential downside risk to the share price, which is currently trading at a high valuation of 37x FY25 PE compared to peers at around high-teens [1][5]. - The valuation of Accelink is considered demanding due to lower profitability in the domestic transceiver market and relatively lower earnings growth compared to competitors like Innolight and Eoptolink [1][5]. Summary by Sections Earnings Guidance - For 2Q25, Accelink's net profit guidance is Rmb215 million, a 64% increase from Rmb131 million in 2Q24, while for 1H25, the guidance is Rmb365 million, a 75% increase from Rmb209 million in 1H24 [4]. Valuation - The target price of Rmb24.6 is based on a P/E multiple of 20.0x 2025E EPS, which is one standard deviation below the stock's five-year historical forward PER [5]. Market Capitalization - Accelink Technologies has a market capitalization of Rmb37,228 million (approximately US$5,196 million) [2].

Investment Rating - The report upgrades SMIC's H/A shares to Buy/Buy from Reduce/Hold, with target prices raised to HKD64.00/RMB148.00 from HKD35.00/RMB92.00, implying upside of approximately 46%/73% [4][8]. Core Insights - SMIC is positioned to benefit from the localization trend in China, emerging as a key player in the semiconductor industry despite facing near-term ASP headwinds due to specific equipment yield issues [1][3]. - The company is expected to maintain margin stability in advanced nodes through a balance of pricing power and yield improvements, with an anticipated ASP premium of 57% under conservative yield assumptions [2][49]. - SMIC's market share in the China Foundry Total Addressable Market (TAM) is projected to grow from 25% in 2024, supported by a 13% capacity expansion from Q2 2024 to Q4 2024 [3][41]. Summary by Sections Financial Performance - Revenue projections for SMIC are estimated at USD 8,030 million for 2024, increasing to USD 13,210 million by 2027, reflecting a year-on-year growth of 27% in 2024 and 15% in 2025 [9][10]. - The net profit is expected to rise from USD 493 million in 2024 to USD 1,918 million in 2027, with EPS estimates increasing from USD 0.06 to USD 0.25 over the same period [9][10]. Valuation Metrics - The report raises the target price-to-book (P/B) multiples for SMIC to 2.9x/7.2x, reflecting a premium due to its strategic positioning and expansion into advanced nodes [4][64]. - The expected EV/sales ratio is projected to decrease from 5.9 in 2024 to 3.5 by 2027, indicating improving valuation as revenue grows [11]. Market Dynamics - The ongoing geopolitical tensions are expected to reinforce China's push for self-sufficiency, benefiting SMIC as it becomes the preferred foundry in China [21][39]. - The report highlights that despite short-term ASP declines, SMIC is likely to emerge as a major beneficiary of the localization trend, with expectations for improved ASP conditions in the second half of 2025 [38][41]. Capacity and Utilization - SMIC's capacity in advanced nodes is projected to reach 25K-30K wafers per month by the end of 2025, with utilization rates expected to improve from 86% in FY24 to 91% in FY25 [49][50]. - The company is anticipated to maintain a high utilization rate compared to peers, reaching full capacity by the first half of 2026 [22][41].

Investment Rating - The report maintains a "Buy" rating for AMEC, indicating a positive outlook for the company's performance in the semiconductor industry [1][7][10]. Core Insights - AMEC is experiencing solid order growth driven by clients' capacity expansion and increasing adoption of domestic equipment in China. The company is actively expanding its product offerings, which include deposition, etch, and metrology & inspection tools [1][6]. - Management projects a revenue growth of over 30% year-on-year, supported by strong bookings from both memory and logic customers. The local supply ratio for advanced technologies is expected to grow significantly [6][7]. - The company is accelerating its R&D cycle for new products, reducing the development time from 2-3 years to 1.5-2 years, which is attributed to improved design processes and increased client collaboration [6][7]. Revenue and Orders Outlook - AMEC's management is optimistic about achieving over 30% year-on-year revenue growth, with a strong operational performance in the first half of the year and a solid outlook for the second half [6]. - The company anticipates continued growth from the increasing adoption of local equipment by Chinese customers, with significant room for growth in the local supply ratio, especially in advanced technologies [6]. Product Expansion - AMEC plans to enhance its product coverage in deposition tools to approximately 80% by 2026, up from around 30% currently. The company has begun generating revenues from its WU series deposition products in 2024 [6][7]. - The company is also developing next-generation etching tools and expanding into metrology and inspection tools, including the launch of a Critical Dimension Scanning Electron Microscope (CDSEM) [6][7]. R&D Process Acceleration - The new product development cycle has been shortened to 1.5-2 years, compared to the previous 2-3 years. This improvement is due to platform product design, increased client trust, and the integration of AI technology in simulations [6][7]. Valuation and Price Target - The 12-month target price for AMEC is set at Rmb275, based on a P/E ratio of 29x for 2029 estimates, reflecting an attractive valuation as the company trades below its historical average [8][10]. - The report indicates a potential upside of 52.3% from the current price of Rmb180.58 [10]. Financial Projections - Revenue projections for AMEC are as follows: Rmb9,065.2 million for 2024, Rmb12,590.1 million for 2025, Rmb16,330.5 million for 2026, and Rmb20,477.2 million for 2027 [10]. - EBITDA is projected to grow from Rmb1,560.9 million in 2024 to Rmb6,244.6 million by 2027 [10]. Conclusion - AMEC is positioned to benefit from the ongoing expansion of the semiconductor industry in China, with a strong focus on product development and local market penetration, making it a compelling investment opportunity [1][7][10].

Investment Rating - The report maintains a Neutral rating for iFlytek (002230.SZ) with a 12-month price target of Rmb54.00, indicating an upside potential of 14.9% from the current price of Rmb46.98 [1][10][26]. Core Insights - iFlytek's 2Q25 revenue guidance is expected to grow by 10% to 15% year-over-year, with a midpoint growth of 11%, which is 7% below previous estimates. The company reported a net loss in 2Q25, attributed to increased spending on AI model development [1][18]. - The company has launched new AI models, including iFlytek Spark LLM V4.0 Turbo and a new reasoning model, which are expected to enhance its project wins in AI software [2][18]. - iFlytek secured a new project worth Rmb232 million from the QinHuangDao government for AI model training and management, indicating strong momentum in AI monetization [2][18]. Financial Summary - Revenue projections for iFlytek are revised downwards for 2025-2027, with expected revenues of Rmb28,797 million in 2025, Rmb32,648 million in 2026, and Rmb38,794 million in 2027, reflecting a decrease of 1%, 3%, and 5% respectively from previous estimates [19][20]. - The report anticipates a net income of Rmb1,100 million in 2025, Rmb2,029 million in 2026, and Rmb3,316 million in 2027, with a downward revision of 24%, 23%, and 27% respectively [19][20]. - The operating margin is expected to improve from 2.3% in 2025 to 5.2% in 2026, and further to 8.1% in 2027, indicating a gradual recovery in profitability [11][20]. Valuation Metrics - The report sets a target price based on a valuation of 4.1x 2026E EV/Sales, which aligns with peer averages in the software sector. The implied 2026E P/E ratio is projected at 60x, consistent with the company's trading range since 2019 [20][26]. - Key financial ratios include a projected P/E of 98.7x for 2025, decreasing to 32.7x by 2027, and a P/B ratio of 5.8x in 2025, declining to 4.7x in 2027 [10][11].