Summary of Key Points from Conference Call Records Industry Overview - The conference call discusses the **domestic computing power industry chain**, particularly focusing on the **switching industry** and its performance in the context of recent market trends and regulatory changes [1][5]. Core Insights and Arguments - **Strong Demand in North America**: There is robust demand for computing power infrastructure in North America, as evidenced by the performance of companies like Nvidia, Stargate Construction, and CO CO Wave, which supports ongoing capital expenditures [1][2]. - **Rising Token Consumption**: Google’s rapid increase in TOKEN consumption indicates a growing demand for vertical industry applications and inference needs, which is expected to sustain capital expenditures [4][14]. - **Impact of H20 Ban**: The H20 ban has accelerated training demand within the domestic data center industry, with companies like Century Internet raising their annual performance guidance, and significant improvements in revenue and profit forecasts from optical module companies [1][5]. - **Profitability Improvement**: In Q2, domestic computing power profitability improved significantly, with Ruijie Network's quarterly profit growth ranging from 93% to 160%, and StarNet Ruijie's growth between 21% and 74% [1][5]. Key Industry Trends - **White Box Switches**: The rise of data center white box switches is meeting the customization needs of internet companies, with Ruijie and Unisoc leading the domestic market, while traditional brands like Cisco are losing their competitive edge [1][7]. - **High Sales and R&D Expenses**: Ruijie Network's sales expense ratio is 15.5% and R&D expense ratio is 16%, attributed to the need for channel establishment and high customization in their switching business [3][9][10]. - **Market Challenges**: The domestic computing power market faces challenges due to the H20 ban leading to reduced capital expenditures, with major companies like Alibaba and Tencent reporting lower capital spending [12]. Future Outlook - **Positive Market Trends**: The domestic computing power market is expected to improve, with indicators such as the rapid increase in Google TOKEN consumption and optimistic performance guidance from Oracle, Broadcom, and Marvell [14]. - **Performance Predictions**: Ruijie Network is projected to generate approximately 11.6 billion RMB in revenue in 2024, with a significant portion of profits expected from its data center switching business [9][15]. - **Investment Recommendations**: There is a suggestion to focus on investing in early performers in the domestic computing power sector, such as StarNet Ruijie and Ruijie Network, due to their favorable valuation compared to peers [15].

Investment Rating - The report maintains a positive outlook on the computer industry, particularly focusing on the developments in stablecoins and supernodes [5][6]. Core Insights - The report emphasizes that stablecoins are transitioning from speculative concepts to mainstream payment solutions, supported by regulatory developments and strategic initiatives in regions like Shanghai and Hong Kong [7][8]. - The supernode architecture is highlighted as a significant advancement in computational power, with products like Huawei's CloudMatrix 384 demonstrating superior performance compared to traditional single-card systems [5][33]. Summary by Sections Stablecoins - The Shanghai Municipal State-owned Assets Supervision and Administration Commission recognizes the role of stablecoins in enhancing the financial system and encourages the exploration of related technologies [7][8]. - The report outlines that stablecoins are not merely a short-term trend but represent a long-term investment theme, with a shift towards legislative compliance and mainstream payment applications [6][9]. - Key companies involved in stablecoin technology and infrastructure include 恒生电子 (Hengsheng Electronics), 金证股份 (Jinzhen Co.), and others [5][6]. Supernodes - The report discusses the transition from single-card systems to supernode architectures, which integrate multiple GPUs for enhanced computational efficiency [33][34]. - Huawei's CloudMatrix 384 is presented as a benchmark for domestic supernode solutions, achieving 1.7 times the computational power and 3.6 times the memory capacity compared to Nvidia's GB200 NVL72 [55][56]. - Companies positioned to benefit from the supernode trend include 海光信息 (Haiguang Information), 浪潮信息 (Inspur Information), and 神州数码 (Digital China) [5][33].

Core Insights - The domestic GPU chip industry is experiencing significant growth, driven by rising demand for AI computing in China, with several companies expected to see substantial revenue increases in 2024 [1][2][3] - Companies like Moore Threads and Muxi Integrated Circuit are projected to have explosive revenue growth, with Moore Threads expecting a 257.02% increase to 432 million yuan and Muxi anticipating a 1354.9% surge to 742 million yuan in 2024 [2][3] - The shift towards AI computing is leading to higher profit margins, with Moore Threads' gross margin expected to rise to 72.32% in 2024 from 27.84% in 2023 [2] - The domestic GPU ecosystem is evolving, with companies focusing on self-developed ASIC chips and integrated solutions to enhance efficiency and growth [1][12] Company Performance - Moore Threads' revenue is shifting towards AI computing, which is projected to account for 77.63% of its main business income in 2024, reflecting a strategic pivot from traditional graphics acceleration [2] - Muxi Integrated Circuit's revenue is heavily reliant on its training and inference series, with GPU board sales making up 68.99% of total revenue in 2024 [3] - Both companies are experiencing rapid growth in procurement, with Muxi's purchases from top suppliers increasing from 176 million yuan to 999 million yuan in 2024 [3] Market Trends - The Chinese AI server market is expected to see a decrease in reliance on foreign chips, with local suppliers projected to capture a 40% market share by 2025 [6] - The competitive landscape is challenging, as established players like NVIDIA maintain a stronghold due to their extensive software and ecosystem development [7] - Domestic companies are focusing on building a comprehensive ecosystem, with Muxi and Moore Threads emphasizing their full-stack capabilities in GPU technology and software [8][10] Future Outlook - Companies are optimistic about achieving profitability, with Muxi estimating a break-even point by 2026 and Moore Threads projecting profitability by 2027 [9] - The integration of companies like Haiguang Information and the potential acquisition of Zhongke Shuguang could create a complete ecosystem from chips to servers [11] - The rise of DeepSeek is prompting domestic GPU manufacturers to enhance their product offerings and adapt to new AI models, strengthening the local computing ecosystem [11]

Group 1 - The report highlights the strong growth potential of coconut water as a new consumer product, with a projected market size of nearly 200 billion yuan by 2029, reflecting a compound annual growth rate (CAGR) of approximately 20% over the next five years [25][26] - The coconut water market has transitioned from a niche luxury juice to a mainstream health beverage, with sales increasing from less than 2 billion yuan before 2022 to 7.8 billion yuan in 2024, driven by health trends and consumer education [25][26] - Key players in the coconut water market include IFBH, which has become the largest single product in China, and Huanyoujia, which is leveraging its supply chain advantages to expand its market presence [26][27] Group 2 - The report discusses the significant advancements in China's marine economy, emphasizing the strategic importance of marine economic development in the context of national modernization [10][12] - The central government has outlined five key principles for promoting high-quality marine economic development, including innovation-driven growth and efficient collaboration, which are expected to lead to a series of supportive policies [10][11] - Investment opportunities in the marine economy are identified in sectors such as marine technology, marine renewable energy, and marine biomedicine, with a focus on deep-sea materials and equipment [12][13] Group 3 - The report analyzes the performance of the Hong Kong Stock Connect Technology ETF, which tracks the performance of technology-related companies listed in Hong Kong, highlighting its cost advantages and growth potential [15][18] - The technology sector within the Hong Kong Stock Connect index is primarily driven by information technology, with significant contributions from software services and hardware sectors, indicating strong market potential [16][17] - The report notes that the technology index is currently at a historically low price-to-earnings ratio, suggesting potential for future growth as the market recovers [18]

Core Insights - The report highlights the sustained high demand for domestic computing power driven by ongoing U.S. restrictions on advanced chip imports, accelerating the domestic substitution process [3][7] - Domestic cloud service providers are increasing capital expenditures, gradually releasing industrial demand, while the iteration of domestic AI large models and applications is further boosting computing power needs [3][7] Industry Performance - The report provides a snapshot of market indices, with the Shanghai Composite Index closing at 3454.79, down 0.09%, and the Shenzhen Component Index at 10412.63, down 0.61% [4] - The performance of various sectors is noted, with steel up 3.37% and electronics down 2.01% [5] Key Focus Areas - The domestic computing power market is experiencing a boom, with Huawei's Ascend 910C servers being deployed in significant quantities, indicating a new phase in domestic computing commercialization [7] - The Ascend 910C chip boasts a single-chip computing power of 320 TFLOPS (FP16), designed for efficiency and low power consumption, suitable for AI tasks [7] - Major domestic internet companies are ramping up investments in AI infrastructure, with Alibaba planning to invest 380 billion RMB over three years, and Tencent's capital expenditure reaching 275 billion RMB in Q1 2025, up 91% year-on-year [8] Demand Drivers - The report notes that application-side inference is expected to drive demand growth, with significant increases in token usage reported by major companies like Alphabet and ByteDance [9] - The domestic supply side, including chips and supernode deployments, has achieved technological breakthroughs, which will lead to increased demand for computing power as industry applications evolve [9]

Group 1 - The 2025 China International Financial Expo was held from June 18 to 20, showcasing nearly 300 exhibitors, including both mainstream financial institutions and emerging tech companies [1] - Fast Warehouse, a tech company specializing in smart warehousing, has transitioned from being a service provider for banking technology to directly serving bank clients with advanced technologies like AI and big data [1] - The expo highlighted the integration of traditional financial institutions with tech companies, indicating a trend towards collaboration in the digital transformation of the financial sector [1] Group 2 - The "role model effect" is accelerating the digital transformation of finance, with larger banks replicating their intelligent business experiences in smaller banks [2] - OceanBase, a self-developed distributed database, has set a record by switching 133 systems in 48 hours, demonstrating its capability to support over 100 banks with critical systems [2] - The acceptance of autonomous innovation in core trading systems is increasing among users, presenting significant opportunities for companies in the industry chain [2] Group 3 - The expo served as a platform for collaboration between financial institutions and tech companies, focusing on innovations in data, technology, management, and compliance [3] - Attendees were not only interested in new intelligent service experiences but also in capturing the future direction of China's financial industry [3] - The vibrant atmosphere of financial innovation was evident as professionals engaged in discussions and formed project groups on-site [3]

Group 1 - The average return of active equity funds in the first half of the year reached 7.36%, with over 70% of funds achieving positive returns [1][2] - Notable performers include funds focused on the North Exchange and the pharmaceutical sector, with top funds achieving returns of 82.45% and 75.18% respectively [2] - There is a significant performance disparity among active equity funds, with the best and worst performers showing a difference of over 103% in returns [3] Group 2 - Analysts express a cautiously optimistic outlook for the market in the second half of the year, anticipating a potential upward trend amid easing tariff concerns and improved risk appetite [4] - Structural investment opportunities are expected to emerge in technology, new consumption, and stable dividend sectors, with a focus on areas like AI applications and semiconductor industries [5] - The market sentiment has improved significantly as the Shanghai Composite Index has successfully surpassed the 3400-point mark, although caution is advised regarding crowded trades in certain sectors [5]

Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry index is expected to perform better than the benchmark index over the next 6-12 months [11]. Core Insights - The report highlights the sustained high demand for domestic computing power driven by the ongoing restrictions on advanced chip imports from the US, which accelerates the domestic computing power substitution process. Domestic cloud vendors are increasing capital expenditures and gradually releasing industrial demand, while the iteration of domestic AI models and applications is boosting computing power demand [1][3]. Summary by Sections Investment Recommendations - It is recommended to prioritize attention on the construction and application of domestic AI computing power network infrastructure, including operators such as China Mobile, China Telecom, and China Unicom, as well as server and switch equipment manufacturers like ZTE, Unisoc, Inspur, Ruijie Networks, and Shengke Communication. Additionally, focus on optical modules and optical devices from companies like NewEase, Zhongji Xuchuang, Yuanjie Technology, Huagong Technology, Guangxun Technology, Shijia Photonics, and Huafeng Technology [3]. Industry Trends - The report notes that Huawei's Ascend 910C has begun mass shipments, marking a new phase in the commercialization of domestic computing power. A recent tender announcement indicated that a smart computing center project plans to use 4,500 Ascend 910C-2 servers, with an expected capacity of 20,000 P computing power. The Ascend 910C features a single-chip computing power of 320 TFLOPS (FP16), making it suitable for AI tasks such as natural language processing and computer vision [1][3]. - Domestic cloud vendors and operators are increasing capital expenditures on computing power, with Alibaba planning to invest 380 billion RMB in cloud construction and AI hardware infrastructure over the next three years, averaging over 120 billion RMB annually. Tencent's capital expenditure in Q1 2025 reached 27.5 billion RMB, a year-on-year increase of 91%, with a focus on resources for large model training and inference [1][3]. - The demand for computing power is expected to grow due to breakthroughs in application-side inference technology, which significantly lowers barriers to entry. The report cites Alphabet's inference volume reaching approximately 634 trillion tokens in Q1 2025, a 50-fold increase from the previous year [1][3].

Key Points - The Shanghai and Shenzhen Stock Exchanges are seeking public opinion on adjusting the price fluctuation limit for risk warning stocks on the main board from 5% to 10%, aligning it with other stocks on the main board [2][4] - The People's Bank of China emphasized the need for a moderately loose monetary policy to support technological innovation and boost consumption, while maintaining capital market stability [4] - The Chinese government has decided to conditionally resume imports of seafood from certain regions of Japan, following monitoring of the Fukushima nuclear wastewater situation [4] - The Hong Kong Financial Secretary announced that regulations for stablecoins will take effect on August 1, aiming to create a favorable market environment for their application [5] - Neuralink, a company owned by Elon Musk, showcased its latest research and developments, with seven participants in its trials, including patients with spinal cord injuries and ALS [5] Company News - The China Securities Regulatory Commission has issued a notice regarding administrative penalties for Nanjing Yuebo Power System Co., Ltd. for information disclosure violations [7] - Hongye Futures stated that there are no undisclosed significant matters [8] - Zhongguang Optical reported normal production and operational conditions without significant changes in the internal and external business environment [9] - Mindray Medical announced plans to reduce its shareholding by up to 5 million shares, representing 0.41% of the total share capital [10] - New Dairy's controlling shareholder plans to reduce its stake by no more than 3% [11] - Magu Technology's shareholder Baolifeng intends to reduce its stake by no more than 3% [12] - Qin Port Co., Ltd. plans to reduce its stake by no more than 2% [13] - Unisplendour repurchased 775,500 shares for 49.6173 million yuan [14] - *ST King Kong signed a significant 399 million yuan contract for computing power sales [15] - Degute plans to acquire control of Haowei Technology, with stock suspension starting June 30 [16] - Chengdu Xian Dao terminated a major asset restructuring plan to acquire approximately 65% of Nanjing Haina Pharmaceutical Technology Co., Ltd. [17] - Yueyang Xingchang reported that its production facilities are operational [18] - Qixiang Tengda plans routine maintenance for its 60,000-ton acetone and methyl ethyl ketone facility starting June 30 [19] - China Rare Earth reported stable production and operations without impact from changes in management [20] - Longqi Technology has submitted an application for H-share listing on the Hong Kong Stock Exchange [21] Market Insights - Zhongtai Securities maintains a focus on the bond market and dividend assets, while also identifying opportunities in the technology sector related to AI capital expenditures [22] - Tianfeng Securities highlights sectors with strong fundamentals, such as overseas computing power and gaming, while also noting higher risk preferences in emerging trends like solid-state batteries and stablecoins [22]

Group 1 - The domestic computing power sector is expected to enter a phase of accelerated growth in the second quarter, with companies like Cambricon projected to exceed 2 billion in revenue, up from 1.1 billion in the first quarter [2] - Major companies such as Guangxun Technology are gaining attention due to anticipated significant performance growth in the second quarter, with Huagong Technology's shipment volume increasing from approximately 400,000 units in April to 600,000-700,000 units in June [2] - The overall computing power sector experienced a wave of negative trading, leading to a significant clearing of positions, with capital inflow recovery at about 50%, indicating a shift from a pessimistic to a certain growth outlook [2] Group 2 - The industry is expected to see a clear growth trend driven by the introduction of 800G and 1.6T technologies, with demand projected to increase by at least 40% to 50% [2] - The anticipated release of NVIDIA's GB200 and GB300 in the second half of the year marks the beginning of an acceleration phase for the industry, with no immediate negative factors expected [2] - The domestic computing power sector has completed its bottoming process, with the first quarter growth being below expectations, but the second quarter is set for rapid growth due to large-scale adoption by enterprises and government [1][2]