Investment Rating - The report initiates coverage with a "Buy" rating for the company [2] Core Views - The company has benefited from the rapid growth in domestic computing power construction, leading to a significant increase in data and access business revenue, which reached 3.71 billion yuan in the first half of 2025, a year-on-year increase of 149.27% [1] - The company is positioned as a pioneer in the domestic optoelectronic industry, with a vertical layout in optoelectronic chips enhancing its competitive strength, and is expected to achieve rapid growth in performance due to domestic AI infrastructure construction [2] Financial Summary - In the first half of 2025, the company achieved revenue of 5.243 billion yuan, a year-on-year increase of 68.59%, and a net profit attributable to the parent company of 372 million yuan, a year-on-year increase of 78.98% [1] - The company forecasts revenues of 10.779 billion yuan, 13.788 billion yuan, and 16.949 billion yuan for 2025, 2026, and 2027 respectively, with net profits of 1.049 billion yuan, 1.342 billion yuan, and 1.625 billion yuan for the same years [3][12] - The company's earnings per share (EPS) is projected to be 1.30 yuan, 1.66 yuan, and 2.01 yuan for 2025, 2026, and 2027 respectively [3][12] Market Position and Product Development - The company’s data communication products are primarily used in cloud computing data centers, AI intelligent computing centers, enterprise networks, and storage networks, providing various optical modules and active optical cables [1] - The transmission business has seen a slight decline in revenue, with a year-on-year decrease of 3.71% in the first half of 2025, attributed to product structure adjustments affecting gross margins [2] - The company is actively developing cutting-edge technologies, including MEMS-based OCS products, and has established comprehensive capabilities in optical engine, external light source, connector wiring, and system optical path design [2]

Investment Rating - The report maintains an "A" rating, indicating an expectation of outperforming the market [1]. Core Insights - The communication equipment manufacturing supply chain is expected to recover due to the recent updates in the US tariff exemption policy, which includes key products such as optical modules and semiconductor devices [2][3]. - The focus on technology self-sufficiency and domestic demand is seen as a clear direction amidst fluctuating US tariff policies, with significant investments in high-end chips and the launch of the OISA industry chain initiative [4][5]. - Positive outlooks are noted for sectors such as optical communication, IoT, and military informationization, with several companies projecting substantial year-on-year profit growth [6][7]. Summary by Sections 1. Weekly Viewpoint and Investment Suggestions - The US tariff exemption policy is expected to benefit the communication equipment manufacturing sector, reflecting the resilience of the Chinese supply chain [2][3]. - The ongoing adjustments in US tariff policies are likely to suppress market confidence, emphasizing the need for self-sufficiency in technology [4][5]. - Companies in sectors like optical communication and IoT are projected to show significant improvements in their financial performance [6][7]. 2. Market Overview - The overall market experienced a decline during the week of April 7-11, 2025, with various indices showing negative performance, particularly in the communication sector [6][7]. - Notable stock movements included significant gains for companies like Changguang Huaxin and Zhenyou Technology, while others like Zhongji Xuchuang faced substantial declines [6][7]. 3. Recommended Companies - Companies to watch include Zhongji Xuchuang, New Yisheng, and Tianfu Communication for tariff recovery opportunities [6][7]. - For technology self-sufficiency, focus on companies like Shengke Communication and Yutai Micro [6][7]. - In the military informationization sector, companies such as Zhenlei Technology and Chengchang Technology are highlighted for their growth potential [6][7].

Investment Rating - The report maintains an "A" rating for the communication industry, indicating an expectation of outperforming the market [1]. Core Insights - The communication equipment manufacturing supply chain is expected to recover due to the recent updates in the US tariff exemption policy, which includes key products such as optical modules and networking devices [4][13]. - The focus on technology self-sufficiency and domestic demand is a clear direction amidst fluctuating US tariff policies, particularly concerning high-end chips and the establishment of a domestic computing power infrastructure [5][14]. - Upcoming quarterly reports are anticipated to show positive trends in sectors like optical communication, IoT, and military information technology, with significant year-on-year growth expected in several companies [6][15]. Summary by Sections Industry Dynamics - The US Customs and Border Protection has announced exemptions for certain products under the "reciprocal tariff" policy, which is expected to benefit the communication equipment sector significantly [4][13]. - The resilience and irreplaceability of the Chinese communication equipment supply chain are highlighted, with a focus on high-frequency circuit design and precision optical packaging as core advantages [4][13]. Market Performance - The overall market experienced a decline during the week of April 7-11, 2025, with the communication index dropping by 3.85% [6][31]. - Specific sectors such as cloud computing and operators showed slight gains, while others like satellite communication faced minor declines [6][31]. Company Recommendations - Companies to watch for tariff recovery include Zhongji Xuchuang, Xinyi Sheng, and Tianfu Communication, among others [7][17]. - For technology self-sufficiency, recommended companies include Shengke Communication and Yu Taiwei [7][17]. - In the domestic supernode segment, focus on companies like Lixun Precision and ZTE Communications is advised [7][17]. Quarterly Outlook - Companies such as Zhongji Xuchuang and Huagong Technology are expected to report significant year-on-year profit growth, with estimates ranging from 35% to 68% [6][15][16]. - The IoT sector is also projected to see substantial growth, particularly in AI-related applications [6][15][16].