Core Viewpoint - Company reported a significant increase in revenue and net profit for 1H25, exceeding previous expectations, primarily driven by high sales growth in non-mobile CCM and FPM products, as well as the profitability turnaround of an associated company [1][2]. Financial Performance - 1H25 revenue grew by 15% year-on-year to 8.83 billion yuan, while net profit attributable to shareholders surged by 168% to 308 million yuan, aligning with the forecast midpoint of 150%-180% growth [1]. - The revenue from CCM and FPM products saw substantial increases, with CCM revenue up 10% and FPM revenue up 109%, benefiting from high industry demand [2]. - Gross margin improved by 2.2 percentage points to 7.4%, with CCM and FPM gross margins increasing by 1.0 and 15.4 percentage points, respectively [2]. Product Development and Market Trends - The company is focusing on optimizing the product structure of mobile-related products, with a notable increase in the sales of periscope camera modules, which grew by 5.9 times year-on-year [2]. - In the non-mobile sector, IoT and automotive CCM sales increased by 48%, with an upward revision of the annual growth guidance to 60%, driven by the high demand for handheld smart imaging devices and drones [3]. - The company is expanding its capabilities in various fields, including XR and robotics, through self-research, investment, and acquisitions, aiming to establish a comprehensive smart vision product platform [3]. Earnings Forecast and Valuation - Due to the better-than-expected performance in non-mobile CCM and FPM sales, the company has raised its earnings forecasts for 2025 and 2026 by 44% and 41%, respectively, to 702 million and 852 million yuan [3]. - The current stock price corresponds to a P/E ratio of 20.6x for 2025 and 16.7x for 2026, with a target price increase of 67% to 14.97 HKD, indicating a potential upside of 15% from the current price [3].

Core Viewpoint - The report from CICC indicates that Hillstone Technology (01478) has exceeded expectations in non-mobile CCM and FPM sales and profitability, leading to an upward revision of the company's profit forecasts for 2025 and 2026 by 44% and 41% to 702 million and 852 million HKD respectively [1] Group 1: Financial Performance - In 1H25, Hillstone's revenue increased by 15% year-on-year to 8.83 billion HKD, and net profit attributable to shareholders surged by 168% to 308 million HKD, surpassing CICC's previous expectations [2] - The significant profit growth is attributed to high sales of non-mobile CCM and FPM, as well as the turnaround of joint ventures from losses to profits [2] - The gross margin improved by 2.2 percentage points year-on-year to 7.4%, driven by better utilization rates and optimized product structure [2] Group 2: Product Performance - The sales of mobile-related products are being optimized, with the sales of periscope camera modules reaching 10.6 million units in 1H25, a year-on-year increase of 590% [3] - The company is focusing on high-end mobile business strategies, which are expected to drive revenue and profitability growth [3] Group 3: Non-Mobile Business Expansion - In 1H25, the sales of IoT and automotive CCM increased by 48%, with an upward revision of the annual guidance to a 60% year-on-year growth [4] - The company is establishing production capabilities in various fields such as XR and robotics through self-research, investment, and acquisitions, aiming to create a smart vision product platform [4]