Core Viewpoint - Huayuan Securities has initiated coverage on ZTE Corporation (00763), recognizing it as the fourth largest telecommunications equipment supplier globally, with a stable operator network business and a promising second growth curve from computing and terminal businesses, assigning a "Buy" rating [1] Business Segments - **Connection Business**: The operator network business remains solid, achieving a gross margin of 52.94% in H1 2025, serving as a significant cash flow source. The company is also advancing in 5G-A technology and promoting the deployment of 400G optical networks [2] - **Computing Business**: The emergence of AI large models has created substantial demand for computing power. The company is seizing this opportunity by expanding its computing infrastructure-related business, which includes servers, storage, switches, and data center products. In H1 2025, revenue from the government and enterprise sector doubled, making it a core growth driver [2] - **Terminal Business**: The company is implementing the "AI for All" concept, continuously expanding AI technology applications in terminal devices, particularly in the smartphone sector. In H1 2025, the company launched the world's first full-size AI smartphone, Nubia Z70 Ultra, which is expected to enhance user experience and increase AI terminal product shipments [2]

Core Insights - The 2025 China Unicom Partner Conference was held in Shanghai, focusing on the theme "Co-creation of a New Ecosystem through Practical Collaboration" to explore digital technology integration and innovation in China [1] - Unisplendour's subsidiary, H3C Group, showcased its full-stack innovative achievements under the theme "Computing Power × Connectivity, AI × Future," emphasizing the dual drive of "AI in All" and "AI for All" to empower digital transformation across various industries [1][12] Group 1: Event Highlights - Key leaders from China Unicom, including Chairman Chen Zhongyue and General Manager Jian Qin, visited the H3C exhibition booth, where H3C's latest technological achievements and solutions in intelligent computing and smart home sectors were presented [3] - H3C's Senior Vice President He Ning provided detailed insights into the collaboration between H3C and China Unicom, receiving high praise from leaders for H3C's innovative technologies and applications [3] Group 2: Strategic Initiatives - H3C's participation in the launch of the "China Unicom Tongtong Huigou Enterprise Mall" aims to enhance procurement processes and service efficiency for government and enterprise clients [4] - The company was recognized with the "Outstanding Contribution Award" at the China Unicom Partner Conference for its achievements in the terminal ecosystem, particularly in FTTR products and smart home collaborations [6] Group 3: Technological Innovations - The "Lingxi Intelligent Computing Solution," central to the "AI in All" strategy, supports AIGC demands through six capabilities, including efficient computing power supply and intelligent energy management, while collaborating with over 15 major AI chip manufacturers [8] - H3C's BNC (Broadband Core Network) initiative aims to create a flexible and efficient broadband network architecture, enhancing service capabilities and operational efficiency [10] Group 4: AI Applications and Collaborations - The "Turing Town" initiative, part of the "AI for All" strategy, is being developed in multiple cities to create a closed-loop business model that integrates construction, ecology, operations, and sales [11] - H3C's AI solutions have been implemented in various sectors, including industrial manufacturing and smart healthcare, with a focus on accelerating industry intelligence transformation [11]

Investment Rating - Investment Rating: BUY with a Price Objective (PO) of 160.00 USD, current Price at 135.40 USD [1][6] Core Insights - NVIDIA Corporation (NVDA) is expanding its portfolio with a broad set of AI products across various sectors, including cloud, enterprise, humanoid robots, and gaming, positioning itself in a "multi Trillion $ AI factory" industry [2][3] - The introduction of NVLink Fusion allows NVDA to extend its proprietary interconnect technology to third-party custom accelerators and CPUs, significantly expanding its Total Addressable Market (TAM) [2][3] - The GB200 systems are in full production, with management expressing high confidence in the rollout and strong demand, while preparing for the next-generation GB300 systems [4] - The launch of the Grace CPU C1 targets power-efficient edge, telco, and storage systems, competing against Intel and AMD's x86 products [3] Summary by Sections Portfolio Expansion - NVDA is diversifying its offerings with AI products across multiple sectors, indicating a strategic move to capture a larger market share [2][3] - The NVLink Fusion technology enhances collaboration with cloud service providers, integrating NVDA's GPUs with third-party ASICs and ARM-based CPUs [3] Production and Delivery Confidence - The GB200 systems are fully operational, with management indicating a strong demand and confidence in the production process despite challenges [4] - The upcoming GB300 systems are expected to deliver 1.5 times more inference capability due to enhanced memory and networking features [4] Market Dynamics - The enterprise server RTX Pro extends AI capabilities into the enterprise sector, increasing competition against legacy x86 systems [2] - The Sovereign AI buildout is anticipated to benefit from recent Middle-East deals, with significant advantages expected in the following years [2]

Investment Rating - The report maintains an "Accumulate-A" rating for the company [1][9]. Core Views - The company's operator business is under pressure from external environmental factors, while computing power and end-side businesses are opening new growth avenues [1][6]. - The company reported a revenue of 121.3 billion yuan in 2024, a year-on-year decrease of 2.38%, and a net profit of 8.43 billion yuan, down 9.66% year-on-year [3][10]. - The operator business revenue for 2024 was 70.3 billion yuan, down 15.02% year-on-year, while the government and enterprise business grew by 36.68% to 18.57 billion yuan [5][9]. Financial Performance - The company achieved a gross margin of 37.91% in 2024, a decrease of 3.62 percentage points year-on-year [3]. - The fourth quarter of 2024 saw a revenue of 31.25 billion yuan, down 10.34% year-on-year but up 13.41% quarter-on-quarter [3]. - The company expects net profits to grow to 9.26 billion yuan in 2025, reflecting a year-on-year increase of 9.9% [9][10]. Business Segments - The operator business is facing challenges due to a decline in overall investment from domestic operators as 5G network construction matures [5]. - The government and enterprise business has seen significant growth due to increased R&D investment, with revenues doubling in key sectors [5][6]. - The consumer business reported a revenue increase of 16.12% to 32.41 billion yuan, driven by growth in home terminals and mobile internet products [5][6]. Market Position and Strategy - The company is actively expanding its computing power segment, achieving breakthroughs in servers, storage, and data centers [8]. - The company is implementing a dual-brand strategy in international markets, leveraging innovative technologies to capture emerging market demands [8][9]. - The company maintains strict cost control, with a declining debt-to-asset ratio of 64.7% in 2024, marking six consecutive years of improvement [8][9].