Investment Rating - The report suggests focusing on sectors such as servers, IDC, switches, switching chips, optical modules, and liquid cooling driven by domestic AI development, as well as servers and optical modules driven by overseas AI development [5]. Core Insights - DeepSeek has disclosed the theoretical cost and profit margin of its V3/R1 inference system, with a theoretical daily revenue of $562,027 and a profit margin of 545%. This advancement, along with the launch of the general-purpose AI Agent product Manus by Monica, is expected to accelerate the domestic AI application deployment and enhance profitability in the AI sector [1][10]. - The acceleration of AI technology iteration is leading to increased demand for computing power, prompting major internet companies like ByteDance and Baidu to potentially raise capital expenditures to expand their computing investments [1][12]. - The report highlights that in March 2025, Broadcom's Q1 revenue reached $14.916 billion, a 25% year-on-year increase, with net profit soaring by 315% to $5.503 billion, indicating strong performance in AI semiconductor revenue [1]. Summary by Sections Server Sector - Approximately 60% of the investment in large models is allocated to hardware procurement, with servers accounting for 69% of total capital expenditure. The year 2025 is projected to see a significant increase in inference demand, benefiting domestic ASIC chip manufacturers like ZTE and Unisoc [2][7]. Switch Sector - Network equipment procurement, including switches, constitutes about 11% of hardware procurement. Major suppliers like Ruijie Networks and Unisoc are positioned to benefit from the demand from leading internet companies [2][10]. IDC Sector - Data centers are crucial for AI development and deployment, with companies like Data Port and Runjian signing agreements to provide computing services. IDC suppliers are expected to benefit significantly from large-scale construction in 2025 [3][12]. Liquid Cooling Sector - The liquid cooling market is anticipated to expand significantly, with NVIDIA's NVL36/72 cabinets expected to be shipped in bulk by 2025. Domestic suppliers are accelerating their international expansion, indicating a promising growth trajectory [3][14]. Core Data Updates - In December, the three major telecom operators achieved a total telecom revenue of 141.7 billion yuan, a year-on-year increase of 10.10%. New business revenue reached 39.6 billion yuan, growing by 66.39% year-on-year [4][20]. Investment Recommendations - The report emphasizes the importance of monitoring sectors such as servers, IDC, switches, switching chips, optical modules, and liquid cooling, driven by both domestic and international AI developments [5].

Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage [1][7]. Core Insights - The company is a leading provider of IoT solutions in China, holding a dominant position in the global IoT module market, with products spanning cellular modules, automotive pre-installed modules, and smart modules, among others [5][19]. - The IoT industry is experiencing significant growth, driven by clear development paths and a well-defined industrial chain, with continuous expansion in IoT connections across various application fields [5][61]. - The company is entering a rapid expansion phase, with its modular products penetrating emerging fields, supported by a robust global R&D network and a diverse product matrix [6][20]. Summary by Sections Company Overview - The company, founded in 2010, has established a comprehensive global service network and has launched various successful IoT products, including GSM/GPRS modules and multi-mode LPWA modules [20][21]. - The revenue has shown a strong growth trajectory, with a five-year CAGR of 38.69%, despite a temporary decline in 2023 due to external economic factors [23][24]. Industry Analysis - The IoT market in China is projected to grow significantly, with a market size increase from 351.52 billion yuan in 2019 to an estimated 508.90 billion yuan in 2023, reflecting a CAGR of 9.69% [52][54]. - The report highlights the importance of policy support for the IoT sector, emphasizing its role in digital transformation and the integration of new technologies [45][46]. Financial Projections - The company is expected to achieve revenues of 185.64 billion yuan, 225.49 billion yuan, and 267.26 billion yuan for the years 2024 to 2026, with corresponding net profits projected at 5.48 billion yuan, 7.11 billion yuan, and 9.04 billion yuan [7][9]. - The report anticipates a significant increase in net profit growth rates, with projections of 503.77% in 2024, followed by 29.88% and 27.16% in the subsequent years [7][9]. Competitive Positioning - The company is positioned as a leader in the IoT module market, with a strong emphasis on R&D and a diverse product offering that includes AI and smart modules, which are expected to drive future growth [59][60]. - The report notes that the company has a stable shareholding structure and a management team with extensive technical and managerial experience, which is crucial for navigating the competitive landscape [39][42].