Core Viewpoint - The communication sector is experiencing revenue and net profit growth, with profitability metrics reaching new highs since 2022, driven by the burgeoning AI computing power segment [1][2][4]. Group 1: Communication Sector Performance - In the first half of 2025, the A-share communication sector achieved revenue of 13,220.65 billion, a year-on-year increase of 2.99%, while net profit growth outpaced revenue growth at 7.66% [2]. - The comprehensive gross margin for the sector was 29.33%, reflecting a year-on-year increase of 0.11 percentage points, and the net profit margin was 11.08%, up by 0.49 percentage points [2]. - In Q2 2025, both revenue and net profit growth rates improved compared to the same period last year, with gross and net profit margins reaching their highest levels since 2022 [1][2]. Group 2: Subsector Performance - The optical module/device and connector segments showed strong performance in the first half of 2025, leading in revenue and net profit growth rates [3]. - The three major telecom operators in Hong Kong reported a 0.3% year-on-year revenue increase and a 5.1% net profit increase in the first half of 2025, although Q2 saw a slight revenue decline of 0.1% with a net profit growth of 6.0% [3]. Group 3: Institutional Holdings and Valuation - In Q2 2025, public fund holdings in the communication sector reached a record high of 3.85%, an increase of 1.26 percentage points, while northbound capital holdings also hit a record high of 2.18%, up by 0.57 percentage points [4]. - The current PE-TTM for the communication sector is 46.44, placing it at the 99.59th percentile over the past five years and the 74.54th percentile over the past ten years [4]. - The low penetration rate of AI users and the nascent stage of large model development suggest significant potential for capital expenditure growth as revenues from large models increase [4].

Group 1 - The communication sector's revenue and net profit growth have improved compared to the same period last year, with gross and net profit margins reaching new highs since 2022 [1][2] - In the first half of 2025, the A-share communication sector achieved revenue of 13,220.65 billion yuan, a year-on-year increase of 2.99%, while net profit growth outpaced revenue growth at 7.66% [2] - The AI computing power segment is showing strong performance, with low user penetration and the industrialization cycle just beginning, indicating significant potential for capital expenditure growth [1][4] Group 2 - The optical module/device and connector segments performed well in the first half of 2025, with the highest revenue growth rates in these areas [3] - Institutional holdings in the communication sector have reached historical highs, with public fund holdings at 3.85% and northbound capital holdings at 2.18% [4] - The current PE-TTM for the communication sector is 46.44, placing it at the 99.59th percentile for the past five years and the 74.54th percentile for the past ten years [4]

Group 1 - A-shares showed mixed performance on July 29, with active sectors including CRO, optical modules, optical chips, and innovative drugs [1] - The cloud computing 50 ETF (516630) rose over 1%, with leading stocks including Guotou Intelligent (300188), Hengsheng Electronics (600570), Zhongji Xuchuang (300308), Xinyi Sheng (300502), Wanxing Technology (300624), and Yonyou Network (600588) [1] - CITIC Securities reported that by Q2 2025, the market value of public fund holdings in the telecommunications sector reached 101.75 billion yuan, accounting for 3.90%, a record high [1] Group 2 - In Q2 2025, public funds significantly increased their holdings in the optical module/device sector while reducing positions in IDC and telecom operators [2] - The top ten stocks with increased holdings in the telecommunications sector included Xinyi Sheng, Zhongji Xuchuang, Changxin Bochuang, Shijia Photon, and Huace Navigation [2] - The cloud computing 50 ETF (516630) tracks an index with a high AI computing power content, covering popular concepts such as optical modules, computing leasing, data centers, AI servers, and liquid cooling [2]