Summary of AVIC Jonhon (002179.SZ) Conference Call Company Overview - **Company**: AVIC Jonhon (002179.SZ) - **Industry**: Aerospace & Defense (A&D) and Industrial Technology Key Points Growth Outlook - **A&D Revenue Growth**: Forecasted at 16% CAGR from 2024 to 2030, driven by national defense spending and civil aviation opportunities [17][46] - **Liquid Cooling Revenue**: Expected to grow at 21% CAGR from 2024 to 2030, contributing 10% to total revenue by 2030 [24][46] - **Net Income Growth**: Projected to have a CAGR of 19% from 2024 to 2030, supported by A&D growth and liquid cooling contributions [16][36] Financial Performance - **Revenue Projections**: - 2024: Rmb 20,685.5 million - 2025E: Rmb 25,026.4 million - 2026E: Rmb 28,414.7 million - 2027E: Rmb 32,319.1 million [4][13] - **Gross Profit Margin (GPM)**: Expected to improve in 2Q25E after a decline in 1Q25, driven by a higher defense business mix [30][31] - **Net Profit Margin (NPM)**: Projected to reach 18.8% by 2030, up from 16.2% in 2024 [30] Valuation and Investment Thesis - **Target Price**: Rmb 46.10, implying an 18.6% upside from the current price of Rmb 38.87 [1][37] - **P/E Ratio**: Currently trading at 20x 12-month forward P/E, below historical average of 28x [2][39] - **Investment Rating**: Upgraded to Buy from Neutral due to solid growth outlook and attractive valuation [1][37] Risks - **A&D Spending Risks**: Potential slower-than-expected A&D spending could impact revenue forecasts [2][45] - **Pricing Pressure**: Rising pricing pressure in the A&D supply chain may adversely affect earnings [2][45] - **Competition**: Increased competition from domestic and global connector makers could impact market share and margins [2][45] Additional Insights - **Domestic Defense Spending**: Expected to grow at 7% CAGR from 2025E to 2030E, aligning with China's military modernization strategy [17][20] - **Civil Aircraft Opportunities**: Limited current contribution from civil aircraft but potential growth from the C919 aircraft backlog [18][22] - **Liquid Cooling Market**: Currently low penetration compared to air cooling, with a target of 20%-25% revenue contribution in the long term [24][46] Financial Metrics - **EBITDA Growth**: Projected to grow from Rmb 3,825.4 million in 2024 to Rmb 6,302.5 million by 2027 [4][13] - **Dividend Payout Ratio**: Expected to remain stable at around 50% [43] This summary encapsulates the key insights from the conference call regarding AVIC Jonhon's growth prospects, financial performance, valuation, risks, and additional insights into the industry landscape.

Investment Ratings - Amphenol (APH) is rated as Buy with a target price of $115 based on a 35x P/E multiple for F24M EPS [1][49][51] - TE Connectivity (TEL) is upgraded to Buy with a target price of $200 based on a 20x P/E multiple for F24M EPS [1][57][60] Core Insights - The report maintains a constructive outlook on the connector industry, driven by solid demand fundamentals and increased electrification across various end markets [9][58] - Recent stabilization in automotive market production and improving industrial demand are key factors for the upgrade of TEL to Buy [1][9] - Amphenol is expected to benefit from AI-led demand and a balanced end market exposure, while TEL is positioned for margin expansion due to improved industrial demand [1][33][58] Summary by Sections Amphenol (APH) - APH is a leading manufacturer in the connector market with a diversified end market exposure, including industrial (23%), automotive (17%), and IT data communications (37%) [49][50] - The company is expected to see above-market sales and earnings growth driven by technology hardware spending and AI infrastructure [50][51] - The target price of $115 reflects a premium to its historical P/E multiple, indicating strong growth potential [51][52] TE Connectivity (TEL) - TEL is the largest electronics connector company, with a significant portion of its revenue (40%) coming from the automotive sector [56][57] - The company is expected to benefit from stabilizing automotive trends and improving industrial demand, with a strong balance sheet supporting its growth [58][60] - The target price of $200 is based on a valuation that aligns with its long-term median P/E, reflecting its market position and growth prospects [60] Market Trends - The connector market is anticipated to show continued momentum in 2025, supported by growth in IT Datacom and industrial automation spending [58] - The automotive market is stabilizing, which is crucial for TEL as it represents a significant revenue source [9][58] - AI demand is expected to ramp up, particularly in the data center segment, which is beneficial for both APH and TEL [15][58]

Core Viewpoint - The rapid growth of the battery swapping connector market is driven by the increasing popularity of the battery swapping model in the electric vehicle sector, with the market expected to reach 5 billion yuan in 2024, a year-on-year increase of 35.7%, and further grow to approximately 6.42 billion yuan in 2025 [1][15][22]. Industry Overview - Battery swapping connectors are high-voltage connectors that facilitate the rapid transfer of energy and data signals from battery swapping station equipment to electric vehicle battery packs, ensuring stable and reliable connections during the battery swapping process [3][11]. - The battery swapping connector market in China is experiencing significant growth, with applications extending beyond passenger and commercial vehicles to energy and industrial sectors [1][15]. Market Size and Growth - The market size of the battery swapping connector industry in China is projected to reach 5 billion yuan in 2024, reflecting a 35.7% year-on-year increase, and is expected to grow to around 6.42 billion yuan by 2025 [1][15]. - The demand for battery swapping connectors is anticipated to continue rising due to the increasing number of battery swapping stations, which are expected to reach 4,819 by May 2025, an increase of 376 from the end of 2024 [13][15]. Competitive Landscape - The battery swapping connector industry features competition from both international brands, such as TE Connectivity and Amphenol, and domestic brands like AVIC Optoelectronics and Yonggui Electric, with the latter gaining traction in the mid-to-high-end market [17][18]. Policy Support - The Chinese government has introduced several policies to promote the development of the battery swapping connector industry, including guidelines to enhance the resilience of the supply chain and support the construction of battery swapping stations [8][9]. Industry Chain - The battery swapping connector industry consists of an upstream segment involving raw materials like metals and plastics, a midstream segment focused on manufacturing, and a downstream segment that includes applications in battery swapping stations and electric vehicles [9][11]. Future Trends - The industry is expected to see advancements in technology and materials, with a focus on introducing new conductive materials and smart monitoring systems to enhance user experience [22][23]. - Standardization and unification of battery swapping connectors will be crucial for compatibility across different brands and models, reducing production costs and maintenance challenges [23]. - The industry will increasingly emphasize environmental sustainability by utilizing low-carbon materials and improving energy efficiency [25].

Market Overview - Wall Street experienced a significant rally in May, driven by expectations of a U.S.-China trade deal and delays in tariff imposition by the Trump administration on the European Union, which boosted confidence in equities [1] - The market rally is expected to continue in June, supported by declining inflation rates, with the personal consumption expenditures price index rising only 0.1% month-over-month and 2.1% year-over-year, marking its lowest level since 2025 [4] Recommended Growth Stocks - Five growth stocks are recommended for June, all of which have shown double-digit returns in the last month and possess a favorable Zacks Rank [2][3] - The recommended stocks are AppLovin Corp. (APP), Amphenol Corp. (APH), Intuit Inc. (INTU), Carvana Co. (CVNA), and Stantec Inc. (STN), each with a Zacks Rank 1 (Strong Buy) and a Growth Score of A or B [3] AppLovin Corp. (APP) - AppLovin is focused on enhancing marketing and monetization for mobile app developers through its software-based platform [7] - The company reported strong fundamentals, with an expected revenue growth rate of 24.3% and earnings growth of 85.2% for the current year, driven by its AI-powered AXON 2.0 technology [10][9] Amphenol Corp. (APH) - Amphenol provides connectivity solutions utilizing AI and machine learning technologies, with a diversified business model that supports growth across various sectors [11][12] - The company anticipates a revenue growth rate of 32.3% and earnings growth of 40.7% for the current year, bolstered by increased defense spending and the Andrew acquisition [13] Intuit Inc. (INTU) - Intuit benefits from steady revenues across its Online Ecosystem and Desktop business segments, with strong performance in its Credit Karma and cloud-based services [14][15] - The expected revenue growth rate for Intuit is 14.8%, with earnings growth projected at 18% for the current year [17] Carvana Co. (CVNA) - Carvana's acquisition of ADESA's U.S. operations has enhanced its logistics and auction capabilities, positioning it for significant growth in the used car market [18] - The company expects a revenue growth rate of 31.4% and more than 100% earnings growth for the current year, with a focus on improving operational efficiency [20] Stantec Inc. (STN) - Stantec provides a range of professional consulting services in planning, engineering, and environmental sciences, focusing on infrastructure and facilities projects [22][23] - The expected revenue growth rate for Stantec is 11.1%, with earnings growth projected at 18.6% for the current year [24]

Core Viewpoint - The article discusses the growth and investment opportunities in the AI computing center market in China, particularly focusing on the Huawei Ascend ecosystem and its associated companies across four key areas: complete machines, power supply, cooling, and connectivity [2]. Group 1: Complete Machines - The newly added computing power in 2024 is expected to reach approximately 20,000 PFlops, with the investment scale of China's intelligent computing center market projected to reach 288.6 billion yuan by 2028. In 2023, the market size was 87.9 billion yuan, showing a year-on-year growth of over 90% [3]. - As of August 2024, there are over 300 intelligent computing center projects in China, with a total announced computing power exceeding 500,000 PFlops. About one-third of these projects are planned to have a computing power greater than 500 PFlops, mainly funded by government or telecom operators [3]. Group 2: Power Supply - AI servers utilize three power supply methods: external cabinets, racks, and trays. The power supply unit (PSU) converts high-voltage AC from the grid to 48V DC, which is then further converted to 12V for CPUs and 0.8V for GPUs [15]. - The GB200 NVL72 cabinet is equipped with 48 5.5kW PSUs, providing a total power of 132kW. The increasing power demand in AI servers is expected to expand the AI power supply market [16][21]. Group 3: Cooling - The power consumption of single cabinets has increased from 4-6 kW in traditional computing centers to 20-40 kW or higher in intelligent computing centers. Liquid cooling technology is becoming the preferred choice due to its efficiency and low energy consumption [27]. - The market size for liquid cooling data centers in China was 8.63 billion yuan in 2023, with a growth rate of 26.2%, expected to reach 18.01 billion yuan by 2026 [29]. Group 4: Connectivity - Backplane connectors are crucial for high-performance servers and communication devices, supporting high-speed data transmission and ensuring signal integrity [38]. - The Chinese communication connector market is projected to grow at a compound annual growth rate of 30%-35%, with expectations to exceed 60 billion yuan by 2025, where AI-related connectors will account for over 70% of the market [40].

Market Overview - Wall Street has experienced significant volatility over the past two months due to sticky inflation, weak economic data, and the imposition of reciprocal tariffs by the Trump administration, raising concerns about a potential near-term recession in the U.S. economy. All three major stock indexes are currently in negative territory year to date [1]. Investment Opportunities - Three U.S. corporate giants with a market capitalization of nearly $100 billion or more and a favorable Zacks Rank have provided positive returns in the past month. These companies are Amphenol Corp. (APH), AppLovin Corp. (APP), and Philip Morris International Inc. (PM), all holding a Zacks Rank 1 (Strong Buy) [2]. Amphenol Corp. (APH) - Amphenol provides connectivity solutions utilizing AI and machine learning technologies, offering high-density, high-speed connectors and cables optimized for signal integrity and thermal performance [4]. - The company benefits from a diversified business model, with strong demand across Commercial Air, Industrial, and Mobile devices, alongside defense technologies driving top-line growth [5]. - Amphenol's expected revenue and earnings growth rates for the current year are 30% and 38.6%, respectively, with the Zacks Consensus Estimate for current-year earnings improving by 12.9% in the last 30 days [6]. AppLovin Corp. (APP) - AppLovin operates a software-based platform for mobile app developers, enhancing marketing and monetization capabilities both domestically and internationally [7]. - The introduction of AI-powered AXON 2.0 technology and strategic expansion in gaming studios have significantly boosted revenue growth, while the Ai-enabled Audience+ marketing platform enhances reach into direct-to-consumer and e-commerce sectors [8]. - AppLovin's expected revenue and earnings growth rates for the current year are 24.3% and 70.6%, respectively, with the Zacks Consensus Estimate for current-year earnings improving by 13.7% in the last seven days [10]. Philip Morris International Inc. (PM) - Philip Morris has shown strong pricing power and an expanding smoke-free product portfolio, making significant progress in its smoke-free transition with products like IQOS and ZYN [11]. - The company anticipates robust growth in 2025, driven by increasing demand across all product categories, with an expected volume growth of 2% and smoke-free products projected to expand by 12-14% [12]. - Philip Morris's expected revenue and earnings growth rates for the current year are 8.1% and 13.7%, respectively, with the Zacks Consensus Estimate for current-year earnings improving by 4.2% over the last 30 days [13].

Core Viewpoint - Huafeng Technology reported significant revenue growth in 2024 and Q1 2025, driven by expansion in the server sector and new communication business capabilities [1][4]. Group 1: Financial Performance - In 2024, Huafeng Technology achieved a revenue of 1.092 billion yuan, representing a year-on-year increase of 20.83% [1]. - For Q1 2025, the company reported a revenue of 406 million yuan, a remarkable year-on-year growth of 79.82% [1]. - The net profit attributable to shareholders for Q1 2025 reached 31.81 million yuan, a substantial increase of 207.17% year-on-year [1]. - The company's non-recurring net profit for Q1 2025 was 23.05 million yuan, with an astonishing growth rate of 2253.89% [1]. Group 2: Market Position and Strategy - Huafeng Technology holds a significant position in the research, production, and sales of optical and electrical connectors, with applications in defense, communication, and automotive sectors [3]. - The company has successfully established relationships with key clients such as Huawei, ZTE, Inspur, and H3C in the high-end server market [3]. - The global AI server market is rapidly growing, with an expected increase from 125.1 billion USD in 2024 to 158.7 billion USD in 2025, and potentially reaching 222.7 billion USD by 2028 [3]. Group 3: Production Capacity and Profitability - The gross profit margin for Q1 2025 reached 27.9%, an increase of 12.2 percentage points year-on-year, attributed to the release of high-speed module production capacity [4]. - The completion of automated production lines has significantly reduced labor costs, enhancing product profit margins [4]. - The company is actively advancing its capacity enhancement plans, with the third phase of the connector industrial park nearing completion [3]. Group 4: Research and Development - In 2024, Huafeng Technology's R&D investment reached 110 million yuan, a year-on-year increase of 20.99%, maintaining R&D expenses at over 10% of sales revenue [5]. - The company applied for 68 new patents in 2024, including 23 invention patents and 44 utility model patents, and received 52 new authorized patents [5]. - Significant advancements were made in communication technology, including the development of 224G copper cable high-speed transmission technology and 112G high-density backplane products [6]. Group 5: Industry Trends and Future Outlook - The demand for high-speed backplane connectors and high-speed I/O connectors is expected to increase as server cabinets integrate more GPUs, presenting a broad market opportunity for Huafeng Technology [7]. - The company is focusing on new quality production capabilities in defense, industrial, and automotive sectors, aligning with trends in automation and smart technology [7]. - The rise of AI and the transformation in the connector industry position Huafeng Technology to capture market share and achieve sustained growth [7].