Core Viewpoint - Zhejiang Merchants Bank initiates coverage on Weishi Jiajie (00856.HK) with a "Buy" rating and a target price of HKD 9.9 [1] Business Overview - The company's main revenue sources are its enterprise systems and consumer electronics businesses, providing stable cash flow. It is a leading IT distributor in the Asia-Pacific region, focusing on IT equipment distribution and solution integration across four core areas: hardware, software, application software, and information security. The consumer electronics segment covers a wide range of products, including computers, mobile phones, drones, smartwatches, and VR devices. The overall revenue is projected to reach HKD 89 billion in 2024, with industry-leading revenue scale and profitability [2] Innovation and Growth - The company is leveraging cloud distribution and its own cloud brand, Jiajie Cloud Star, to capitalize on growth opportunities in the cloud computing market. It has established deep partnerships with major cloud providers like Alibaba Cloud and Huawei Cloud to offer comprehensive cloud services. Additionally, the company is proactively developing capabilities in AI, including computing resource scheduling and large model services, managing around 40 next-generation national intelligent computing centers across the country [3] Market Expansion - The company holds a leading position in the Southeast Asian IT distribution market, with revenue from this region expected to account for 34% of total revenue in 2024. As the company deepens its market penetration in Southeast Asia, this region is anticipated to become a key driver of overall revenue growth [4] Financial Forecast and Valuation - Revenue projections for the company from 2025 to 2027 are HKD 102.37 billion, HKD 116.94 billion, and HKD 132.27 billion, respectively. Net profit attributable to shareholders is expected to be HKD 1.18 billion, HKD 1.41 billion, and HKD 1.60 billion for the same period. A relative valuation method is used, with a target market value of HKD 15.6 billion and a target price of HKD 9.9, applying a 13x PE ratio for 2025. The initial coverage is rated as "Buy" [5]

Group 1 - The company reported Q1 2025 performance exceeding expectations, with revenue growth of 16-17% year-on-year, gross profit growth of 20-21%, and net profit attributable to shareholders increasing by 28-29% [1] - The increase in market share for domestic brands is expected to continue, driven by AI demand and the optimization of distribution business structure, with leading companies like Huawei and Haiguang maintaining high growth rates [1] - The demand for AI computing power is driving the release of network and storage products, supported by the "national subsidy" policy since Q4 2024, which has led to early procurement in Q1 [1] Group 2 - The company has established a broad product ecosystem through deepening partnerships with global brands such as Huawei, Alibaba, Tencent, and others, enhancing its coverage in the core IT product distribution market [2] - The diverse product portfolio helps improve customer stickiness and supports stable revenue sources across different economic cycles, contributing to the company's risk resilience [2] - The company is a leading technology service platform in the Asia-Pacific region, benefiting from the AI wave and digital transformation, with adjusted net profit forecasts for 2025, 2026, and 2027 showing growth of 12.0%, 11.6%, and 8.7% respectively [2]