Investment Rating - The report maintains an "Overweight" rating for the communication industry [1][9]. Core Insights - The establishment of China Fusion Energy Co., Ltd. marks a new phase in the development of controllable nuclear fusion, with significant investment from state-owned enterprises totaling 11.492 billion yuan [5][18]. - The investment cycle for controllable nuclear fusion is on the rise, driven by intensified US-China competition and supportive domestic policies [5][18]. - The AI infrastructure expansion and model transition are expected to drive opportunities across the computing and application stack, highlighting the synergy between hardware and software [6][19]. Summary by Sections Market Review - In the past week (July 21-27, 2025), the Shanghai Composite Index and Shenzhen Component Index rose by 1.67% and 2.33%, respectively, while the CITIC Communication Index fell by 0.47%, ranking 28th among 30 primary industries [4][14]. - The top five performing stocks in the communication sector included Dongxin Peace (34.10%), Cheng Tian Wei Ye (17.14%), and Si Nan Navigation (16.54%) [4][15]. Weekly Topic - The focus is on the significant investment in the fusion energy sector by state-owned enterprises, indicating a strategic shift towards large-scale development [5][18]. - The report suggests monitoring related industry chain stocks due to the ongoing investment cycle in controllable nuclear fusion [5][18]. Industry News - China Mobile's centralized procurement for data center switches is expected to involve approximately 33,300 units, with a total budget of about 2.0294 billion yuan [7][21]. - Huawei has the highest share in this procurement, with several other established domestic manufacturers also participating [7][21][23]. Investment Recommendations - The report recommends focusing on key beneficiaries across various sectors, including controllable nuclear fusion and AI-related hardware and software [6][19].

Investment Rating - The report maintains an "Overweight" rating for the communication industry, expecting the industry index to outperform the market index by more than 10% in the next six months [2][41]. Core Viewpoints - In the first half of 2025, China's telecommunications business revenue reached CNY 905.5 billion, showing a year-on-year growth of 1% [20]. - The communication industry is experiencing a period of technological iteration and policy dividends, with growth drivers from AI, quantum communication, and low-altitude economy [38]. - The report suggests focusing on companies that align with the themes of "technology commercialization + policy catalysis + performance certainty" [38]. Summary by Sections 1. Industry Market Review - The communication sector index increased by 6.78% from July 11 to July 24, outperforming the CSI 300 index by 3.31 percentage points, ranking 7th among 31 sectors [11]. - Year-to-date, the communication sector has risen by 17.04%, surpassing the CSI 300 index by 11.60 percentage points [11]. 2. Industry News - Dell'Oro report indicates a 6% CAGR for the global 5G core network market from 2024 to 2029, driven by accelerated deployment of 5G SA architecture [16]. - China Mobile's procurement for data center switches includes major players like Huawei and ZTE, with an estimated procurement of approximately 33,300 units [18]. - The Ministry of Industry and Information Technology reported that the number of mobile phone users reached 1.81 billion, with 5G users at 1.118 billion, accounting for 61.8% of mobile users [20]. 3. Company Announcements - Zhongji Xuchuang expects a net profit increase of 53%-87% for the first half of 2025, driven by strong demand for high-end optical modules [22]. - New Yisheng anticipates a net profit growth of 328%-385% for the same period, benefiting from AI-related investments [24]. - StarNet Ruijie forecasts a net profit increase of 43.81%-91.75% due to accelerated orders for data center switch products [26]. 4. Industry Data Updates - As of June 2025, the length of optical cable lines reached approximately 73.77 million kilometers, a year-on-year increase of 9.91% [29]. - The total number of 5G base stations reached 4.549 million, with a net increase of 298,000 from the end of the previous year [34]. 5. Weekly Perspective on the Communication Sector - The report emphasizes the stable operation of the communication industry, with ongoing growth in telecommunications business volume and new infrastructure construction [38]. - It recommends focusing on companies such as China Telecom, FiberHome, and Changfei Fiber for potential investment opportunities [39].

Core Viewpoint - The communication industry is experiencing stable growth driven by advancements in AI and new infrastructure development, with significant increases in user scale for 5G, gigabit, and IoT services [1][2]. Industry Overview - In the first half of 2025, China's telecommunications industry generated a total revenue of 905.5 billion yuan, marking a year-on-year growth of 1%, and a 9.3% increase when adjusted for last year's prices [1]. - The Shenzhen Stock Exchange's communication sector has 26 companies forecasting a combined net profit of 9.4 billion to 11.3 billion yuan for the first half of 2025 [1]. Company Performance - Wuhan Guangxun Technology Co., Ltd. anticipates a net profit of 323 million to 407 million yuan for the first half of 2025, representing a substantial year-on-year increase of 55% to 95% [2]. - Fujian StarNet RuiJie Communication Co., Ltd. expects a net profit of 180 million to 240 million yuan, reflecting a growth of 43.81% to 91.75% year-on-year [2]. AI Impact - The AI wave is significantly driving growth in the communication sector, with companies like StarNet RuiJie reporting increased orders for data center switch products due to accelerated data center construction [3]. - The demand for AI computing power is expected to continue driving large-scale data center construction, becoming a primary growth engine for the industry [3]. Policy Support - Recent policies have created a favorable environment for the communication industry, including targeted support for 5G, gigabit networks, and AI-communication technology integration [5][6]. - The National Development and Reform Commission and other agencies have set a goal to establish a national data infrastructure by 2029, which will enhance the demand for computing and optical communication infrastructure [5][6]. Future Outlook - The integration of AI with communication technology is anticipated to create vast market opportunities, with companies positioned to benefit from ongoing digital transformation and infrastructure development [3][6]. - The optical module market for AI clusters is projected to grow significantly, with sales expected to reach 12 billion USD by 2029 [4].

Core Viewpoint - The AI wave is significantly driving growth in the communication industry, with many listed companies reporting substantial profit increases due to rising demand for computing power and AI applications. Group 1: Company Performance - As of July 24, 2025, 26 companies in the Shenzhen communication sector forecast a combined net profit of 9.4 billion to 11.3 billion yuan, representing a year-on-year growth of 59% to 90% [1] - Guangxun Technology expects a net profit of 323 million to 407 million yuan, a significant increase of 55% to 95% year-on-year [1] - StarNet Ruijie anticipates a net profit of 180 million to 240 million yuan, reflecting a year-on-year growth of 43.81% to 91.75% [1] - New Yisheng, a leader in optical modules, projects a net profit of 3.7 billion to 4.2 billion yuan, a staggering increase of 327.68% to 385.47% year-on-year [1][3] Group 2: Market Trends - The demand for AI computing power and the deepening of digital transformation are expected to drive large-scale data center construction, becoming the main growth engine for the industry [2] - The optical module market is projected to maintain rapid growth over the next five years, driven by the proliferation of AI large models and increased capital expenditure from internet giants [2] - The telecommunications market is showing signs of recovery due to ongoing construction and upgrades of DCI interconnections and PON networks [2] Group 3: Policy Support - In 2025, the government released several key policies aimed at enhancing computing networks and optical communication infrastructure, including the goal to establish a national data infrastructure by 2029 [4] - The Ministry of Industry and Information Technology emphasized accelerating the construction of 5G and gigabit optical networks, transitioning from "gigabit popularization" to "ten-gigabit initiation" [4] - These policies are expected to stimulate demand for computing and optical network infrastructure, providing significant market opportunities for companies like StarNet Ruijie [5]

Summary of Key Points from the Conference Call Company Overview - The company discussed is **Xingwang Ruijie**, which operates in four main segments: **Ruijie Network**, **Communication**, **Financial Innovation**, and **Metaverse** [2][4][5]. Core Business Segments and Performance - **Ruijie Network**: Expected to contribute significantly to net profit, with projections between **400 million to 500 million CNY** for the first half of 2025, showing a strong performance [2][4][7]. - **Communication Segment**: The core of this segment is the **Optical Communication** business, primarily serving **China Mobile** and expanding into **China Unicom**, **China Telecom**, and **China Tower** markets. A growth period is anticipated in 2025 due to product updates that will increase the proportion of high-margin products [2][5][8]. - **Financial Innovation**: Led by a subsidiary in Shenzhen, this segment provides comprehensive financial solutions and participates in the **digital RMB pilot project**. The company has completed **Hongmeng certification** and is expanding into the **Middle East** and **ASEAN** for international payment solutions [2][3][5][16]. - **Metaverse Segment**: Focuses on audio-visual technology and immersive experiences, with applications in entertainment and corporate promotion. Collaborations with universities are ongoing to explore brain-computer interface technology [2][6][18]. Financial Performance - The company forecasts a net profit of **180 million to 240 million CNY** for the first half of 2025, representing a year-on-year growth of **3.81% to 91%** [4][7]. - The **De Ming Communications** segment, focusing on the U.S. market for vehicle networking, reported a revenue and profit increase of approximately **30%** in the first half of 2025 despite trade tensions [2][5][7]. Future Growth Drivers - Anticipated growth in the second half of 2025 is driven by advancements in computing power and the availability of computing cards, which are expected to boost demand for switches [2][8]. - The overseas business of Ruijie Network has seen over **50% growth** in revenue last year, with expectations for continued strong performance [2][8]. - The company is also focusing on high-margin products in the optical communication sector, including voice gateways and intelligent gateways, to meet AI demands [8][9]. Market Position and Strategy - The company has joined the **Digital RMB Alliance** and collaborates with major firms like **Meituan**, **Alibaba**, **Tencent**, and **JD.com** to expand cross-border payment solutions [3][16]. - The white-box switches, primarily targeting internet companies, have a gross margin of about **20%**, significantly higher than the **8%-10%** margins typical for simple OEM/ODM manufacturers [10][12]. Operational Efficiency - The company has implemented significant operational cost reductions, which are expected to enhance net profit margins as revenue grows without a proportional increase in operational expenses [9][11][14]. AI and Innovation - The company is actively exploring AI applications, particularly in hardware needs for data center switches and integrated solutions for various sectors, including healthcare [18][19]. - Research in brain-computer interface technology aims to provide personalized mental health analysis through advanced modeling techniques [18][19]. Outlook - The overall performance for the first half of 2025 aligns with expectations, with optimism for increased orders and revenue in the second half, particularly in computing power and operator construction opportunities [20]. - New products and market expansions are anticipated to contribute positively to the company's financial performance, enhancing returns for investors [20].

Investment Rating - The report maintains a "Recommended" rating for the company, indicating a potential upside of over 15% relative to the benchmark index [6]. Core Views - The company is expected to achieve a net profit attributable to shareholders of between 180 million to 240 million yuan for H1 2025, representing a year-on-year growth of 43.8% to 91.8% [1]. - The strong growth in net profit is primarily driven by the accelerated construction of data centers in the internet sector and improved operational efficiency [2]. - The company continues to explore applications for digital currency in cross-border payments, positioning itself as a key player in the digital finance landscape [3]. - The strategic transformation towards "ICT and AI application solutions" is ongoing, with multiple AI application scenarios being explored [4]. - The projected net profits for 2025, 2026, and 2027 are estimated at 550 million, 720 million, and 880 million yuan respectively, with corresponding PE ratios of 26, 20, and 16 [4]. Summary by Sections Financial Performance - For H1 2025, the company anticipates a net profit of 180 million to 240 million yuan, with a growth rate of 43.8% to 91.8% year-on-year [1]. - The second quarter is expected to show a net profit of 140 million to 200 million yuan, reflecting a year-on-year increase of 41.4% to 91.8% and a quarter-on-quarter growth of 227.3% to 369.8% [1][2]. Market Position - The company has maintained its leading position in the 200G/400G data center switch market in China for 13 consecutive quarters, indicating strong market dominance [2]. - The company secured a 21% share in a recent procurement by China Mobile for data center switches, amounting to 350 million yuan [2]. Strategic Initiatives - The subsidiary, Ascend Information, is actively involved in the digital currency sector and is exploring cross-border payment applications [3]. - The company is focusing on AI applications and has launched various innovative solutions in the metaverse and smart retail sectors [4]. Financial Projections - The company forecasts revenues of 16.758 billion yuan for 2024, with a growth rate of 5.3%, and expects revenues to reach 30.12 billion yuan by 2027, with a growth rate of 20.9% [5][10]. - The projected net profit for 2024 is 405 million yuan, with a decline of 4.8%, followed by significant growth in subsequent years [5][10].

Group 1 - The company expects a net profit attributable to shareholders of 180 million to 240 million yuan for the first half of 2025, representing a year-on-year growth of 43.81% to 91.75% [2] - The net profit after deducting non-recurring gains and losses is projected to be 160 million to 210 million yuan, indicating a year-on-year increase of 51.07% to 98.28% [2] - The basic earnings per share are estimated to be between 0.3101 yuan and 0.4135 yuan [2] Group 2 - The increase in performance is attributed to the ongoing AI wave driving the upgrade of computing infrastructure, with accelerated orders for data center switch products from internet clients [3] - The company is committed to enhancing management and efficiency, resulting in effective cost control and revenue growth compared to the previous year [3] - In 2025, the company plans to focus on ICT infrastructure represented by data center networks and optical communications, as well as AI application solutions across various scenarios [3] Group 3 - The company will continue to advance its overseas strategy in both capability building and market expansion [4] - It aims to improve its compliance system to mitigate international market operational risks and support overseas market expansion [4] - The company is exploring business models related to brain-computer interfaces and will develop corresponding strategies based on its growth needs [4]

Performance Forecast - The company expects a net profit attributable to shareholders of 180 million to 240 million yuan for the period from January 1, 2025, to June 30, 2025, representing a year-on-year increase of 43.81% to 91.75% compared to 125.16 million yuan in the same period last year [1] - The net profit after deducting non-recurring gains and losses is projected to be between 160 million and 210 million yuan, reflecting a year-on-year growth of 51.07% to 98.28% from 105.91 million yuan in the previous year [1] - Basic earnings per share are expected to be between 0.3101 yuan and 0.4135 yuan, compared to 0.2134 yuan per share in the same period last year [1] Reasons for Performance Change - The surge in AI-driven infrastructure upgrades has accelerated the construction of data centers in the internet industry, leading to an increase in orders for data center switch products from the company's main subsidiaries [1] - The company has also made progress in management improvement and efficiency enhancement, resulting in effective cost control and overall growth in operating performance compared to the previous year [1]

Core Viewpoint - Ruijie Networks (301165) expects a net profit of 400 million to 510 million yuan in the first half of 2025, representing a growth of 160.11% to 231.64% compared to 154 million yuan in the same period last year [1] Group 1: Financial Performance - The projected net profit for the first half of 2025 is between 400 million and 510 million yuan [1] - This represents a significant increase of 160.11% to 231.64% year-on-year from 154 million yuan [1] Group 2: Market Dynamics - The acceleration of AI technology iteration is driving the global computing infrastructure upgrade process [1] - The internet industry is rapidly increasing the construction of data centers, leading to a faster delivery of data center switch product orders aimed at internet clients [1] Group 3: Revenue Growth - The SMB market revenue is steadily growing, contributing to an increase in product gross profit year-on-year [1]

Core Viewpoint - The company, Xingwang Ruijie, anticipates a significant increase in net profit for the first half of 2025, projecting a growth of 43.81% to 91.75% compared to the same period last year [1] Financial Performance - The expected net profit attributable to shareholders is estimated to be between 180 million to 240 million yuan [1] - The revenue growth is attributed to the accelerated delivery of data center switch products to internet clients, driven by the ongoing AI wave and the upgrade of computing infrastructure [1] Operational Efficiency - The company has made continuous improvements in management and efficiency, achieving effective cost control which has contributed to the growth in operating performance [1]