Investment Rating - The report maintains a "Buy" rating for VSTECS (00856 HK) with a target price of HK$14.00, revised from the previous target price of HK$8.18 [1]. Core Insights - The company has demonstrated strong performance in the first half of 2025, with earnings per share exceeding expectations by 3.7%. Revenue growth was particularly robust in the cloud computing segment, which saw a year-on-year increase of 67.9%, surpassing expectations by 8.2% [5]. - The forecast for net profit for 2025-2027 has been revised upwards to HK$14.03 billion (+16.0%), HK$16.28 billion (+19.2%), and HK$20.36 billion, respectively. The current target price corresponds to a price-to-book ratio of 2.0 times and a price-to-earnings ratio of 13.9 times for 2025 [5][6]. - The company has secured several significant projects in the cloud computing space and maintains strong relationships with domestic chip design companies, positioning it well for future growth [5]. Financial Performance Summary - For the fiscal year ending December 31, 2023, VSTECS reported total revenue of HK$73.891 billion and a net profit of HK$922 million, with an earnings per share (EPS) of HK$0.656 [4]. - The projected revenue for 2025 is HK$103.922 billion, with a net profit forecast of HK$1.403 billion and an EPS of HK$1.009, reflecting a growth of 33.3% in EPS compared to 2024 [4][7]. - The company’s cloud computing revenue for the first half of 2025 was HK$2.620 billion, marking a significant increase of 67.9% year-on-year [6]. Segment Performance - The cloud computing segment is expected to grow significantly, with projected revenues of HK$5.477 billion in 2025, representing a year-on-year growth of 39.2% [9]. - The Southeast Asia expansion has also been fruitful, with revenues reaching HK$16.735 billion, a year-on-year increase of 22.5%, driven by strong growth in markets like Thailand and the Philippines [5][6]. Valuation Metrics - The report indicates that VSTECS is currently trading at a price-to-earnings ratio of 15.2 for 2024 and is expected to decrease to 11.4 by 2025, suggesting an attractive valuation relative to its growth prospects [10]. - The company’s return on equity (ROE) is projected to improve from 11.6% in 2023 to 17.7% by 2027, indicating enhanced profitability [14].

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]