Core Viewpoint - The company, Hong Teng Precision (6088.HK), reported its Q1 2025 earnings, showing a revenue increase but a decline in net profit, leading to a downward revision of revenue growth guidance for smartphone and system terminal products for the full year 2025 [3][4]. Financial Performance - Q1 2025 revenue reached $1.103 billion, a year-on-year increase of 14%, while net profit was $6.24 million, down 38% year-on-year, with a net profit margin of 0.56%, a decrease of 0.49 percentage points [4]. - Revenue from smartphones, network infrastructure, computers and consumer electronics, electric vehicles, and system terminal products for Q1 2025 were $189 million, $166 million, $203 million, $220 million, and $285 million respectively, with year-on-year changes of -6%, +46%, +13%, +89%, and -4% [4]. - The full-year 2025 revenue guidance for smartphones was revised down by over 15%, while the guidance for system terminal products remained flat [4]. Business Segments - The company focuses on three key areas: 5G AIoT, electric vehicles (EV), and audio, with expected revenue contributions of 33% in 2024 and a target of 40% by 2025 [5]. - The network infrastructure segment experienced rapid growth driven by increased demand for AI servers and platform upgrades, with expectations of double-digit growth (>15%) in Q2 2025 [6]. - The automotive business is expanding overseas and collaborating regionally to mitigate tariff impacts, with anticipated double-digit growth (>15%) in Q2 2025 [7]. - The acoustic business showed better-than-expected production yield, with a new production line in India expected to be operational by 2025 [8]. Consumer Electronics - In Q1 2025, smartphone revenue accounted for 17% of total revenue, with a decline in average selling price (ASP) attributed to a higher proportion of low-end models [9]. - The computer and consumer electronics segment represented 18% of total revenue, with expectations of a significant decline (>15%) in smartphone revenue and a slight increase (5%-15%) in computer and consumer electronics revenue in Q2 2025 [9].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a favorable outlook for investment over the next 6-12 months [4]. Core Insights - The company's revenue for Q1 2025 reached $1.103 billion, representing a year-on-year growth of 14%, while net profit decreased by 38% to $6.24 million, primarily due to adverse currency fluctuations [1]. - The company has adjusted its revenue growth guidance for smartphone and system terminal products for the full year 2025, expecting a decline of over 15% in smartphone revenue compared to previous forecasts [1]. - The network and automotive segments showed significant revenue growth, with automotive revenue expected to maintain double-digit growth in Q2 2025 [2]. Summary by Sections Financial Performance - Q1 2025 revenue was $1.103 billion, up 14% year-on-year, while net profit was $6.24 million, down 38% [1]. - The net profit margin was 0.56%, a decrease of 0.49 percentage points year-on-year [1]. - Revenue from smartphones, network infrastructure, computers and consumer electronics, and electric vehicles showed varied growth rates, with smartphone revenue declining by 6% [1]. Business Segments - The network infrastructure segment experienced rapid growth driven by increased demand for AI servers and platform upgrades, with expectations of over 15% growth in Q2 2025 [2]. - The automotive business is focusing on localization to mitigate tariff impacts, with revenue also expected to grow by over 15% in Q2 2025 [2]. - The acoustic segment is seeing improved production yields, and a new production line in India is expected to be operational within 2025 [3]. Profitability Forecast - The net profit forecasts for 2025-2027 have been revised downwards to $224 million, $292 million, and $341 million, respectively, reflecting a decrease of 8%, 10%, and 13% from previous estimates [4]. - The company is projected to benefit from the growing demand for AI data centers, maintaining a "Buy" rating despite the adjustments in profit forecasts [4]. Valuation Metrics - The projected P/E ratios for 2025, 2026, and 2027 are 9x, 7x, and 6x, respectively, based on the stock price of HKD 2.05 as of May 9 [4].