Core Viewpoint - The company Shijia Photon (688313.SH) is advancing its acquisition of Dongguan Fokexima Communication Technology Co., Ltd. to enhance control and integration efficiency in the optical communication industry [3][6]. Group 1: Acquisition Details - Shijia Photon plans to acquire controlling interest in Fokexima through a combination of issuing shares and cash payments, while also raising matching funds [4]. - The company previously acquired 53% of Fokexima for a total price of 326 million yuan, valuing the entire company at 615 million yuan [5]. - This acquisition aims to secure the supply chain for core optical communication components, as Fokexima holds a 60% market share in MT connectors, which are critical for high-density fiber optic connectors [5]. Group 2: Financial Performance - Shijia Photon has shown significant improvement in profitability, with a net profit growth of 1003.78% in Q1 2025, surpassing the total net profit for the entire year of 2024 [8]. - The company's revenue for Q1 2025 increased by 120.57% to 436 million yuan, continuing a trend of high growth over the past five quarters [8]. - The company’s revenue and net profit figures for previous years indicate a recovery from a downturn in 2023, with 2024 showing a 42.40% revenue increase and a net profit of 65 million yuan, a 236.57% year-on-year growth [7][8].

Core Viewpoint - The company Shijia Photon plans to acquire controlling interest in Dongguan Fokexima Communication Technology Co., Ltd. through a combination of issuing shares and cash payment, while also raising supporting funds [4][6]. Group 1: Acquisition Details - Shijia Photon announced the acquisition plan on June 27, 2025, and its stock will be suspended from trading starting June 30, 2025, for a period not exceeding 10 trading days [2][5]. - The valuation of Fokexima has not been finalized, and it is uncertain whether the transaction will constitute a major asset restructuring [6]. - The acquisition is expected to be a related party transaction but will not lead to a change in the actual controller of the company [6]. Group 2: Financial Performance - Fokexima achieved a net profit of 18.22 million yuan in 2023, with total assets amounting to 217 million yuan as of October 31, 2024 [8]. - Shijia Photon reported a revenue of 436 million yuan and a net profit of 93 million yuan in the first quarter of 2025, continuing the growth trend observed since the third quarter of 2024 [9][10]. - The company’s total revenue for 2023 was 1.075 billion yuan, with a year-on-year increase of 120.57% [10]. Group 3: Market Position and Strategy - Shijia Photon is a leading manufacturer in the optical communication industry, focusing on optical chips and devices, indoor optical cables, and cable materials [9][11]. - The company has established itself as a major supplier of AWG chips, with significant shipments for 400G and 800G optical modules in 2024 [11]. - Continuous investment in R&D for optical chips and devices is expected to enhance the company's competitive position in the rapidly evolving optical communication market [11].

Group 1: Macro Insights - The first round of China-US trade talks has made substantial progress, exceeding market expectations, which will inject more certainty and stability into the global economy, further highlighting the irreplaceability of Chinese manufacturing and enhancing the investment value of Chinese assets [3] - The latest comprehensive tariff rate imposed by the US on China has decreased to 42.5%, which is expected to reduce China's exports by 4.0-5.2 percentage points and GDP by 0.5-0.7 percentage points, indicating significant downward pressure on China's economy [3] - The report emphasizes the importance of monitoring three key areas regarding China-US negotiations: potential fluctuations in tariffs, the main topics of negotiation, and the progress of negotiations between the US and other countries that may involve China [3] Group 2: Convertible Bonds - The report indicates that balanced convertible bonds have a high risk premium and are suitable for long-term allocation, while timing strategies have not significantly improved performance [4] - Conversely, equity-linked convertible bonds have a low risk premium but high timing value, with strategies based on valuation improving risk-adjusted returns [4] Group 3: Communication Industry - The company focuses on the optical communication industry, with its main business covering optical chips and devices, benefiting from the rapid development of AI and increasing demand from data centers [5] - The projected net profits for the company are estimated at 382 million, 539 million, and 713 million yuan for 2025, 2026, and 2027, respectively, with corresponding PE ratios of 35, 25, and 19 [5] Group 4: Electronics Industry - The company is a leader in video codec technology and is expanding into new fields such as automotive electronics and edge AI, with a comprehensive product plan for AI SoC series [6] - Expected revenues for the company are projected to be 2.49 billion, 3.07 billion, and 3.63 billion yuan for 2025, 2026, and 2027, with net profits of 140 million, 230 million, and 310 million yuan, respectively [6] Group 5: Automotive Industry - The company reported a revenue of 3.6 billion yuan in 2024, a decrease of 8% year-on-year, while Q1 2025 revenue increased by 12% year-on-year, driven by growth in domestic new energy vehicle sales [8] - The company has maintained a competitive edge through continuous investment in technology and R&D, enhancing its production capabilities and expanding its product offerings [9][10]