Investment Rating - The investment rating for the company is "Accumulate" [6] Core Views - The company reported a revenue of 722 million yuan in the first half of 2025, a year-on-year decrease of 12.39%, and a net profit attributable to shareholders of 21.88 million yuan, down 71.32% year-on-year [1] - In Q2, the company achieved a revenue of 432 million yuan, a year-on-year increase of 3.59% and a quarter-on-quarter increase of 49.03%, with a net profit of 11.17 million yuan, down 73.49% year-on-year [2] - The overall gross margin for the first half of the year was 13.47%, a decrease of 4.16 percentage points year-on-year, while Q2 gross margin was 13.85%, showing a quarter-on-quarter improvement but a year-on-year decline of 4.89 percentage points [3] - The data center switch business saw significant growth, with sales revenue increasing by approximately 119% year-on-year in the first half of 2025, driven by AIGC [4] - The company is expanding its product layout to capture opportunities in AI, forming a multi-dimensional business system that includes CT communication, IT computing, high-end PCBA manufacturing, and automotive electronics [5] Financial Data and Valuation - The company’s projected net profits for 2025 and 2026 are adjusted to 70 million yuan and 120 million yuan, respectively, with a forecast of 180 million yuan for 2027 [5] - The corresponding PE ratios for 2025 to 2027 are projected to be 107, 64, and 43 times [5] - The company’s revenue is expected to decline by 11.80% in 2023, 19.09% in 2024, and 5.50% in 2025, before increasing by 36.25% in 2026 and 34.15% in 2027 [11]

Financial Performance - In 2024, the company's operating revenue was approximately 1.679 billion CNY, with a net profit attributable to shareholders of about 117 million CNY [3] - As of the end of 2024, total assets were around 2.316 billion CNY, and net assets increased by 17.19% year-on-year [3] - In Q1 2025, the operating revenue was approximately 290 million CNY, with a net profit of about 10.72 million CNY [3] Product Sales and Market Dynamics - Ethernet switch products accounted for approximately 77.06% of total revenue, with sales volume increasing by 42.72% for major S customers [5] - Sales of data center switches with 10G and above increased by approximately 48.56% year-on-year [7] - The company has launched new generation products in the park switch category and has achieved mass production of 12.8T data center switches and Wi-Fi 7 related wireless devices [3] Customer Structure - The top two customers, including Xinhua San and S customers, accounted for approximately 89.91% of total revenue in 2024 [6] - The company aims to expand its customer base by enhancing R&D capabilities and exploring new markets [6] Strategic Initiatives - The company is implementing a dual-driven product strategy focusing on network equipment and IT computing products [8][13] - It is actively pursuing domestic and international market opportunities while enhancing its R&D and production capabilities [6][12] Future Outlook - The demand for computing power is expected to diversify, driven by developments in digital economy and artificial intelligence [13] - The company plans to continue its strategic expansion into high-end data center switches, servers, and DPU acceleration cards [13] Investment and Project Updates - The company has decided to postpone the completion of the Haining fundraising project to March 31, 2027, due to external environmental factors [12] - Despite the delay, the company remains committed to investing in high-performance computing data products, which are experiencing rapid growth [12]