Investment Rating - The investment rating for the company is "Recommended" (maintained) with a target price of 141 CNY per share [1]. Core Views - The company has seen a significant improvement in gross margin in Q2, with high-end flagship chips gradually entering the application stage. The overall gross margin reached 46.70%, an increase of 9.24 percentage points year-on-year [6][7]. - The company reported a revenue of 5.08 billion CNY in the first half of 2025, a decrease of 4.56% year-on-year, and a net profit attributable to shareholders of -0.24 billion CNY, indicating a reduction in losses [3][6]. - The company is focusing on high-end product lines, with products covering a range of switching capacities from 100Gbps to 25.6Tbps, and is well-positioned to benefit from the growing demand in the AI and data center markets [6][7]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 2.85 billion CNY, a year-on-year increase of 2.53% and a quarter-on-quarter increase of 27.78%. The net profit for the quarter was -0.08 billion CNY, showing an improvement of 83.29% year-on-year [6]. - The company’s gross margin and net margin for Q2 were 48.77% and -2.98%, respectively, reflecting a year-on-year increase of 11.74 percentage points and 15.31 percentage points [6]. Revenue and Profit Forecast - Revenue projections for 2025-2027 are adjusted to 12.75 billion CNY, 17.14 billion CNY, and 21.98 billion CNY, respectively, with corresponding price-to-sales (P/S) ratios of 45.3X, 33.7X, and 26.3X [7]. - The company is expected to achieve profitability by 2026, with a projected net profit of 60 million CNY and 125 million CNY in 2027 [8][9]. Market Position and Strategy - The company is recognized as a rare Ethernet switch chip design enterprise in China, with a rich product lineup targeting the mid-to-high-end market. The demand for high-speed network communication devices is expected to rise due to the explosion of the AI industry [6][7]. - The company is benefiting from the trend towards domestic production and has established a first-mover advantage in the market, which is expected to enhance its market share in the future [7].

Investment Rating - The investment rating for the company is "Recommended" (maintained) with a current stock price of 63.66 yuan [1]. Core Views - The company has increased its R&D investment significantly, leading to a small batch delivery of high-end flagship chips. Despite this, the profit margins are under pressure due to the high R&D costs [7][8]. - In 2024, the company achieved a revenue of 1.082 billion yuan, a year-on-year growth of 4.28%, but reported a net loss attributable to shareholders of 68.26 million yuan, a decrease of 249.52% year-on-year [4][7]. - The company is positioned as a rare domestic Ethernet switch chip design enterprise, with a rich product lineup targeting the mid-to-high-end market. The demand for high-performance switching chips in emerging fields like cloud computing and data centers is expected to drive future growth [8]. Summary by Sections Financial Performance - In 2024, the company reported a revenue of 1.082 billion yuan, with a year-on-year growth of 4.28%. The net profit attributable to shareholders was -68.26 million yuan, a decrease of 249.52% year-on-year [4][7]. - For Q1 2025, the company achieved a revenue of 223 million yuan, a year-on-year decrease of 12.30%, with a net loss of 15.20 million yuan, a decrease of 150.42% year-on-year [4][7]. Revenue and Profitability - The overall gross margin for 2024 was 40.11%, an increase of 3.85 percentage points year-on-year, while the net margin was -6.31%, a decrease of 4.43 percentage points year-on-year [7]. - The company’s R&D expenses reached 428 million yuan in 2024, a growth of 36.40%, reflecting its commitment to high-end chip development [7][8]. Product Development - The company has successfully delivered high-end flagship chips in small batches, with a focus on Ethernet switch chips, which generated 835 million yuan in revenue, a year-on-year increase of 5.54% [8]. - The product range includes high-end chips with port speeds reaching 800G and switching capacities of 12.8Tbps and 25.6Tbps, which are competitive with international products [8]. Market Outlook - The company is expected to benefit from the growing demand for high-speed network communication equipment driven by the AI industry and the need for domestic supply chain independence [8]. - Revenue projections for 2025-2027 are estimated at 1.321 billion yuan, 1.781 billion yuan, and 2.285 billion yuan, respectively, indicating a strong growth trajectory [8].