Core Viewpoint - The company reported a decline in revenue for the first half of 2025, primarily due to the impact of cost reductions in the ICT support business from telecom operators, while focusing on high-growth areas such as AI and 5G applications [3][4]. Revenue Performance - The company's total revenue for H1 2025 was 2.598 billion RMB, a year-on-year decrease of 13.2% [3]. - The ICT support business generated 2.118 billion RMB, down 14.7% year-on-year, accounting for 81.5% of total revenue [4]. - The gross profit for H1 2025 was 783 million RMB, with a gross margin of 30.1%, reflecting a 5.4 percentage point increase year-on-year [3]. Business Segmentation - The company has restructured its revenue reporting to focus on three high-growth business lines: smart operations, 5G private networks and applications, and AI model applications and delivery [3]. - The ICT support business is under pressure due to traditional telecom operator cost-cutting, but the company is leveraging AI and cost control measures to mitigate these challenges [4]. 5G Private Network and Smart Operations - Revenue from the 5G private network and applications was 47 million RMB in H1 2025, a decline of 26.3% year-on-year, but the order volume increased by 51.7% [5]. - The smart operations segment saw revenue of 408 million RMB, down 8.8% year-on-year, but non-telecom orders grew significantly, with financial, automotive, and consumer sectors seeing increases of 48.3%, 5.3%, and 4.4% respectively [5]. AI Model Applications - Revenue from AI model applications and delivery reached 26 million RMB in H1 2025, a staggering increase of 76 times year-on-year, with signed order amounts reaching 70 million RMB [7]. - The company is a partner in Alibaba Cloud's AI model initiative and has established nearly 100 projects in collaboration with them [7]. - The company aims for AI model application and delivery orders to reach 200-300 million RMB by 2025, with potential growth to 1 billion RMB by 2027 [7].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a favorable outlook for investment over the next 6-12 months [3][11]. Core Insights - The company's revenue for the first half of 2025 was 2.598 billion RMB, a year-on-year decline of 13.2%, primarily due to pressure on ICT support business from reduced costs by telecom operators [1]. - The gross profit for the same period was 783 million RMB, reflecting a 6.1% increase year-on-year, with a gross margin of 30.1%, up by 5.4 percentage points [1]. - The net loss for the first half of 2025 was 202 million RMB, influenced by one-time severance payments due to personnel restructuring, but adjusted net loss was 48 million RMB, a reduction from 70 million RMB in the previous year [1]. Summary by Sections Revenue Breakdown - The ICT support business generated 2.118 billion RMB in H1 2025, down 14.7% year-on-year, accounting for 81.5% of total revenue [1]. - The 5G private network and application revenue was 47 million RMB, a decline of 26.3%, but orders increased by 51.7% year-on-year [1]. - The smart operation revenue was 408 million RMB, down 8.8%, with non-telecom orders growing significantly [1]. AI Model Applications - Revenue from AI model applications and delivery reached 26 million RMB, a staggering increase of 76 times year-on-year, with signed orders amounting to 70 million RMB, up 78 times [1]. - The company has established a strategic partnership with Alibaba Cloud and is involved in nearly 100 projects, enhancing its delivery efficiency through a dedicated AI engineering team [1]. Profit Forecast and Valuation - The profit forecast for 2025-2027 has been adjusted downwards due to the impact of cost reductions in the telecom sector, with expected net profits of 455 million RMB, 691 million RMB, and 759 million RMB respectively [2][8]. - The company anticipates a recovery in revenue growth driven by AI model applications and smart operations, maintaining a target of 200-300 million RMB in orders for AI applications by 2025 [1].