Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The emergence of high-performance open-source large models has significantly lowered the barriers and costs for AI application innovation, driving the development of intelligent computing applications across various sectors such as finance, government, education, healthcare, and industry [7][14] - The report emphasizes the differentiated network connection requirements arising from the rapid growth of intelligent computing applications, highlighting the need for high bandwidth, low latency, and high reliability to support AI model training and inference [7][15] - The report proposes five key features for high-quality computing dedicated lines tailored for intelligent computing applications: intelligent perception, business certainty experience, elastic network on demand, intelligent operation and maintenance, and optical computing collaboration [7][15] Summary by Sections Overview - The proliferation of open-source large models since 2023 has disrupted the previous monopoly in the field, enabling rapid innovation in intelligent computing applications across various industries [14] - The report identifies the need for networks to perceive business types and provide differentiated connection capabilities to ensure optimal service experiences [14] Differentiated Dedicated Line Service Requirements for Intelligent Computing Applications Financial Intelligent Computing Applications - Financial institutions are leveraging AI for customer service, risk management, and operational efficiency, requiring high bandwidth and low latency for various applications [17][22] - Specific network requirements include: - AI service assistants: 5 Mbps bandwidth, latency < 5 ms, availability ≥ 99.99% [27] - Digital lobby managers: 200 Mbps bandwidth, latency < 2.5 ms, availability ≥ 99.99% [27] - AI financial compliance checks: 150 Mbps bandwidth, latency < 5 ms, availability ≥ 99.99% [27] - AI fraud detection systems: 5 Mbps bandwidth, latency < 5 ms, availability ≥ 99.99% [27] Government Intelligent Computing Applications - The report discusses the transition from basic digitalization to comprehensive intelligent governance, emphasizing the need for flexible network services to handle varying demands [29][33] - Network requirements include: - Intelligent government customer service: < 5 Mbps bandwidth, latency < 500 ms, availability ≥ 99.99% [38] - Intelligent traffic management: < 200 Mbps bandwidth, latency < 20 ms, availability ≥ 99.99% [38] - Intelligent environmental monitoring: 200 Kbps to 20 Mbps bandwidth, latency < 500 ms, availability ≥ 99.99% [38] Educational Intelligent Computing Applications - The report highlights the transformation in education through intelligent computing, with applications in personalized learning and automated assessment [39][43] - Network requirements include: - Smart classrooms: 100-500 Mbps bandwidth, latency < 25 ms, availability ≥ 99.99% [45] - Intelligent monitoring systems: ~4 Gbps bandwidth, latency < 5 ms, availability ≥ 99.99% [45] Healthcare Intelligent Computing Applications - The healthcare sector is increasingly adopting intelligent computing to enhance diagnostic accuracy and operational efficiency [46][49] - Network requirements include: - AI-assisted imaging: 10 Gbps bandwidth, latency < 10 ms, availability ≥ 99.9% [52] - AI-assisted diagnosis: 500 Mbps to 1 Gbps bandwidth, latency < 5 ms, availability ≥ 99.9% [52] Public Security Intelligent Computing Applications - AI is being integrated into public security to enhance risk identification and response capabilities [54][58] - Network requirements include: - AI video monitoring: 200 Mbps bandwidth, latency < 5 ms, availability ≥ 99.99% [60] - AI policing services: 20 Mbps bandwidth, latency < 50 ms, availability ≥ 99.99% [60] Entertainment Intelligent Computing Applications - The report discusses the digital transformation of the entertainment industry, particularly in cloud gaming and media production [66][67] - Network requirements include: - Cloud gaming: 120 Mbps bandwidth per user, latency < 1 ms [66] - 3D scene reconstruction: 1 Gbps bandwidth, latency < 1 ms [67]

Investment Rating - The report maintains a "Buy" rating for the company, expecting significant price appreciation in the next 6-12 months [4][12]. Core Insights - The company reported a revenue of 10.91 billion yuan for the first half of 2025, representing a year-on-year growth of 17.0%, with gross profit also increasing by 17.1%. However, the net profit attributable to the parent company was a loss of 360 million yuan, although this loss narrowed by 24.6% year-on-year [2]. - The company's education products and services revenue reached 3.53 billion yuan in the first half of 2025, growing by 23.5% year-on-year, with the AI learning machine business experiencing significant growth [3]. - The company plans to raise up to 4 billion yuan through a private placement, with 800 million yuan allocated for AI education models and products, particularly in AI smart classrooms and AI learning machines [3]. Summary by Sections Performance Review - In Q2 2025, the company achieved a revenue of 6.25 billion yuan, a 10.1% increase year-on-year, but the net profit attributable to the parent company was a loss of 140 million yuan, which is a significant increase in loss by 220.4% year-on-year [2]. Revenue Analysis - The company’s revenue from education products and services was 3.53 billion yuan in H1 2025, with a notable growth of 23.5%. The AI learning machine segment continues to see exponential growth, expanding into international markets such as Japan and Singapore [3]. - Recovery was noted in the information engineering and digital government sectors, while growth in open platforms, smart hardware, and smart automotive sectors slowed down [3]. Profit Forecast and Valuation - Revenue projections for 2025-2027 are estimated at 27.29 billion yuan, 30.89 billion yuan, and 34.57 billion yuan, with year-on-year growth rates of 16.9%, 13.2%, and 11.9% respectively. The net profit attributable to the parent company is expected to be 830 million yuan, 1.15 billion yuan, and 1.30 billion yuan for the same period, reflecting growth rates of 48.6%, 38.5%, and 12.9% respectively [4].

Fundraising Plan - The company plans to raise a total of up to 400,000.00 million yuan through a targeted stock issuance, with the funds allocated to specific projects totaling 432,571.00 million yuan [1] - The funds will be used for the development of the Spark Education Large Model and typical product projects, with an investment total of 112,571.00 million yuan and a planned use of 80,000.00 million yuan from the raised funds [1][2] Project Overview - The Spark Education Large Model project aims to integrate high-quality data resources and expertise in the education sector to enhance the model in line with new educational standards and requirements [1][2] - The project will focus on continuous upgrades and iterations to improve the model's adaptability and effectiveness in educational applications [2][3] Market and Policy Environment - The Chinese government emphasizes the importance of artificial intelligence in education, promoting digital transformation in the education sector through various strategic plans [2][3][9] - Multiple provinces have initiated action plans to integrate AI into education, indicating a strong policy support for the project [3][9] Competitive Advantage - The company has established a leading position in the smart education sector over 21 years, with its products widely adopted in over 50,000 schools [6][10] - The AI Learning Machine has received high user satisfaction ratings and has been recognized as a top product in the high-end learning machine market [7][10] Technological Foundation - The company has a strong R&D team and has achieved significant breakthroughs in AI technologies, maintaining a leading position in various international assessments [11][12] - The Spark Large Model is built on a fully autonomous and controllable foundation, ensuring the safety and ethical standards required for educational applications [13][14] Financial Implications - The fundraising will enhance the company's financial structure, increase total assets and net assets, and reduce financial risk [23] - The funds will support ongoing high R&D investments and accommodate the growing operational scale of the company [22][23]

Core Viewpoint - iFLYTEK plans to issue A-shares to specific investors in 2025, aiming to strengthen its position in the rapidly evolving artificial intelligence sector and secure funding for ongoing technological advancements [1][10][19]. Summary by Sections Issuance Overview - The issuance plan was approved by the board on August 20, 2025, and requires shareholder approval and regulatory consent before implementation [1][2]. - The maximum number of shares to be issued is 100 million, representing 4.33% of the total share capital prior to the issuance [3][23]. Target Investors - The issuance will target up to 35 specific investors, including Yanzhi Technology, which is controlled by the company's actual controller, Liu Qingfeng, with a planned subscription amount between 250 million and 350 million RMB [1][19]. - Other investors may include securities investment funds, securities companies, trust companies, and qualified foreign institutional investors [2][21]. Pricing and Issuance Method - The shares will be issued through a competitive bidding process, with the issuance price set at no less than 80% of the average trading price over the previous 20 trading days [2][20]. - If the competitive bidding does not yield a price, Yanzhi Technology will still participate at the minimum price [3][23]. Fundraising Purpose - The total amount to be raised is capped at 4 billion RMB, with funds allocated to various projects totaling 4.32571 billion RMB [5][24]. - The funds will be used for advancing AI technology and enhancing the company's competitive edge in the education sector [17][24]. Regulatory Compliance - The issuance complies with relevant laws and regulations, ensuring that it does not alter the company's control or violate listing conditions [5][6]. - The decision on the issuance's validity will remain effective from the date of shareholder approval [6]. Market Context - The global AI market is projected to see significant investment growth, with China emerging as a key player in AI development, reflecting a broader trend of increasing capital allocation to AI technologies [10][12][11]. - The company aims to leverage its first-mover advantage in domestic AI technology to capture strategic opportunities in the evolving market landscape [17][18].