Summary of Transsion (688036.SS) Conference Call Company Overview - **Company**: Transsion Holdings - **Ticker**: 688036.SS - **Market Cap**: Rmb76.2 billion / $10.9 billion - **Current Price**: Rmb66.20 - **12-Month Price Target**: Rmb91.00, indicating an upside of 37.5% [7] Industry Insights - **Industry**: Smartphone Manufacturing - **Trends**: The smartphone market is experiencing challenges due to rising memory costs and increased competition, particularly in the budget segment [1][2] Key Points from Management 1. **AI Smartphone Expansion**: Management is optimistic about the growth of AI smartphones, particularly in budget models. The Infinix Hot 60i, priced at $115, features advanced AI functions such as DeepSeek R1 and Folax AI, which includes capabilities like auto-answering calls and real-time translation [1][2] 2. **Product Mix Upgrade**: To counteract rising memory costs, Transsion plans to upgrade its product mix and pass some costs onto consumers. The company is also looking to leverage local memory suppliers to maintain revenue growth [2] 3. **Smartphone Shipment Growth**: Recent shipment growth has slowed, with a CAGR of +35% from 2015-2021, followed by +9% from 2021-2024. The company aims to remain among the global top five smartphone manufacturers by 2025 [1] 4. **Pricing Strategy**: Management anticipates raising smartphone prices due to increased memory costs, while also expecting less aggressive pricing competition among brands due to slim margins across the industry [2] 5. **Outlook for 2026**: Despite challenges in the first half of 2026, management is positive about a better performance in the second half of the year [2] Financial Projections - **Revenue Forecast**: Expected revenue growth from Rmb68.7 billion in 2024 to Rmb99.8 billion by 2027 [7] - **Earnings Per Share (EPS)**: Projected EPS to increase from Rmb5.48 in 2024 to Rmb7.60 in 2027 [7] - **Valuation**: The target P/E multiple is set at 15.0x, aligning with industry peers, reflecting the competitive nature of the smartphone market [3] Risks - **Market Risks**: Potential risks include faster or slower-than-expected smartphone shipment growth and changes in average selling prices (ASP) [3] Conclusion - **Investment Rating**: Neutral, with a target price of Rmb91.00 based on a 2026E P/E multiple of 15.0x, indicating a fair valuation amidst market challenges [3][7]

Core Insights - Lenovo Group reported record financial results for Q2 FY 2025/26, with total revenue reaching US$20.5 billion, a 15% increase year-on-year, and adjusted net income growing 25% to US$512 million [1][6][15] - The company achieved double-digit revenue growth across all business groups and geographies, with AI-related revenue accounting for 30% of total revenue, up 13 percentage points year-on-year [2][3] Financial Performance - Group revenue for Q2 FY 2025/26 was US$20,452 million, compared to US$17,850 million in Q2 FY 2024/25, reflecting a 15% increase [6][15] - Adjusted net income rose to US$512 million from US$409 million, marking a 25% increase year-on-year [6][17] - Basic earnings per share decreased to 2.77 US cents from 2.92 US cents, a decline of 5% [6][17] Business Strategy and Growth - Lenovo's strategy focuses on hybrid AI, with significant advancements in Personal AI and Enterprise AI, aiming to personalize AI for individuals and enterprises [3][5] - The Intelligent Devices Group (IDG) reported nearly 12% revenue growth to US$15.1 billion, with a 25.6% market share in PCs, reinforcing its market leadership [11] - AI PC shipments accounted for 33% of total shipments, with Lenovo leading the Windows AI PC segment at 31.1% market share [11] AI and Innovation - The AI-related revenue mix increased significantly, driven by high-double-digit growth in AI Servers and triple-digit growth in AI PCs, smartphones, and services [2][3] - Lenovo's Personal AI strategy aims to enhance consumer demand for hyper-personalization, launching a Personal AI super agent in January 2026 [8] - The Enterprise AI strategy is designed to transform data into actionable insights, with a focus on on-premises and edge inferencing [9] Corporate Developments - Lenovo's Board declared an interim dividend of 8.50 HK cents per share, reflecting the company's commitment to delivering sustainable returns to shareholders [4] - The company has been recognized for its supply chain excellence, ranking 8th in the Gartner Supply Chain Top 25 for 2025 [21] - Lenovo's factory in Monterrey, Mexico, was added to the World Economic Forum's Global Lighthouse Network, highlighting its manufacturing capabilities [16]

Summary of ZTE (0763.HK) Conference Call Company Overview - **Company**: ZTE Corporation (0763.HK) - **Industry**: Telecommunications and AI technology Key Financial Projections - **2Q25E Revenues**: Expected to grow by 12% YoY and 8% QoQ to Rmb35.6 billion [1] - **Gross Margin**: Anticipated to improve to 37.8% in 2Q25E from 34.3% in 1Q25 [1] - **Net Income**: Projected to increase by 12% QoQ to Rmb2.7 billion in 2Q25E [1] - **Revenue Contribution from Non-Telecom Business**: Non-telecom segments (computing network, automotive electronics, digital power, smart devices) accounted for 35% of total revenues in 1Q25 [1] AI Innovations and Product Offerings - **AI Product Range**: ZTE is expanding its portfolio with AI servers, storage, software solutions, smartphones, home networks, smart displays, and robots [2] - **NebulaCoder-V6 Model**: Ranked first in the "Chinese LLM Evaluation May 2025 report" by SuperCLUE, showcasing ZTE's capabilities in scientific reasoning, mathematical reasoning, and code generation [2] - **DeepSeek All-in-One Machine**: Launched AiCube, compatible with multiple mainstream GPUs, enhancing enterprise clients' AI deployment [2] Earnings Revisions - **Net Income Revisions**: 2025-27E net income revised down by 4%, 4%, and 2% respectively due to lower gross margins [2] - **Revenue Revisions**: 2025-27E revenues cut by 1% reflecting a slowing capex cycle in telecom networks [2] - **Operating Expense Ratio**: Revised down to 29% and 27% for 2026-27E, maintaining 2025E unchanged [2] Valuation and Price Target - **Target Price for H-share**: Updated to HK$29.3 (previously HK$33.0) based on a target P/E of 12.0x for 2026E [8] - **Target Price for A-share**: Adjusted to Rmb45.4 (previously Rmb51.1) based on a target P/E of 20.3x for 2026E [8] - **Market Capitalization**: HK$103.8 billion / $13.2 billion [14] Risks and Considerations - **Market Risks**: Demand fluctuations in telecom infrastructure and 5G BTS building in China could impact estimates [13] - **Non-Operating Gains/Losses**: Historical non-operating items have varied significantly, which could lead to upside or downside risks [13] Conclusion - **Investment Rating**: Maintained Neutral for both ZTE-A and ZTE-H due to the slowing capex cycle in the telecom sector [1][8]