Core Viewpoint - Q-Tech's 1H25 net profit growth of 168% YoY aligns with profit alert, driven by stronger CCM ASP (+27% YoY), improved non-mobile sales mix, and Newmax's earnings turnaround [1][2]. Group 1: Financial Performance - Q-Tech's 1H25 revenue increased by 15% YoY, exceeding market expectations by 5% and 8%, attributed to a better non-mobile sales mix and high-end mobile products [2]. - Gross profit margin (GPM) improved by 2.2 percentage points YoY to 7.4%, supported by high-end mobile CCM mix and recovery in FPM ASP/GPM [2]. - The company raised FY25E shipment guidance for non-mobile CCM growth to +60% YoY (previously +40%) and FPM growth to +30% YoY (previously +20%) [1][2]. Group 2: Market Outlook - Q-Tech is optimistic about non-mobile product launches, including drones and handheld devices, as well as auto shipment ramp-up and FPM share gains [1]. - Management maintains a positive outlook on OIS/periscope upgrades, new project wins in auto CCM, and advancements in IoT CCM [2]. - The company expects a 32MP+ CCM mix of 55%+ and periscope CCM growth of 100%+ YoY in FY25E [2]. Group 3: Valuation and Recommendations - The revised FY25-27E EPS forecasts are 29-30% above consensus, indicating strong earnings upgrade potential [3]. - Current valuation at 17.7x/14.8x FY25/26E P/E is considered attractive, especially in light of projected EPS growth of 187%/19% for FY25/26E [3]. - The recommendation to maintain a BUY rating reflects confidence in Q-Tech's market leadership and sales momentum, particularly in the non-mobile segment [3].

Core Viewpoint - Q-Tech reported strong 1H25 results, benefiting from a robust upgrade trend in Android smartphone specifications and gaining market share in the FPM segment through a partnership with Goodix, leading to a record high GPM and significant net profit growth [1][2]. Financial Performance - Revenue for 1H25 reached RMB8.8 billion, marking a 15% year-over-year increase and a 4% quarter-over-quarter rise, driven by a 60% YoY increase in FPM shipments and a 31% YoY increase in average selling price (ASP) [2]. - Gross profit margin (GPM) improved to 7.4%, a 0.5 percentage point increase quarter-over-quarter, attributed to a better product mix and utilization [2]. - Operating profit surged 1,269% YoY to RMB280 million, primarily due to effective R&D cost control [2]. - Net income rose 168% YoY to RMB308 million, aligning with the profit alert [2]. Product and Market Dynamics - In 1H25, 32MP+ CCM accounted for 53% of shipments, with a notable increase in OIS and periscope shipments, the latter soaring 590% YoY [3]. - The average ASP of CCM increased by 27% YoY and 16% HoH to RMB41.5, exceeding estimates [3]. - Q-Tech revised its full-year shipment guidance for FPM from +20% YoY to +30% YoY, indicating strong demand for its ultrasonic FPM [3]. - The company raised its full-year non-smartphone CCM shipment guidance from at least 40% YoY to 60% YoY, driven by strategic gains in automotive, drones, XR, and LiDAR sectors [3]. Strategic Developments - Q-Tech became the largest shareholder in poLight, a Norwegian company, which is expected to enhance its XR capabilities with valuable technologies for next-generation XR products [4]. - The company established partnerships with seven leading tier-one automotive suppliers and obtained certifications from 37 global automotive OEMs in 1H25 [3]. Valuation and Target Price - The target price for Q-Tech has been raised from HK$11.6 to HK$16.4, based on a 22x 2026E EPS valuation [1][5].

Core Viewpoint - The report from CICC indicates that Hillstone Technology (01478) has exceeded expectations in non-mobile CCM and FPM sales and profitability, leading to an upward revision of the company's profit forecasts for 2025 and 2026 by 44% and 41% to 702 million and 852 million HKD respectively [1] Group 1: Financial Performance - In 1H25, Hillstone's revenue increased by 15% year-on-year to 8.83 billion HKD, and net profit attributable to shareholders surged by 168% to 308 million HKD, surpassing CICC's previous expectations [2] - The significant profit growth is attributed to high sales of non-mobile CCM and FPM, as well as the turnaround of joint ventures from losses to profits [2] - The gross margin improved by 2.2 percentage points year-on-year to 7.4%, driven by better utilization rates and optimized product structure [2] Group 2: Product Performance - The sales of mobile-related products are being optimized, with the sales of periscope camera modules reaching 10.6 million units in 1H25, a year-on-year increase of 590% [3] - The company is focusing on high-end mobile business strategies, which are expected to drive revenue and profitability growth [3] Group 3: Non-Mobile Business Expansion - In 1H25, the sales of IoT and automotive CCM increased by 48%, with an upward revision of the annual guidance to a 60% year-on-year growth [4] - The company is establishing production capabilities in various fields such as XR and robotics through self-research, investment, and acquisitions, aiming to create a smart vision product platform [4]

Core Viewpoint - Q-tech preannounced a significant net profit growth of 150-180% YoY for 1H25, with a mid-point of RMB305 million, surpassing Bloomberg consensus by 20% and tracking 54% of the FY25E net profit estimate [1][2]. Financial Performance - For 1H25, Q-tech's estimated revenue and net profit growth were 7% and 162% YoY, respectively, driven by a 2% YoY increase in CCM (with non-mobile CCM up 97%) and a 100% YoY increase in FPM (with ultrasonic FPM up 20x) [2]. - The gross profit margin (GPM) improved to 7.1% in 1H25, compared to 5.2% in 1H24 and 6.9% in 2H24, attributed to HCM spec upgrades and higher-margin non-mobile CCM and ultrasonic FPM shipments [2]. Outlook - The outlook for 2H25 is positive, with expectations of continued strong momentum driven by high-end smartphone camera upgrades (OIS/periscope), IoT/auto CCM growth, and GPM recovery [2]. - Revenue and net profit are estimated to grow by 25% and 162% YoY in 2H25E, respectively, supported by a 23% mix of high-end HCM in 2H and an 85% revenue increase in IoT/auto [2]. Earnings Estimates - The company raised FY25-27E EPS estimates by 21-30%, reflecting strong 1H25 performance and improved GPM outlook for FY26/27E, with EPS now 14-19% above consensus [1][3]. - The new target price (TP) is set at HK$13.21, based on a higher 19.5x FY25E P/E, aligning with the 10-year historical average forward P/E, following sector re-rating and a stronger outlook for FY26-27E [1][3]. Investment Thesis - Q-tech is positioned to capture high-end smartphone camera upgrade demand and momentum in IoT/auto CCM modules, leading to a reiteration of the BUY rating [3].