Core Viewpoint - The report from First Shanghai gives a "buy" rating for Cloud Factory (02512), with a target price of HKD 6.9, indicating a 36% upside potential from the current price, driven by the company's strategic positioning in new business areas and alignment with government policies on "Artificial Intelligence+" [1] Financial Performance - In H1 2025, the group's total revenue reached HKD 406.8 million, a year-on-year increase of 10.0%, primarily due to regular business expansion and significant growth in edge computing services [1] - Gross profit was HKD 47.7 million, with an overall gross margin of 11.7%, while net profit stood at HKD 14.9 million, reflecting a year-on-year growth of 19.0% [1] - The earnings per share for ordinary equity holders remained at HKD 0.03, and as of June 30, the group had cash and cash equivalents of HKD 348.1 million, indicating strong liquidity reserves [1] IDC Solutions Growth - The revenue from IDC solutions services in H1 2025 reached HKD 376.1 million, a year-on-year increase of 7.9%, accounting for 92.5% of total revenue [2] - The growth in revenue was attributed to the company's strong reputation, stable customer base, and extensive business network, despite a decrease in gross margin to 10.2% due to competitive pricing strategies [2] Edge Computing Services - Revenue from edge computing services grew to HKD 29.2 million, a year-on-year increase of 39.0%, representing 7.2% of total revenue, driven by increased market demand for EdgeCDN services and new customer acquisition [3] - The gross margin for this segment was 27.1%, and the company has been recognized as one of the top 20 edge computing companies in China for three consecutive years [3] Strategic Development - The company focuses on four strategic areas: expanding smart computing services, enhancing technology research and development, strengthening ecosystem partnerships, and building a dual-driven model for government and enterprise solutions [4] - Recent capital raised from new share subscriptions will be used for various business developments, including the establishment of a joint venture to explore the smart computing services market [4]