Investment Rating - The report has downgraded the investment rating to "Recommended" for Nova Star Cloud (301589) [2][8]. Core Views - The company achieved total operating revenue of 1.533 billion yuan in H1 2025, a year-on-year decrease of 1.93%. The total profit reached 336 million yuan, down 7.86% year-on-year, and the net profit attributable to the parent company was 294 million yuan, a decline of 9.33% year-on-year [2][4]. - The company is focusing on dual growth through commercialization and overseas expansion, with a notable 21.31% year-on-year increase in overseas revenue in H1 2025, indicating the effectiveness of its international strategy [4][8]. - The company has a strong commitment to R&D, with a 1.31% increase in R&D investment year-on-year, and 40.55% of its employees are engaged in R&D activities [8]. Financial Summary - The projected total operating revenue for 2025-2027 is 3.606 billion, 4.021 billion, and 4.582 billion yuan, with year-on-year growth rates of 10%, 11.5%, and 13.9% respectively [4][8]. - The net profit attributable to the parent company is expected to be 676 million, 777 million, and 928 million yuan for the same period, with growth rates of 14%, 14.9%, and 19.4% respectively [4][8]. - The earnings per share (EPS) are projected to be 7.32, 8.41, and 10.04 yuan for 2025, 2026, and 2027, with corresponding price-to-earnings (PE) ratios of 24, 21, and 18 [4][8]. Market Position and Strategy - The company is positioned as a leader in the MLED sector, with significant advancements in technology and product offerings, including the launch of core detection equipment and integrated circuit products [8]. - The company has established a global service system around major cities and is implementing a "7×24 hours" response mechanism to enhance overseas customer service capabilities [8]. - The company plans to maintain a high cash dividend payout, distributing 5.60 yuan per 10 shares, which reflects a commitment to shareholder returns while focusing on core business investments [8].

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, but showed growth in overseas markets and improved cash flow management [1][2]. Group 1: Financial Performance - In 1H2025, the company achieved revenue of 1.533 billion, a year-on-year decrease of 1.93%, and a net profit attributable to shareholders of 294 million, down 9.33% [1]. - In 2Q2025, revenue reached 912 million, reflecting a year-on-year growth of 3.41%, while net profit was 192 million, a decline of 4.95% [1]. - Domestic revenue fell by 8.60%, while overseas revenue grew by 21.40%, indicating a shift in market dynamics [1]. Group 2: Cash Flow and Receivables - As of mid-2025, accounts receivable increased by 25 million compared to the beginning of the year, but this represented a year-on-year decrease of 35.9% [1]. - The net operating cash flow reached 155 million, showing a significant year-on-year increase of 327.9%, indicating improved cash collection and operational quality [1]. Group 3: Product and Market Development - The company launched high-end products, including the "PWM+PAM hybrid drive chip" as part of the Infinity ultra-high-definition MLED solution, and upgraded the VX series 4K dual-use video control server [2]. - The average selling prices of LED display control systems and video processing equipment increased by 7.6% and 14.8% respectively, contributing to a rise in gross margins of 2.65 percentage points and 2.33 percentage points [2]. - The gross margin for domestic sales was 54.49%, while for overseas sales it was 74.16%, with overseas revenue growth outpacing domestic [2]. Group 4: Future Outlook - The company is positioned to leverage its strengths in the MLED video image control sector and aims to accelerate the release of high-margin products while exploring the full value chain of MLED detection equipment and chips [2]. - Revenue projections for 2025-2027 are 3.720 billion, 4.490 billion, and 5.550 billion, with net profits of 684 million, 880 million, and 1.192 billion respectively, corresponding to PE ratios of 24x, 18x, and 14x [2].