Summary of Luxshare Precision Industry 2Q25 Earnings Call Company Overview - **Company**: Luxshare Precision Industry (002475.SZ) - **Date of Report**: August 25, 2025 Key Financial Results - **2Q25 Revenue**: Rmb62.7 billion, representing a **23% YoY increase** and beating Citi estimates by **11%** but in line with consensus [1][2] - **Gross Profit Margin (GPM)**: Narrowed by **0.8 percentage points YoY** to **11.7%**, missing Citi estimates by **1.1 points** and Bloomberg estimates by **0.3 points** [1][2] - **Operating Profit (OP)**: Rmb2.9 billion, up **23% YoY**, with an Operating Profit Margin (OPM) of **4.6%**, exceeding Citi estimates by **6%** but missing Bloomberg estimates by **12%** [1][2] - **Net Profit (NP)**: Rmb3.6 billion, a **23% YoY increase**, surpassing the midpoint of guidance (Rmb3.4 - 3.7 billion) and aligning with Citi estimates while exceeding Bloomberg estimates by **6%** [1][2] - **3Q25 Guidance for NP**: Expected to be between Rmb4,246 million and Rmb4,699 million, indicating a **15% to 28% YoY growth**, ahead of Citi and Bloomberg estimates by **16%** and **7%** respectively [1][2] Segment Performance - **Consumer Electronics Revenue**: Grew **14% YoY** to Rmb98 billion, accounting for **79% of total revenue** with a GPM of **10.1%** [3] - **Automotive Revenue**: Increased by **82% YoY** to Rmb8.7 billion, representing **7% of total revenue** [3] - **Communication Revenue**: Rose **49% YoY** to Rmb11.1 billion, aligning with growth guidance of **30%-50%** [3] - **PC Revenue**: Increased by **12% YoY** to Rmb4.9 billion, making up **4% of total revenue** [3] - **Rikai Revenue**: Decreased by **3% YoY**, contributing approximately **28% of total revenue**, but improved Net Profit Margin (NPM) to **2.3%** [3] Market Implications - Investor focus expected to be on: - Orders from pull-in and tariff impacts on US clients - Margin profile - Updates on automotive and communication businesses - Merger consolidation status - Growth engines beyond 2025 [4] Valuation and Investment Outlook - **Current Price**: Rmb42.95 - **Target Price**: Rmb48.00, implying an expected share price return of **11.8%** and a total return of **12.3%** [5] - **Market Capitalization**: Rmb311.474 billion (approximately US$43.467 billion) [5] Risks - Potential risks include: - Softer-than-expected consumer electronics demand - Slower-than-expected order wins in communications and automotive sectors - Delays in the integration of acquired businesses [15]