
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]