2025-10-19 15:58Summary of Luxshare Precision (002475 CH) Equity Research Report Company Overview - Company: Luxshare Precision - Ticker: 002475 CH - Sector: Electronic Equipment - Market Cap: CNY 420,524 million (USD 58,963 million) [7][13] Key Industry Insights - AI Infrastructure Supply Chain: Luxshare is expanding its role in the AI infrastructure supply chain, particularly as a supplier of high-speed backplane connectors and copper cables for NVIDIA AI servers [2][3]. - CPC Technology: The company's co-packaged copper (CPC) technology is expected to reduce power consumption by 30% and is seen as a preferred alternative for ultra-high-bandwidth interconnects in AI computing [3]. Financial Performance and Projections - Recent Performance: Luxshare's share price surged 63% over the past three months, significantly outperforming the CSI300 index, which rose 14% [2]. - Revenue Growth: Projected revenue contributions from NVIDIA are expected to reach RMB 1.2 billion, RMB 3.2 billion, and RMB 8.0 billion in 2025-2027, respectively [2]. - Consumer Electronics: Strong sales of the iPhone 17 are anticipated, with global sales expected to exceed 90 million units in 2025. This has led to rush orders from Apple [4]. - Revenue Estimates: The revenue estimates for Luxshare's consumer electronics and communication segments have been raised by 1-2% for 2026-2027 due to strong demand [4][22]. Valuation and Investment Recommendation - Target Price: The target price has been raised to RMB 75.00 from RMB 59.00, implying a potential upside of approximately 30% [5][29]. - Profit Growth: A net profit CAGR of 24% is forecasted for 2024-2027, up from a previous estimate of 22% [29]. - PEG Multiple: The stock is valued using a PEG multiple based on the average PEG of 1.1x for China's consumer electronics sector [5][29]. Risks and Considerations - Tariff Concerns: There are minimal concerns regarding tariff issues due to low direct sales exposure to overseas markets [25]. - Market Sensitivity: The company's net profit is sensitive to iPhone and AirPods shipments, with a potential 15% increase in net profit if shipments exceed current assumptions by 20% [27]. - Operational Challenges: Potential risks include slower-than-expected ramp-up at new manufacturing plants in Vietnam, which could impact margins [36]. Conclusion Luxshare Precision is well-positioned to capitalize on the growing demand for AI infrastructure and consumer electronics, supported by strong sales of the iPhone 17 and innovative technologies like CPC. The upward revision of the target price and profit forecasts reflects confidence in the company's growth trajectory, despite some operational and market risks.