Key takeaway

The company released its 2025 annual report and 1Q26 report. In 2025, hardware business drove revenue growth, while profit faced short-term pressure. The company continues to advance its "software-hardware integrated, full-stack intelligent" strategic transformation, building a complete full-stack AI product matrix across three dimensions: computing, scenarios, and terminals. The company is deeply embedded in Huawei's ecosystem, with in-depth collaboration with Ascend to launch related products and qualify for operator frameworks. Meanwhile, the company is building independent computing power service capabilities, including its own computing center and intelligent computing operation services. The company is actively exploring embodied intelligence and overseas markets, opening new space for longterm growth. The company's revenue for 2026-2028 is expected to be RMB40.165bn/RMB45.630bn/RMB51.577bn, up 14.46%/13.61%/13.03% YoY. The net profit attributable to shareholders of the parent company is expected to be RMB310mn/RMB473mn/RMB564mn, up 50.30%/52.77%/19.07% YoY. The corresponding PE multiple is 118x/77x/65x. We maintain "Buy" rating on the company.

Event

The company released its 2025 annual report and 1Q26 report. For full-year 2025, it achieved operating revenue of RMB35.090bn (+12.05%), net profit attributable to shareholders of the parent company of RMB206mn (+14.27%), and recurring net profit attributable to shareholders of the parent company of RMB42mn (-42.14%). In 1Q26, the company achieved operating revenue of RMB8.117bn (+15.79%), net profit attributable to shareholders of the parent company of -RMB350mn (-76.99%), and recurring net profit attributable to shareholders of the parent company of -RMB360mn (-66.62%).

Risks

1)AI strategic transformation falling short of expectations: AI initiatives require high R&D investment and long cultivation cycles, with uncertainty in technological breakthroughs and large-scale implementation; budget shifts toward AI may squeeze existing business; 2) customer concentration risk: the company is deeply tied to core major clients; if key customer demand declines or they switch to other suppliers, operations will be adversely affected; 3) raw material price volatility and supply chain risk: the hardware business involves raw materials such as chips and storage; international trade frictions and current supply-demand mismatches may lead to supply chain risk and rising raw material prices; 4) labor cost increases and exchange rate fluctuation risk.