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ZTE(763)
Analysis¡G
ZTE Corporation positions itself as a leader in network connectivity and intelligent computing power. It continues to strengthen its focus on ¡§connectivity + computing power + capabilities + intelligence,¡¨ helping customers and partners build highly efficient, green digital-intelligent infrastructure and comprehensive digital-intelligent solutions tailored to specific scenarios, thereby accelerating the digital-intelligent transformation and upgrading across society. In the field of artificial intelligence, the group offers full-stack, full-scenario intelligent computing solutions ranging from infrastructure to applications. It has accumulated key technologies in areas such as high-speed interconnection, in-network computing, computing-native architecture, seamless migration, data processing, and algorithm optimization. By continuously enhancing the competitiveness of its end-to-end DICT product portfolio and digital-intelligent solutions, the group has steadily increased its market share and further optimized its market position.
The group began chip research and development in 1996 and has consistently invested in advanced process design, advanced architecture and packaging design, core intellectual property, and digital efficient development platforms. It now possesses industry-leading full-process chip design capabilities. Rooted in the underlying DICT chip technology, and with the development of computing-network integration, ZTE is building a highly efficient, green, and intelligent full-stack computing-network base centered on ¡§data, computing power, and networks.¡¨ Through the development of a product system that meets the core needs of diverse ¡§cloud, edge, and terminal¡¨ scenarios, it has created self-developed custom processor chips, DPU Dinghai chips, switching chips, all-mode fusion architecture intelligent gateway chips, optical access processor chips (supporting 50G PON), 800G coherent DSP chips, and others. These products have already been deployed and delivered across multiple industries, including telecommunications operators and internet companies.
ZTE will partner with Tencent to launch the WorkBuddy AI cloud computer. This collaboration symbolizes the deep integration of hardware terminals and cutting-edge AI agents. The AI cloud computer will fully cover ZTE¡¦s entire range of cloud terminal products. The underlying system will come pre-installed with Tencent¡¦s WorkBuddy office intelligent agent and natively integrate Tencent¡¦s Hunyuan large model along with powerful computing support from Tencent Cloud. ZTE has a strong foundation in the cloud computer market ¡X its cloud computer terminal sales exceeded 2 million units last year, securing the top position in China¡¦s cloud terminal market for two consecutive years with a market share of 44.5%. ZTE¡¦s full-year 2025 revenue reached RMB 133.9 billion, with computing power business revenue surging 150% year-on-year and its share of total revenue rising to 24.6%. In the first quarter of 2026 (Q1), ZTE recorded quarterly revenue of RMB 34.99 billion, with the computing power revenue share increasing further to 27%. This shows that computing power and intelligent terminals, including cloud computers and servers, are rapidly becoming the main revenue drivers. The second-curve businesses represented by AI cloud computers (computing power and AI terminals) will serve as the primary growth engine.(I do not hold the above stock.)
Strategy¡G
Buy-in Price: $29.00, Target Price: $32.00, Cut Loss Price: $27.5
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GSP AUTOMOTIVE(605088)
Analysis¡G
GSP Automotive is a leader in the domestic drive shaft and universal joint sector, holding a leading position in the global automotive aftermarket. It has established a sales network covering over 120 countries, with overseas revenue accounting for more than 90% of total revenue by 2025. Notably, the North American market grew by 30.22%. In 2024, the company ventured into hybrid solid-liquid battery technology while expanding into robotic joint components, gradually forming a "automotive parts + new energy + robotics" triple-drive business model. In the first quarter of 2026, the company achieved operating revenue of 1.108 billion yuan, up 23.99% yoy, with net profit of 78 million yuan, down 7.4% yoy, primarily due to exchange rate fluctuations. With large-scale vehicle ownership and rising average vehicle age in Europe and the U.S., aftermarket repair demand is expected to grow steadily. The capacity ramp-up at the Malaysia plant is nearing completion, while headquarters and Dongchi production facilities are advancing, enhancing global supply chain responsiveness to support sustained order growth. Upon full capacity release in 2026, additional revenue is anticipated. The new business of solid-state batteries and robotic joint components, once production begins, is expected to unlock new growth opportunities.
Strategy¡G
Buy-in Price: RMB32.80, Target Price: RMB39.00, Cut Loss Price: RMB29.60
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Foryou Group (002906.CH) - Second Growth Curve Gradually Becoming Clear
Company profileForyou Corporation was established in 1993 and is mainly engaged in the R&D, production and sales of automotive electronics and precision die-casting businesses. The Company's automotive electronics business mainly covers two core sectors, namely smart cockpit and advanced driver-assistance systems. Its precision die-casting business is centred on precision mould design and manufacturing technology, covering aluminium alloy, magnesium alloy and zinc alloy product lines. In addition, it actively explores and develops AI, robotics and other related businesses, including optical communication modules, AI high-speed connectors, robotics and other related component businesses. In 2025, the Company reported revenue of RMB13,048 million, up 28.46% yoy; net profit attributable to the parent company was RMB782 million, up 20.00% yoy. Investment SummaryQ1 Revenue Maintained High Growth
In Q1 2026, the Company reported revenue/net profit attributable to the parent company/net profit excluding non-recurring items of RMB3,096 million/RMB166 million/RMB159 million, respectively (RMB, the same below), up 24.37%/6.61%/5.89% yoy, respectively. Gross margin was 16.5%, down 1.7 ppts yoy. The slower profit growth compared with revenue growth was mainly due to factors such as price competition and rising raw material prices. The Company has established a raw material price linkage mechanism with most of its customers, and its operating results are expected to improve significantly from Q2. Automotive Electronics Business Continued to Grow, With Its Leading Position in Smart Cockpit Firmly EstablishedThe Company's automotive electronics business reported revenue of RMB9,675 million in 2025, up 27.25% yoy, accounting for 74.15% of total revenue. CAGR reached 35.66% from 2020 to 2025, maintaining high-quality growth. The Company has built a comprehensive product matrix and solution capabilities in the smart cockpit field. The market shares of HUD, in-vehicle wireless charging and other products continued to rank first in China, while the market shares of LCD instrument panels and central control screens rapidly rose to the forefront of the industry. The Company's customer structure continued to optimise, with a low dependence on any single customer, and the revenue contribution from some new energy vehicle makers and international automotive brands increased. Revenue from customers including Changan, BAIC, Xiaomi, Dongfeng, STELLANTIS, SAIC Volkswagen, BYD, Xpeng, NIO and Leapmotor increased significantly. Leveraging the ADAYO Automotive Open Platform (AAOP), the Company provides customers with "one-stop" overall smart cockpit solutions based on its implementation capabilities in cockpit domain controllers across multiple platforms including Qualcomm, SemiDrive and MediaTek, as well as mainstream large models, demonstrating significant platform-based competitive advantages. Precision Die-Casting Business Improved Its Process Technologies, Enhancing Overall CompetitivenessThe Company overcame a number of difficult technical challenges in mould design and manufacturing, expanded the application of highly flame-retardant magnesium alloy materials, and promoted the deep integration of 3D vision guidance with AI and robotics to improve the flexible changeover capability of automated manufacturing cells. Its capabilities in complex and difficult production processes, including high-vacuum combined extrusion, friction stir welding of aluminium-magnesium alloys, profiling spraying, multi-spindle machining and vacuum adsorption, continued to improve. The precision die-casting business delivered particularly impressive performance in 2025, reporting revenue of RMB2,859 million, up 38.47% yoy, with growth exceeding that of the automotive electronics business. CAGR reached 35.08% from 2020 to 2025. Second Growth Curve Gradually Becoming Clear, with Capacity Expansion Releasing Growth MomentumThe Company actively explores non-automotive businesses such as AI and robotics: 1) In the AI infrastructure field, optical communication modules, high-speed connectors and data centre cooling system components have secured project nominations; 2) In the robotics field, the Company has received orders for robotics display screens and joint module components, and jointly developed robotics main and auxiliary controllers, with brand momentum surging and sales increasing exponentially. Following a record-high scale of capacity construction in 2025, capital expenditure is expected to remain at a high level in 2026, focusing on the Thailand Production Base, the expansion of the Automotive Electronics Huizhou Base, the expansion of the zinc alloy die-casting business in the AI field, and Phase III of the Precision Die-Casting Changxing Project. Capacity expansion is being carried out based on orders on hand, providing solid support for sustained business growth going forward. Among them, the Thailand Production Base is expected to commence production in Q4 2026, providing strong support for overseas business expansion. Investment ThesisThe Company's traditional automotive business is growing steadily and rapidly, while its non-automotive business offers enormous growth potential. We are optimistic about the long-term development of the Company and expect EPS to be 1.81/2.18/2.63 yuan respectively for 2026/2027/2028, a yoy increase of 22%/21%/21%. We offer a target price of 36.3 yuan, respectively 20/16.6/13.8x P/E for 2026/2027/2028, and an "Buy" rating. (Closing price as at 5 June) Historical P/E Band 
Source: Wind, Company, Phillip Securities Hong Kong Research
RiskProgress of new production line is below expectations
Electric vehicle sales fall short of expectations
Macroeconomic downturn affects product demand
Sharply rising raw material prices or sharply falling product prices Financials
(Closing price as at 5 June) Download PDF Version
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