Huadian Co., Ltd. recently released its financial report for the first half of 2025 (1H25). Despite the dual disturbances of exchange rate pressure and tariff conflicts, it still demonstrated strong growth resilience and profit elasticity.
1. Performance Overview: Quarterly Profit Hits Record High, Growth Resilience Evident
Huadian Co., Ltd. achieved in 1H25:
– Revenue of 8.49 billion yuan, a year-on-year increase of 57%;
– Net profit attributable to shareholders of 1.68 billion yuan, a year-on-year increase of 48% (in line with the previous performance guidance of 1.65-1.75 billion yuan).
Among them, the performance in the second quarter of 2025 (2Q25) was particularly outstanding:
– Revenue of 4.46 billion yuan, a year-on-year increase of 57%;
– Net profit attributable to shareholders of 920 million yuan, a year-on-year increase of 47%, setting a record high for the company’s quarterly profit.
Although affected by increased equity incentive costs and losses from the Thailand factory, the gross profit margin for 1H25 (35.1%) decreased by 1.4 percentage points year-on-year, and the gross profit margin for 2Q25 (37.3%) decreased by 1.5 percentage points year-on-year, the company still achieved high growth under external pressures, demonstrating its solid business foundation and profit resilience as a global leader in computing power PCBs.
2. AI Products Become Core Growth Engine, Revenue Proportion Hits New High
The company’s “Enterprise Communication Board” segment achieved revenue of 6.53 billion yuan in 1H25, a year-on-year increase of 71%; among them, revenue from AI products reached 4.97 billion yuan, a year-on-year increase of 97%, accounting for 58.5% of total revenue, an increase of 11.9 percentage points year-on-year and 3.7 percentage points quarter-on-quarter.
Performance in AI sub-sectors:
– AI server products: Revenue of 1.51 billion yuan in 1H25, a year-on-year increase of 25%;
– AI switch products: Revenue of 3.46 billion yuan in 1H25, a significant year-on-year increase of 161%.
Looking ahead to 2H25-2026: As the three major overseas cloud providers (Google, Amazon, Meta) gradually ramp up new ASIC AI server projects, and the global penetration rate of 800G switches continues to rise, Huadian Co., Ltd. is expected to leverage its “industry-leading technical capabilities + customer positioning advantages” to secure more high-end AI PCB orders from clients, continuously injecting momentum into performance growth.
3. Capacity Bottlenecks Expected to Ease, Quarterly Profit Likely to Continue Rising
In response to the strong demand from AI clients, Huadian Co., Ltd.’s production lines have been operating at full capacity for the past few quarters. Although the company achieved a record high quarterly profit in 2Q25 through “product structure optimization,” the question of “when will capacity bottlenecks ease” remains a focal point for the market.
The good news is: The company will increase capital expenditures (CAPEX) starting from the third quarter of 2024 (3Q24), with a total investment of approximately 2.8 billion yuan from 3Q24 to 2Q25, aimed at “technological upgrades to expand bottleneck capacity + building new capacity.” Institutions expect that starting from 2H25, the company’s capacity anxiety will gradually ease, which is expected to help continuously break through the “quarterly profit ceiling” from 2H25 to 2026.
4. Company Risk Analysis
1. Strategic and Operational Risks
– Capacity expansion may fall short of expectations
– The Thailand factory will only achieve small-scale production in 2025Q2, incurring a loss of 96 million yuan, and delays in capacity ramp-up may continue to drag down profitability. The Thailand factory has only received certification from 2 clients, with 4 others still under review, and is expected to reach economic scale by the end of 2025.
– Uncertainty regarding the effects of mergers and acquisitions
– The holding subsidiary Shengwei Strategy is still losing 11.56 million yuan (though the loss has decreased year-on-year), and goodwill has not been impaired. Shengwei Strategy’s revenue increased by 159.63% year-on-year, but the net profit margin is negative.
2. Customer and Market Dependency Risks
– High proportion of foreign sales revenue
– Foreign sales revenue accounts for 81.16%, and fluctuations in exchange rates and trade frictions may impact revenue. Exchange rate gains decreased by 59.82 million yuan year-on-year, and financial expenses were -82 million yuan (compared to -145 million yuan in the same period last year).
– Concentration of top five customers
– The top five accounts receivable account for 41.09%, and the loss of a single customer could affect cash flow. Accounts receivable amount to 438 million yuan, with 688 million yuan pledged for short-term loan guarantees.
3. Supply Chain and Cost Risks
– Fluctuations in raw material prices
– Raw materials account for over 50% of main costs, and price fluctuations in copper, copper-clad laminates, etc., may compress gross profit margins. Operating costs increased by 59.48% year-on-year, higher than the revenue growth rate (56.59%).
4. Debt Repayment Ability Risks
– Short-term debt repayment pressure
– Quick ratio of 0.68 (<1), cash to short-term debt ratio of 0.77 (<0.8), indicating liquidity pressure. Monetary funds amount to 2.741 billion yuan, with short-term loans of 3.544 billion yuan.
– Proportion of interest-bearing liabilities
– Interest-bearing liabilities/total assets = 17.4% (<60%), but short-term loans increased by 114% year-on-year.
5. Asset Health Risks
– Accounts receivable bad debt risks
– Accounts receivable amount to 438 million yuan, a year-on-year increase of 8.3%, but 99.7% of the aging is within one year. The bad debt provision ratio is 1.9%, with the provision ratio for automotive board customers at 7.41% (higher than for communication boards).
– Inventory devaluation risks
– Inventory amounts to 3.099 billion yuan, a year-on-year increase of 27.2%, with finished products accounting for 45.7%.
As a global leader in the computing power PCB field, Huadian Co., Ltd. benefits from the “explosive demand for high-end PCBs under the AI wave” and addresses supply bottlenecks through “capacity expansion,” providing strong certainty for future performance growth. Given the current attractive valuation, it is worth paying close attention to.
(Data in this article is sourced from the company’s 2025 semi-annual report and institutional research reports; the analysis is for reference only and does not constitute investment advice.)