Cig Shanghai (06166) expects a net profit attributable to the parent of 252 million to 278 million yuan in 2025, an increase of 51.19% to 66.79% year-on-year.

Cig Shanghai (06166) announced that the company expects to achieve profitability in the fiscal year 2025, with a net profit attributable to shareholders of the listed company increasing by more than 50% compared to the same period of the previous year: 1. The net profit attributable to shareholders of the listed company is expected to be between RMB 2.52 billion and RMB 2.78 billion, an increase of 51.19% to 66.79% year-on-year; 2. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses is expected to be between RMB 2.49 billion to RMB 2.75 billion, an increase of 64.62% to 81.81% year-on-year. The continuous growth in performance in this period is directly driven by the synergistic development of the company's three core businesses: high-speed optical modules, broadband access, and wireless access. Among them, the high-speed optical module business benefits from the strong market demand brought about by the acceleration of artificial intelligence and global data center construction, as well as the continuous capacity layout of the company through the commissioning of the Jiashan new production base, the capacity ramp-up of the Malaysian production base, and the expansion of domestic and foreign bases, with a substantial increase in order size and shipments compared to the same period last year; at the same time, the company continues to promote product technological iteration and structural optimization, with a significant increase in the proportion of high-speed and high-margin products, driving further improvement in overall sales gross margin; broadband access and wireless access businesses maintain steady growth in shipment volumes and amounts, providing solid support for the company's performance with stable customer cooperation relationships and product competitiveness. Over the past few years, the company's continuous investment in production capacity and upstream supply chain has been the core foundation for the growth in this period. After nearly two years of construction, the new production base in Jiashan will be put into operation in mid-2025 and quickly reach full production capacity; at the same time, the Jiangyue Road factory in Shanghai has completed the relocation of production capacity, assets, and personnel, and will be closed by the end of 2025. The continuous capacity adjustment and expansion mentioned above, in response to market demand, have provided solid production capacity guarantee for the company to seize the growth opportunities driven by the current round of artificial intelligence and data center. The company foresees the supply chain tension brought about by the transfer of demand growth to the upstream, and continues to increase investment in upstream supply chain capacity through a combination of prepayments, strategic material reserves, capital expenditures, equity investments, etc., to lock in material supply and material capacity early and effectively reduce the impact of supply chain fluctuations on business. These measures have positively supported the growth in this period's performance and will continue to drive the company's future delivery capacity improvement; however, the current tightness in the supply of core components and other key materials still persists, with some areas showing a trend of expansion and deterioration, and the fluctuations have a certain unpredictability. The company continues to optimize its research and development layout by expanding the scale of research and development centers in Shanghai, Wuhan, Xi'an, Taipei, and significantly increasing investment in the North American research and development center, optimizing and adjusting the Japanese research and development team, and establishing a new research and development center in Hsinchu. Research and development investment mainly focuses on the research and development of core technologies and key components of high-speed optical modules and wireless access, pushing for new product and technology breakthroughs to accumulate core competitiveness for future technological iteration. By increasing sales efforts and continuously expanding market breadth and depth, the increase in sales and marketing investment in this period will lay the foundation for further business growth in the future. In this period, the company has seen a certain degree of growth in research and development, sales, and management expenses, mainly due to the expansion of business scale, increase in research and development investment, and deepening of market layout, which is in line with the company's strategic development plan. In addition, in the fiscal year 2024, the company received government subsidies related to income from the Jiashan Modern Industrial Park Management Committee amounting to more than RMB 16 million. There are no significant non-recurring gains and losses in this period, so non-recurring gains and losses do not make a significant positive contribution to the growth in this period's performance. The growth in this period's performance mainly relies on the improvement in operating profit, making the profit quality more sustainable.