Yamato: The fourth paradigm's target price is raised to HKD 58, and the rating is upgraded to "buy" in one fell swoop.

Daiwa published a research report indicating that the order growth of Fourth Paradigm in 2025 and 2026 may surpass market expectations. The company is expected to achieve a break-even point this year, and the drag from the disposal of equity by shareholders has been removed. Daiwa has upgraded its rating on the stock to "Buy" and raised the target price from HK$47 to HK$58. Daiwa pointed out that the company's collaboration with Huawei to launch SageOne IA machine may become a major driver of revenue growth, targeting large enterprises with data security concerns. In the first quarter of 2025, the company's revenue and gross profit both increased by 30% year-on-year. With strong demand for AI, Daiwa believes that the company's gross profit in 2025 will increase by 30% year-on-year, higher than the current market forecast of 25%. This will enable the company to achieve a break-even point on the income statement in 2025, earlier than Daiwa's previous expectations, which should also lead to a reevaluation of the company's valuation.