Haitong International has initiated coverage on HUAQIN (03296) with an 'Outperform' rating and a target price of HK$104.14.

The firm notes that the AI industry trend is providing clear growth momentum for HUAQIN's AI servers, AI PCs, and super-node products, driving sustained high-speed growth in its computing and data center business.

With an increasing proportion of revenue from high-margin categories and a continuous decline in the expense ratio due to economies of scale, the company's profitability is also showing an improving trend.

Haitong International forecasts HUAQIN's net profit for 2026 to 2028 to reach RMB 5.03 billion, RMB 6.34 billion, and RMB 7.92 billion, respectively. Earnings per share are projected at RMB 4.53, RMB 5.71, and RMB 7.14, representing year-on-year growth of 24%, 26%, and 25%.

The firm also expects the company's net profit margin for 2026-2028 to be 2.47%, 2.68%, and 2.92%, respectively, driving net profit growth to outpace revenue growth.

According to the firm's estimates, HUAQIN's data center business revenue exceeded RMB 20 billion in 2024, doubled to over RMB 40 billion last year, and is expected to reach RMB 60 billion this year. AI servers and super-node products are anticipated to account for approximately 70% of this revenue.

Haitong International projects that from 2025 to 2028, the compound annual growth rate for the overall computing and data center business revenue could exceed 25%.