Haitong International has set a target price of HKD596.7 for ILUVATAR COREX (09903.HK), reflecting a forecast price-to-sales multiple of 24x for the next year. This initiation of coverage comes amid growing optimism about the company’s role as a leader in China's GPU sector, particularly within its DeepSpark ecosystem.
ILUVATAR COREX has experienced impressive growth, with its revenue doubling year-on-year to RMB1.034 billion. Projections indicate that this upward trend will continue, with revenue expected to increase by 126% and 133% over the next two years. These gains are linked to a higher average selling price of the TG Gen 3 product and increased production volumes of its Zhikai (ZK) offerings.
The company’s operational efficiency is also set to improve significantly. The operating loss margin is projected to narrow from a staggering negative 95% last year to negative 28% this year. This operational use is anticipated to drive a turnaround, with forecasts suggesting that ILUVATAR COREX will achieve profitability next year, generating a net profit of approximately RMB847 million.
The upcoming inclusion in Southbound Stock Connect, effective June 8, serves as a short-term catalyst for potential re-rating. This move is particularly noteworthy as it positions ILUVATAR COREX as a rare Hong Kong-listed domestic GPU player, allowing investors to access China's growing AI computing market without the high valuations typically associated with A shares. The current share price suggests a price-to-sales multiple of 20x, significantly lower than the average multiple of about 56x seen among A-share competitors like Cambricon and Moore Threads.
The positive outlook from Haitong International highlights the strategic importance of ILUVATAR COREX in the evolving AI infrastructure and GPU networks. As demand for AI computation surges, ILUVATAR COREX is well-positioned to benefit from its unique market position and operational improvements.
