Highlights

• Plover Bay’s 1H26 attributable net profit grew 28% yoy to US$28m, representing 50% of our full-year estimate, thanks to robust sales growth in North America and Asia, meaningful gross margin expansion and continuous operating leverage. 
   
• Management highlights Peplink’s deployment in physical AI and is positive on its gross margin outlook, thanks to better product mix, economies of scale and price adjustment to be reflected in 2H26. 
   
• Maintain BUY and raise target price to HK$9.86 from HK$9.77 based on DCF.
   

Analysis

• Robust 1H26 results. Revenue grew 18.5% yoy to US$75m in 1H26, accounting for 48.8% of our full-year estimate of US$153m, driven by strong growth in 5G products such as MAX BR2 Pro. By region, North America registered the strongest growth of 27.2% yoy. Sales from Asia grew rapidly by 22.3% yoy on strong deliveries to multi-year large projects, while EMEA declined 2.5% yoy due to large-scale project timing. Gross margin expanded by 3.3ppt yoy to 58.8% despite rising memory costs, supported by favourable sales mix towards high-end products, economies of scale, and growing recurring sales. Net profit grew 28% yoy to US$28m, representing 50% of our full-year estimate of US$55m, thanks to higher gross margin and stronger than-expected operating leverage. Net margin improved 2.8ppt yoy to 37.2%.