\u3000\u3000 Zhongji Innolight Co.Ltd(300308) (300308)
The annual performance in 2021 was low before and high after, and recovered significantly in the fourth quarter. The company released the annual performance forecast for 2021. In 2021, the net profit attributable to the parent company was RMB 800-940 million, with a year-on-year increase of - 7.57% - 8.61%, and the net profit after deducting non recurring profits and losses was RMB 670-790 million, with a year-on-year increase of - 12.35% - 3.35%. In the fourth quarter of 2021, the net profit reached 240-380 million yuan, which was significantly higher than that in the third quarter. According to the median estimate, it increased by 42% month on month and 17% year-on-year. The performance recovered significantly in the fourth quarter of 2021, mainly benefiting from the continuous improvement of demand on the North American digital communication side and the continuous high market share of the company.
Incentive and other expenses have a certain impact on performance. The equity incentive generated by the second phase of the restricted stock incentive plan implemented by the company has incurred more expenses. The annual incentive expenses in 2021 are more than 110 million yuan, which has a certain impact on the current profits. It is expected to be significantly narrowed in 2022. At the same time, the company actively deployed 400g, 800g and other high-end optical modules, and the R & D expenses increased, which affected the profit growth to a certain extent.
The high boom of overseas digital communication superimposes the setting tone of China's digital economy, and the optical module market continues to have a high boom. As Facebook and other Internet giants enter the meta universe, the capital expenditure on the overseas digital communication side is also expected to usher in a new turning point. Facebook's capex in 2022 has been revised to $29-34 billion. At the same time, after setting the tone of digital economy, the subsequent significant growth of traffic is a deterministic direction. The expansion of infrastructure supporting traffic such as optical modules is a rigid demand, which will be highly deterministic in the next three to five years. With the continuous and large volume of 400g and the rapid deployment of 200g and 800g, combined with the further recovery of China Telecom Corporation Limited(601728) side optical module, the optical module industry is expected to continue a high boom.
R & D investment continues to increase, and fixed growth opens up room for growth. The company's R & D expenses in the first three quarters of 2021 were 352 million yuan, a year-on-year increase of 20.52%, and 125 million yuan in Q3, a month on month increase of 15.78% compared with Q2. Meanwhile, the company plans to increase no more than 2.7 billion yuan for the production of 400g high-end optical modules and the R & D and production of 800g high-end optical modules. With the support of continuous high R & D investment and fixed increase funds, the company is expected to further improve the production capacity of 400g and 800g optical modules, further improve the technical platform and product line, form a complete industrial chain from chip packaging, photoelectric components and optical modules, and improve the industrial status and performance level.
Investment suggestion: we believe that with the company's continuous R & D investment and the release of fixed increase capacity, the company's performance is expected to continue to grow steadily. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 880 / 12.1 / 1.47 billion, yoy 2.5% 1% / 37.3% / 21.3%, corresponding to eps1 10 / 152 / 184 million yuan. Corresponding to 24 times of PE in 2022, maintain the "buy" rating.
Risk tip: the demand for overseas digital communication is less than expected, and the market competition is intensified
