\u3000\u3000 Suzhou Tfc Optical Communication Co.Ltd(300394) (300394)
Company announcement: the company released the performance express of 2021, and achieved a total operating revenue of 1.046 billion yuan, a year-on-year increase of 19.75%; The net profit attributable to the shareholders of the listed company was 311 million yuan, a year-on-year increase of 11.48%; After deducting non recurring profits and losses, the net profit attributable to shareholders of listed companies was 282 million yuan, a year-on-year increase of 7.97%. EPS is 0.81 yuan / share.
The annual performance was in line with expectations, and Q4’s single quarter profit reached a new high. In 2021, the company still achieved double-digit growth in revenue and net profit under the adverse factors such as 5g demand delay, its own capacity migration, upstream raw material shortage and price rise, and the annual net interest rate is expected to decline slightly. In a single quarter, Q4 achieved a revenue of 280 million yuan, a year-on-year increase of 29.2% and a month on month increase of 1.4%. The net profit attributable to the parent company was 98 million yuan, with a year-on-year increase of 51.9% and a month on month increase of 30.7%. Net profit deducted from non parent company was 88 million yuan, with a year-on-year increase of 41.9% and a month on month increase of 31.34%. The net interest rate in a single quarter is expected to recover to 34% and increase by about 7 PCT month on month. We believe that the excellent performance in a single quarter is mainly driven by tax return, the increase of gross profit margin and the decrease of expense rate caused by the product structure in a single quarter. Looking forward to 2022, the company will continue to take optical communication as the core and lidar and medical detection as the development direction of both wings, give full play to its advantages in precision manufacturing technology and cost control, and promote the continuous implementation of new customers and new products. At the same time, the capacity release of the new factory in Jiangxi has also solved the capacity bottleneck for the company and provided guarantee for the growth of the company’s performance.
The demand for digital communication optical modules is rising, and the production capacity is steadily put into operation. Driven by the digital economy and metauniverse, the capital expenditure of cloud manufacturers in North America continued to pick up. In 2021q4, the total capital expenditure of Amazon, Microsoft, Google and mega (FB) was about US $34.088 billion, an increase of 24% year-on-year and 7% month on month, a new high in the previous period. We expect the scale construction of global data centers to drive the continuous volume of 400g / 200g and other high-speed optical modules. The company is the core supplier of upstream optical devices of optical modules, which fully benefits from the growth of the industry. In 2020, the company merged Tianfu precision and Arctic optoelectronics successively, which increased the value of the company in a single module and enriched the overseas customer system. The company’s new Jiangxi production base is in the stage of intensive recruitment, which can effectively alleviate the cost side pressure of Arctic photoelectric production in Shenzhen, improve the company’s comprehensive gross profit margin, release the production capacity of Arctic photoelectric coating, optical filter and WDM devices, provide physical space for the growth of other product lines, and is expected to further strengthen the standardized management of production links. In terms of telecommunications, 5g bidding of Chinese operators resumed successively in the second half of the year, but considering the inventory level of downstream customers and the time difference of demand transmission to the upstream, it is expected that the landing of China’s 5g demand will be reflected in the follow-up.
The high-speed optical engine has achieved mass production and synchronous power in the fields of lidar and medical monitoring. The high-speed optical engine of the company’s fund-raising project has been delivered in batch in Q3 and will be mainly used for 400g / 800g and higher rate data communication optical modules. The mass production of high-speed optical engine helps the company realize vertical extension and integration in business and improve the unit value of the company in the optical module. At the same time, it is technically in line with the long-term trend, and the continuous volume of business is expected to open the space for long-term growth. In addition to the optical communication business, the company uses the professional ability accumulated by the existing team in many fields such as basic materials and components, optical design and integrated packaging to provide supporting products for customers in new fields such as lidar and medical testing, including basic components and integrated packaging products. In the field of lidar, the company attaches great importance to the rapid development of automatic driving of global new energy vehicles, and has established a special sales team and project team to continuously follow up the development of lidar market. The field of medical monitoring is also in the state of planned promotion. The company actively explores the cross domain extension of core competence, seeks new high-quality business growth points and seeks long-term steady development.
Investment suggestion: the company is the leading service provider of China’s optical device integration platform system, and continues to expand its product line through endogenous extension. With the release of the demand for high-end optical modules in the downstream data center, the company’s passive business has grown strongly, the optical engine has entered the state of batch delivery, and the source business is ready to go. The progress of new business lidar and medical testing is good, which is expected to break the growth ceiling of the company. We expect the net profit of the company from 2021 to 2023 to be 304 million yuan / 416 million yuan / 551 million yuan, and EPS to be 0.78 yuan / 1.07 yuan / 1.41 yuan respectively, maintaining the buy rating.
Risk warning: the market demand for 5g construction and digital communication is lower than expected; The new product line is put into operation less than expected risk.
