The optical module technology changes rapidly, and the industrial transfer trend to China is significant
The optical module realizes the photoelectric conversion function, which is the core composition of the optical communication system. It occupies the middle reaches of the industrial chain. The industry is highly competitive and labor-intensive. In recent years, the general trend of industrial transfer to China is obvious. In the downstream digital communication market, the technology iteration cycle is short, so manufacturers focus on the first mover advantage in the technology change period, and the core competitiveness is the leading cost and large-scale delivery ability in the mature period. The wireless / fixed network access products in the telecom market are relatively low, and the end gross profit margin is low, so it continues to focus on the cost leadership.
A new round of data flow investment is accelerating, the inflection point of the industry is coming, and the technology change of data communication optical module is advancing at a high speed
From the marginal changes of the industry this year, the demand began to improve in the second half of the year after the low at the beginning of the year, the price of raw materials increased, and the supply chain shortage ran through the whole year. At the same time, the optical module manufacturers had a relatively serious inventory backlog this year after the expansion last year, which was basically cleared after entering the fourth quarter. In terms of the outlook of the downstream digital communication market, it has experienced a low at the beginning of the year, and the current prosperity has entered an upward cycle. The total capex of 2021q3 overseas giants has increased significantly year-on-year and month on month. Looking forward to the future, we believe that a new round of data flow investment wave will rise again, the data communication market will enter a new round of boom upward cycle in the next 3 ~ 5 years, and the inflection point of the upstream optical module industry will come. In terms of industrial technology change, 400g has started large-scale production, and the industry has entered the early stage of 800g iteration. Looking forward to the future, we believe that the traditional discrete 800g scale mass production is approaching. In the short term, we need to focus on the progress of manufacturers in the upcoming technology change bonus window. In the medium and long term, silicon optical modules and coherent optical modules deserve attention.
The overall atmosphere of Telecom city scene warmed up, and 10gpon accelerated penetration
In the first half of the year, the demand was weak, the customers were mainly eliminating inventory, the orders were delayed, the centralized purchase of base stations began to recover in the middle of the year, and the prosperity picked up. Looking forward to next year, with the policy overweight and the return of the two major operators to a shares, the capital expenditure of operators with supplementary funds is expected to grow steadily, and the recovery trend of prosperity is expected to continue. At the level of optical module manufacturers, factors such as weak demand, fierce competition and rising raw material prices accelerated the liquidation of small factories in the first half of the year. After the liquidation, the price trend is expected to be better. At the same time, the accelerated localization process of optical chips is expected to provide cost reduction space. In addition, the accelerated penetration of 10gpon will also bring considerable increment.
Investment advice
The flow catalysis industry has accelerated into the upward cycle. We suggest to focus on the industry leaders Zhongji Innolight Co.Ltd(300308) and Eoptolink Technology Inc.Ltd(300502) focusing on the digital communication market. The core advantages are the stable supply chain system and large-scale delivery capacity. At the same time, it is making progress in the 800g field, and it is expected to seize the dividend window period of technology change in the future. It is suggested to focus on the industry leader Huagong Tech Company Limited(000988) focusing on the telecom market. At the same time, it is suggested to pay attention to Hengtong Optic-Electric Co.Ltd(600487) , Broadex Technologies Co.Ltd(300548) , Accelink Technologies Co.Ltd(002281) , T&S Communications Co.Ltd(300570) , Cig Shanghai Co.Ltd(603083) , Hangzhou Anysoft Information Technology Co.Ltd(300571) , Sichuan Tianyi Comheart Telecom Co.Ltd(300504) , Shenzhen Gongjin Electronics Co.Ltd(603118) , China Bester Group Telecom Co.Ltd(603220) , Tongyu Communication Inc(002792) in the optical communication industry.
Risk statement
The demand of telecom market / data communication market is lower than expected, the market competition is intensified, and the price of optical module has fallen too much
