\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 08 Zhongji Innolight Co.Ltd(300308) )
Event overview: on March 4, 2022, the company announced that it would display 800g pluggable osfp2 FR4 and qsfp-dd800dr8 + silicon optical modules at ofc2022 exhibition. At the same time, it said that its 400gdr4 + and 100gfr1 based on self-designed silicon optical chips had entered the market introduction stage.
The advent of 800g silicon optical solution continues to consolidate the first mover advantage in the 800g field: the company has obvious first mover advantage in the 800g field. In December 2020, it took the lead in launching the industry’s first 800g pluggable OSFP and qsfp-dd800 series optical modules based on the traditional split scheme at the ECOC exhibition. Relevant products have successfully entered key customers and achieved small batch shipment in 2021. This time, the company further launched the 800g silicon optical scheme, which can support the transmission distance of 10km. It was announced that the relevant products have begun to send samples to customers for testing. As the pioneer of 800g optical module solution, the launch of silicon optical solution enriches the 800g product matrix and helps to further consolidate the company’s first mover advantage in 800g field.
The forward-looking layout of the silicon optical field has been for many years, and has the scarce ability to independently design silicon optical chips in the industry: the silicon optical solution has high integration, and has good performance in peak speed, energy consumption and cost, so it is one of the important development directions of optical modules in the future. As early as a few years ago, the company began to develop silicon optical chips for forward-looking layout. At present, it has the rare independent design and packaging capacity of silicon optical chips in the industry. The 800g silicon optical module released this time is based on independently designed silicon optical chips, and 400gdr4 + and 100gfr1 products based on independently designed silicon optical chips have entered the market introduction stage. On the one hand, the products are in the performance On the other hand, thanks to the company’s strong supply chain ability, it can ensure the stable mass production of silicon optical products and fully meet the large-scale delivery requirements of customers.
With high downstream demand, the company welcomes opportunities for accelerated development: looking forward to the future, metauniverse is the world’s largest application scenario and traffic consumer in the next few years. Major giants are expected to open a new round of capital expenditure competition on the infrastructure side. At the same time, China’s “counting East and counting West” policy will also boost the increment of China’s demand to a certain extent, The upstream optical module industry will usher in a period of high demand growth & accelerated technology iteration. Companies with deep binding to head customers, strong supply chain, outstanding large-scale delivery capacity and first mover advantages in forward-looking fields such as 800g will usher in opportunities for accelerated development.
Investment suggestion: we expect the net profit attributable to the parent company from 2021 to 2023 to be RMB 875 / 1164 / 1537 million respectively, and the corresponding PE multiple is 34x / 26x / 20x. The company is a global leader in digital communication optical modules. At 200g and 400g, it will fully benefit from the demand of downstream cloud giants. At the same time, the company has obvious first mover advantages in the field of 800g optical modules, and is expected to fully enjoy the dividends in the window period of technological change. Maintain a “recommended” rating.
Risk tip: the demand for optical modules of cloud computing giants is lower than expected, the industry competition intensifies, and the price of optical modules decreases too much
