Zhongji Innolight Co.Ltd(300308) (300308)
event:
Recently, the company announced that it plans to transfer 100% equity of its wholly-owned subsidiary Shandong Zhongji intelligent equipment to the controlling shareholder Shandong Zhongji Investment Holding Co., Ltd., with a transaction price of 502 million yuan.
comment:
Divest inefficient assets, pack light and focus on the core business of optical module: Recently, the company announced that it plans to transfer 100% equity of its wholly-owned subsidiary Zhongji intelligent equipment to the controlling shareholder Zhongji holdings at a transfer price of 502 million yuan. The subsidiary Zhongji intelligent equipment is mainly engaged in the R & D, manufacturing and sales of high-end motor stator winding manufacturing equipment. The revenue of Zhongji intelligent equipment in the first three quarters of 2018-2021 was RMB 1.59/1.27/1.86/042 million respectively, and the net profit was RMB -0.13 / – 0.47/0.11/ – 43 million respectively. Affected by adverse factors such as market demand fluctuation and intensified horizontal competition, In recent years, the overall operation of Zhongji intelligent equipment has shown a downward trend. Considering the business status of Zhongji intelligent equipment and the planning and needs of the company’s business strategic development, after the equity transfer, the company can peel off inefficient assets and further concentrate resources on the development of high-end optical communication transceiver module business, which is conducive to reducing business risks and continuously improving the company’s core competitiveness and profitability.
The capital expenditure of overseas cloud manufacturers continues to increase, and the implementation of new applications is expected to accelerate: according to the third quarter financial report of overseas cloud manufacturers, Amazon, the four major cloud manufacturers in North America Meta (Facebook), Microsoft and Google have a total capital expenditure of US $32.69 billion in 2021q3, with a year-on-year increase of more than 30%, a month on month increase of about 6%, and capital expenditure continues to increase. Major manufacturers are optimistic about the capital expenditure in 2022. Among them, meta said it would raise the capital expenditure guidelines for the construction of data centers and network infrastructure related to yuancosmos. It is expected that the capital expenditure for the whole year of 2021 will be increased About USD 19 billion, and the capital expenditure is expected to be USD 29-34 billion in 2022, with a year-on-year increase of about 53% – 79%. With the continuous growth of capital expenditure of cloud manufacturers and the accelerated implementation of new technologies and applications such as VR / AR, artificial intelligence, driverless and metauniverse, network data traffic is expected to usher in rapid growth again and accelerate the explosion of demand for high-end optical modules such as 200g and 400g. In the long run, the high growth of the cloud computing market is uncertain. The company is a leading enterprise in the field of high-end optical modules in the world. The proportion of 400g high-end optical module products continues to increase, which will continue to benefit from the improvement of the prosperity of the industry.
Profit forecast: we expect the net profit of the company in 2021 / 22 / 23 to be RMB 1.002/13.08/1.487 billion, yoy + 15.73% / + 30.59% / + 13.65%, equivalent to EPS of RMB 1.40/1.83/2.08. At present, the corresponding PE of A-share price is 31 / 23 / 21 times, giving a “buy” rating.
Risk tips: 1. The landing of new technologies and new applications is not as expected; 2. The risk of intensified market competition; 3. The capital expenditure of overseas cloud manufacturers is lower than expected
