Advanced Fiber Resources (Zhuhai) Ltd(300620) (300620)
Optical communication devices have been precipitated for 20 years and have accumulated profound technology. The company continues to focus on the optical communication industry focusing on fiber lasers. In 2018, the company acquired VLink to further enter the optical communication device industry from the optical fiber device industry and realize the leading design, manufacturing and packaging technology of optical components. In 2019, the company cut into the lithium niobate modulator production line. At present, a three wire business layout of fiber laser, optical communication and lithium niobate has been formed.
Build a technology star team and steadily increase the R & D expense rate. The management of the company mostly comes from related fields, has long-term experience in related industry management and research, and has deep scientific research genes. In order to ensure the retention of high-end talents, the company has carried out equity incentive three times since 2018, of which the incentive target in 2018 has been achieved, and the equity incentive is advancing steadily in 2020 and 2021. The equity incentive in 2021 will increase the lifting of the ban index of R & D expense rate compared with the previous one, which shows that the company attaches great importance to R & D. From 2018 to 2021h1, the R & D expense rate of the company was 9.30%, 9.68%, 10.05% and 10.09%. The R & D expense rate increased steadily and was in the leading position in the industry.
The localization rate of fiber laser has been continuously improved, the technology is leading, and the growth power has been added. Fiber laser has become the largest industrial laser market in the world, and China's production rate of fiber laser market has been increasing. The company has been in the field of polarization maintaining and high-power devices for 20 years, and its passive devices and other lasers rank at the first-class advanced level. With the increase of market share of domestic customers such as downstream Wuhan Raycus Fiber Laser Technologies Co.Ltd(300747) and Chuangxin laser, the company is expected to continue to benefit under the trend of industry prosperity.
5g + cloud computing drives the prosperity of optical communication device industry, and the company takes the lead in polarization maintaining passive device technology. Optical communication device is the main component of optical module, and its performance dominates the upgrading of optical communication network. With the maturity of 5g and cloud computing, the application scenarios such as communication network and data center are constantly developed, and the amount of data continues to grow, thus increasing the demand for high bandwidth communication. The company has a self-developed system and independent production capacity of optical communication devices, has a competitive advantage in the field of polarization maintaining passive devices, and provides core parts for 40g, 100g, 400g, 800g and other high-speed and ultra-high-speed optical modules, coherent communication and WSS modules.
The bayonet thin film lithium niobate modulator opens up the growth space by increasing production. Optical modulator is an important part of optical communication, among which electro-optical modulator is the core component of communication industry. At present, electro-optic modulators mainly include silicon light modulator, indium phosphide modulator and lithium niobate modulator. Lithium niobate material is widely used in high-speed modulation. The volume of thin-film lithium niobate modulator recently released by Fujitsu is 60% less than that of traditional products, which is expected to replace the traditional lithium niobate modulator and gradually replace the InP based modulator in the field of medium and long-distance communication transmission. In 2019, the company cut into the lithium niobate modulator business and established the photon integration department to fully develop the thin-film lithium niobate modulator technology. With the commissioning of lithium niobate high-speed modulator chip and industrialization project in 2020, it is expected that the project will achieve a revenue of 117 million in 2022.
Investment suggestion: the company is a scarce supplier of optical communication devices. Its traditional fiber laser and optical communication device business fully benefits from import substitution and industry demand growth. Lithium niobate modulator for emerging business is expected to achieve high-speed growth with constant increase and expansion of production. We expect that the company is expected to achieve operating revenue of 640, 946 and 1288 million yuan from 2021 to 2023, with a year-on-year increase of 30.11%, 47.86% and 36.19%. The net profit attributable to the parent company was 140, 213 and 289 million yuan, with a year-on-year increase of 136.17%, 52.45% and 35.61%, corresponding to EPS of 0.85, 1.30 and 1.76 yuan. Based on the closing price on January 6, 2022, the current market value of the company is RMB 8.712 billion, and the corresponding PE from 2021 to 2023 are 62.30x, 40.87x and 30.14x respectively, lower than the industry average. The company is given a "buy" rating for the first time.
Risk tips: the progress of thin film lithium niobate modulator is not as expected, the market competition is intensified, the risk of exchange rate fluctuation, the lag of public information or the risk of untimely information update
