\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 08 Zhongji Innolight Co.Ltd(300308) )
Events
The company issued a repurchase plan and plans to use its own funds to repurchase the company’s shares in the form of centralized bidding for equity incentive or employee stock ownership plan. The repurchase price shall not exceed RMB 2024 million / day after being deliberated by the board of directors, and the repurchase period shall not exceed RMB 2022 million / day, and the repurchase price shall not exceed RMB 2024 million / day.
Our comments are as follows:
Repurchase shows the company’s confidence in future development. Looking back on the past 21 years, the quarterly performance has continued to improve. Short term factors have a certain impact on the current performance, and the impact in the future is expected to be gradually eliminated.
Repurchase demonstrates the company’s confidence in long-term sustainable and stable development and attaches importance to the interests of investors. In the early stage, the company issued a 21 year performance express, with a 21 year revenue of 7.695 billion yuan, a year-on-year increase of 9.16%; The net profit attributable to the parent company was 875 million yuan, a year-on-year increase of 1.07%. In the fourth quarter of the year, the operating revenue in a single quarter was 2.373 billion yuan, an increase of 28.6% year-on-year and 17.2% month on month; The net profit attributable to the parent company was 315 million yuan, an increase of 18.5% year-on-year and 43.5% month on month.
From a quarterly perspective, the company’s operating revenue and net profit attributable to the parent company increased steadily quarter by quarter in 2021. As a whole, in 2021, 1) global traffic growth drives key customers of the data center to continuously increase capital expenditure investment, accelerate the deployment of high-end optical modules such as 200g and 400g, and the company has strong demand for orders; 2) Revenue increased significantly quarter on quarter. 400g high-end products have become the primary source of revenue of the company. The optimization of product structure, cost reduction and efficiency increase have promoted the year-on-year improvement of overall gross profit margin; 3) The company will increase investment in research and development of new technologies and products, and high-end new products will gradually form large-scale sales, bringing incremental revenue.
However, in 2021, 1) the equity incentive fee will affect the profit by about 58 million yuan; 2) The decrease of investment income and government subsidies led to a year-on-year decrease of about 68 million yuan in the parent company’s profit; 3) The transfer of a wholly-owned subsidiary, CIIC, and the decrease in its current performance led to a decrease in the net profit attributable to the parent company of about 20 million yuan. The above short-term events have a certain impact on the annual performance of 21 years, and these impacts are expected to gradually weaken in the future.
Looking forward to the first quarter of 22 years, the industrial chain confirms the high prosperity of 22q1 industry.
According to the latest forecast data of lightcounting, eight of the nine global head optical module enterprises said that their sales increased year-on-year. Only lumentum’s sales of about $65 million were affected by the shortage of semiconductor supply chain, resulting in a year-on-year decrease of 7% in 22q1 revenue. On the whole, the industrial chain has improved its response to supply chain fluctuations, the demand of downstream cloud manufacturers has continued to grow, the price decline of main products has been relatively narrowed, the penetration rate of high-end products has increased, and the comprehensive average price has increased, laying a good development trend for the optical module industry.
In the medium and long term, the growth of traffic and the development of new technologies drive major customers such as cloud manufacturers to continue to increase capital expenditure. The demand for high-end optical modules is expected to continue to grow, and the leading position of the company is stable.
According to Google’s latest data, among its network traffic, traditional server traffic has increased by 40%, machine learning related traffic has increased by 55-60%, and AI related traffic has accounted for more than 50% of the total data center traffic. In the future, with the continuous development of AI, metauniverse and other new technologies, network traffic will maintain long-term growth. As the core carrying link of network traffic, optical modules have benefited from the continuous increase of capital expenditure investment by cloud manufacturers. The deployment of high-end optical modules such as 200g / 400g has continued to grow rapidly, and the next generation of 800g products have gradually entered the stage of scale deployment. As the global leader in high-end digital communication optical modules, the company has strong demand for orders. The next generation of 800g products are expected to continue to maintain the first mover advantage. In the future, it is expected to focus on benefiting from the continuous growth of industry demand and consolidate its leading position.
Investment advice and profit forecast
As the global leader of high-end digital communication optical modules, the company has a clear growth track from 40g to 100g and then to 400g. The advantages of 200g / 400g era company are expected to continue to the next generation of 800g products and continue to lead the development of the industry. Benefiting from the growth of cloud computing capital expenditure driven by the continuous growth of traffic, as well as the growth / rate upgrading of access network demand driven by 5g construction and Gigabit broadband upgrading in the telecommunications market, the company’s 22-year growth is expected to accelerate, and the repurchase scheme shows the company’s long-term growth confidence. It is estimated that the net profit attributable to the parent company from 21 to 23 will be RMB 870 million, RMB 1170 million and RMB 1.44 billion respectively, corresponding to 21 times of PE in 22 years and 17 times of PE in 23 years. The “overweight” rating is reiterated.
Risk warning: the demand is lower than expected, the global epidemic is higher than expected, the market competition risk, the repurchase items are changed, terminated or cannot be fully implemented, the 21-year performance express is the preliminary data, and the actual performance is subject to the annual report
