\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 94 Suzhou Tfc Optical Communication Co.Ltd(300394) )
Review the development process of the company in recent years and deeply resume the growth track. Since we released the company’s first coverage report in 2018, the company has continuously expanded its business territory in recent years. Starting from optical passive components, the company has gradually laid out the fields of optical active components and high-speed optical component packaging and OEM. Through the continuous investment and expansion of technology and products, the product line has been continuously expanded, and the company has an overall solution from components to OEM. What we have predicted before, including “the large volume of new products into the main increment”, “fine division of labor in the optical module industry”, “orderly expansion of downstream capital expenditure to stimulate industry demand”, are also gradually being realized. Based on the present, look at the future development opportunities of the company. The company built a one-stop platform for optical devices. With the continuous expansion of products and technologies, the company strengthened high-end passive products through endogenous epitaxy, and continued to improve the value and market share through the layout of active device packaging. Facing the future, the company makes every effort to build a high-speed optical engine product line and strengthen the cooperative relationship with downstream customers to cope with the sustainable development of digital communication and telecommunications market. In addition, relying on its perennial accumulation in the field of optical devices, the company has gradually expanded to new application fields such as lidar and medical detection, which will become an important driving force for the company’s future growth.
The high-speed optical engine is progressing smoothly, and the downstream expansion opens up new space for growth. The company is located in the upstream of the industry, with strong basic principle attributes of technology and products, and there is room for continuous expansion of downstream application scenarios. The company’s high-speed optical engine project in 2021 has achieved remarkable results in fixed increase and large R & D investment, and the product joint R & D strategy is very viscous. Under the background of the explosion of traffic in the data center, it is expected that the high-speed optical engine has the potential of large-scale volume in the fields of high-speed optical modules and CPO switches. The subsidiary Arctic optoelectronics has a solid accumulation in the field of high-end Coated optical devices, with strong competitiveness in active devices. It has a wide application space in the downstream fields of large space, such as laser radar and medical detection.
Digital communication has developed continuously and rapidly, and a new cycle of scientific and technological innovation has emerged. Digital communication is an important strategic highland for optical communication enterprises in the digital communication market. It has a huge demand for high-speed optical modules, digital communication equipment, servers or computing power. We see that technology giants led by Amazon, Google, meta and Microsoft are increasing their capital expenditure and continuously overweight the layout of emerging fields such as metauniverse and cloud computing. After several years of development, VR / AR technology and content have become mature, We judge that VR / AR equipment will become an important driving force for the continuous growth of subsequent traffic, superimposing the continuous development of 5g and other applications. We believe that the science and technology field is entering a new cycle, the digital communication market continues to develop at a high speed, and the company will continue to benefit.
Investment suggestion: we estimate that the company’s revenue from 2021 to 2023 will be RMB 1.046/1.518/1.994 billion respectively, and the net profit attributable to the parent company will be RMB 311/4.35/564 million, corresponding to eps0.01 billion 79 / 1.11/1.44 yuan, and the current share price corresponding to PE is 28.5/20.3/15.7 times respectively. Considering the prosperity of the industry, the company’s competitiveness and barriers, as well as the progress of the company’s new products and new customers, maintain the “buy” rating.
Risk tip: the expansion of new product line is less than expected, and the construction progress of traffic related infrastructure is less than expected.
