\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 08 Zhongji Innolight Co.Ltd(300308) )
Event: on April 21, the company disclosed the annual report of 2021. In 2021, the company achieved an operating revenue of 7.695 billion yuan, a year-on-year increase of 9.16%; The net profit attributable to the parent company was 877 million yuan, a year-on-year increase of 1.33%; The net profit attributable to the parent company after deducting non-profit was 728 million yuan, a year-on-year increase of 4.78%. In the first quarter of 2022, the company achieved an operating revenue of 2.089 billion yuan, a year-on-year increase of 41.91%; The net profit attributable to the parent company was 217 million yuan, a year-on-year increase of 63.38%.
Overseas demand grew strongly and the performance in the first quarter exceeded expectations. According to the company’s announcement, overseas key customers have continued to promote the deployment of 400g and 200g since 2022, and the corresponding orders are sufficient. In the first quarter, the growth rate of operating revenue in a single quarter hit the highest level since 2021. At the same time, it promoted the acceleration of the company’s operating turnover. In the first quarter, the turnover days of accounts receivable decreased from 89 days to 70 days, the turnover days of inventory decreased from 310 days to 220 days, the operating cash flow changed from negative to positive, and the net inflow of operating cash flow in the first quarter reached a record high of 900 million yuan.
New products and processes have been introduced continuously, and the profitability of high-speed optical modules has been improved. In 2021, the gross profit margin of high-speed optical module was 27.97%, with a year-on-year increase of 0.11pct; In the first quarter of 2022, the overall gross profit margin was 26.28%, with a year-on-year increase of 1.17 PCT. Against the background of rising raw material costs, the gross profit margin of the company has increased against the trend. On the one hand, because the production scale and supply capacity are at the forefront of the industry, the scale advantage has greatly improved the company’s ability to undertake large orders and effectively reduced the company’s manufacturing and procurement costs; On the other hand, the company continues to promote product technology iteration and reduce comprehensive costs by optimizing product design and production process. In the future, with the continuous improvement of the leading position of the company and the continuous promotion of new processes, the gross profit margin of the company is expected to rise steadily.
800g silicon light was launched, and the cutting-edge products continued to lead the industry. According to the company’s official wechat, the DR8 and 2xfr4 silicon optical modules of 800g OSFP and qsfp-dd800 have begun to send samples to customers for testing. The company’s 800g silicon optical pluggable module is based on self-designed silicon optical chip, and gives full play to the advantages of silicon optical technology by optimizing chip design, chip packaging process and module manufacturing process. At the same time, in order to meet the needs of customers for batch deployment of 400g, the 400g DR4 + and 100gfr1 based on self-designed silicon optical chips of the company have entered the market introduction stage. We believe that the company extends from downstream packaging to upstream chip design, and the layout of silicon optical products is leading the industry, which is expected to fully benefit from the improvement of silicon optical permeability.
Investment suggestion: the company’s R & D advantages are prominent, and the R & D capabilities of relevant modules, 800g modules, silicon optical modules and other cutting-edge technologies continue to improve. With the continuous acceleration of data center network construction, the market share of the company, as a global leading enterprise of data communication optical module, is expected to further rise. We maintain the profit forecast and expect the company’s revenue to be 10 / 121 / 15.2 billion yuan in 2022 / 23 / 24; The estimated net profit is 1.249/14.96/1.950 billion yuan. Give 30 times PE in 2022 and maintain the target price of 46.8 yuan. Maintain the “Buy-A” investment rating.
Risk warning: overseas demand is less than expected, market competition intensifies, raw material price fluctuation risk, and production expansion process is less than expected
