\u3000\u30 Beijing Jingyeda Technology Co.Ltd(003005) 02 Eoptolink Technology Inc.Ltd(300502) )
Key investment points:
North American high-end demand drives industry growth, and China’s cost advantage drives production capacity to move eastward
Lightcounting predicts that from 2022 to 2024, the global optical module market will be US $107.65/119.56/13.262 billion respectively, with a year-on-year increase of 16.09% / 11.06% / 10.92%. According to the data of lightcounting in January 2021, the global market share of domestic optical modules increased by an average of 3.1% per year from 2010 to 2021 and exceeded 50% in 2021. According to the relevant data of lightcounting, the scale of China’s optical module industry in 20222024 was US $5.427/63.64/7.432 billion respectively, with a year-on-year increase of 22.95% / 17.25% / 16.78% respectively, higher than the growth rate of global market scale.
Remarkable achievements have been made in expanding the overseas high-end market, and the revenue of overseas business has doubled for two consecutive years
The company set up a branch in North America in 2017 to expand the North American data center high-end optical module market. From 2019 to 2021, the proportion of the company’s overseas sales revenue continued to increase, accounting for 43.59% / 56.10% / 78.98% respectively. From 2020 to 2021, the company’s overseas sales revenue increased by 127.04% / 105.91% respectively year-on-year. The rapid growth of overseas business scale helps the company gradually establish stable upstream and downstream cooperation relations, form effective overseas market development strategies, and consolidate the basic sector of performance growth.
The R & D capacity and high-end production capacity have been continuously improved, and the cost control ability is leading in the industry
The company has attached great importance to R & D investment for a long time. It is one of the few enterprises in China that can deliver 100g, 200g and 400g high-speed optical modules of data centers in batches. 800g optical module series products, 400g optical module products based on silicon optical solutions and 400gzr / Zr + coherent optical modules have been successfully launched. In terms of production capacity, the company’s raised investment projects are expected to reach production capacity in 2022, with an additional annual production capacity of 2.85 million, and continue to consolidate the delivery capacity. The company’s cost control ability is better than most comparable companies in China, and its profitability is leading in the industry.
Earnings forecast, valuation and rating
Considering the remarkable achievements of the company in opening up overseas markets from 2020 to 2021, the constant increase and expansion of production, the continuous focus on overseas high-end markets, the leading cost control ability and other factors, we expect the company’s revenue from 2022 to 2024 to be 1.130 billion yuan, 38.33/46.74/56.42 EPS to be 1.57/1.88/2.23 yuan / share, 3-year CAGR to be 19.51%, and the corresponding PE to be 16.28/13.60/11.49 times respectively. The target price for 2022 is 37.68 yuan, corresponding to 24 times of PE. For the first time, give a “buy” rating.
Risk tips
Systemic risk, risk of less than expected demand, supply chain risk, risk of intensified market competition, etc.
