\u3000\u3000 Advanced Fiber Resources (Zhuhai) Ltd(300620) (300620)
Event overview: on January 17, 2022, the company released the performance forecast for 2021. It is expected that the net profit attributable to the parent company will be 124-142 million yuan, with a year-on-year increase of 110% – 140%. Among them, Q4’s net profit attributable to the parent company is expected to be 27-45 million yuan, with a year-on-year increase of 74% – 189%.
Guangku Milan turned losses into profits and its annual performance exceeded market expectations: according to the performance forecast, the net profit attributable to the parent company in 2021 is expected to be 124-142 million yuan, a year-on-year increase of 110% – 140%. The performance growth in 2021 is obvious. On the one hand, the company has achieved steady growth in operating revenue through technological innovation, introduction of new products and active development of new customers at home and abroad. On this basis, guangku Milan Co., Ltd., a wholly-owned subsidiary of the company, began to turn losses into profits in 2021, which led to a significant increase in the overall net profit attributable to the parent company.
The lithium niobate business has obvious competitive advantages, and the fixed increase and expansion of production accelerates the release of performance: after completing the acquisition of relevant assets of lithium niobate series high-speed modulator product line of optical device giant lumentum in early 2020, the company officially entered the lithium niobate field. The threshold in this field is high, and the main competitors are only Fujitsu and Sumitomo of Japan. The overall competition pattern is good. The company will fully benefit from its cost advantage in sealing and testing and the opportunities brought by the localization substitution on the demand side. In addition, the company is making progress in the current industry frontier – thin film lithium niobate. In December 2020, the company launched the fixed growth project, which will be fully completed in 2025. On the one hand, it will obtain complete chip design, production, packaging and testing capabilities, and help the company develop to the lithium niobate optical chip IDM mode. On the other hand, 80000 lithium niobate modulator chips and devices will be added, which is expected to accelerate the release of performance.
Lidar business has accumulated a lot and is expected to further expand the company’s growth space in the future: the company has been deeply engaged in the field of fiber laser devices for many years and has rich product matrix. Many fiber laser device products can be applied to fiber lasers in lidar. At present, relevant products have been supplied in small quantities to key overseas manufacturers, and have been adapted to major lidar manufacturers in China. In the future, with the accelerated volume of lidar, it is expected to create a second growth curve for the company.
Investment suggestion: we expect the net profit attributable to the parent company from 2021 to 2023 to be RMB 132 / 230 / 333 million respectively, and the corresponding PE multiple is 68x / 39x / 27x. The company actively transformed into a scarce supplier of lithium niobate optical chips and devices in China. In the future, the company will fully benefit from the large market space brought by thin-film lithium niobate and the opportunity to improve the competitive pattern brought by domestic substitution. The fixed increase and expansion of production is expected to accelerate the release of the company’s performance. At the same time, the lidar business is accelerated, which is expected to further expand the company’s future growth space and maintain the “recommended” rating.
Risk tip: the production expansion progress of lithium niobate is less than expected, the development of thin film lithium niobate route is less than expected, and the industry competition is intensified
