\u3000\u3000 Advanced Fiber Resources (Zhuhai) Ltd(300620) (300620)
According to the performance forecast, the company expects to realize the net profit attributable to the parent company of 124-142 million yuan in 2021, of which 21q4 is expected to realize the net profit attributable to the parent company of 26-44 million yuan, with a year-on-year increase of about 71.26% – 187.77%; In 2021, the company expects to realize a net profit of about 105-118 million yuan, of which 21q4 is expected to realize a net profit of about 19-32 million yuan, a year-on-year increase of about 52.31% – 154.89%, and the performance is in line with expectations.
The fiber laser industry continues to enjoy high prosperity, and the leaders of passive components enjoy dividends: with the development of fiber laser to high power, the downstream application field continues to expand. The company’s self-developed isolators, fiber Bragg gratings and other passive components have a high market share, and its customers cover trumpfgroup, Shenzhen Jpt Opto-Electronics Co.Ltd(688025) , Wuhan Raycus Fiber Laser Technologies Co.Ltd(300747) and other Chinese foreign enterprises. Under the background of continuous high prosperity of fiber laser industry, the company is expected to take the lead in benefiting. At the same time, the company will further consolidate and improve the supply capacity of beam combiner, laser output head and other devices, and consolidate the leading position of passive devices.
Fiber laser components are supplied in small quantities to 1550nm lidar, which is expected to create a second growth curve. The company regards lidar as one of the important development directions in the future, and its optical fiber device products such as isolator, beam combiner and coupler have been supplied in small quantities by overseas manufacturers. With the evolution of lidar from 905nm to 1550nm, the company is expected to build a second growth curve with its first mover advantage and technical precipitation in the field of fiber laser.
The digital economy helps the optical communication industry prosper, and the device suppliers integrating production and research benefit simultaneously: the company has the ability to integrate production and research of optical communication devices, provides core parts for high-speed, ultra-high-speed optical modules and coherent communication, and is applied in many fields such as data center and communication system. With the frequent introduction of favorable policies for the digital economy, the construction of new infrastructure has accelerated, promoting the further prosperity and development of the optical communication industry. According to ovum and prospective industry research institute, the global optical communication device market will expand rapidly from 2021 to 2026, and is expected to reach US $38.4 billion in 2026. The company has rich products of optical communication devices, has competitive advantages in the field of polarization maintaining passive devices, and is expected to continue to benefit under the trend of industry prosperity.
The loss of optical library Milan has been reversed, and the business of lithium niobate modulator is beginning to show great promise: lithium niobate has the characteristics of multi photoelectric performance and strong regulation, and is widely used in the field of high-speed and ultra long-distance optical communication. At present, the market is mostly monopolized by overseas manufacturers such as Fujitsu and Sumitomo. In 2019, the company cut into the lithium niobate modulator business and established the photon integration department to fully develop the thin-film lithium niobate modulator technology. In 2022, with the constant increase projects of lithium niobate modulator put into operation, it will add more power to the growth of the company’s revenue.
Investment suggestion: the company is a scarce supplier of optical communication devices. Its traditional fiber laser and optical communication device business fully benefits from import substitution and industry demand growth. Lithium niobate modulator for emerging business is expected to achieve high-speed growth with constant increase and expansion of production. We maintain the company’s EPS of 0.85, 1.30 and 1.76 yuan from 2021 to 2023. Based on the closing price on January 17, 2022, the current market value of the company is RMB 8.948 billion, corresponding to PE of 63.99x, 41.98x and 30.95x from 2021 to 2023 respectively, maintaining the “buy” rating.
Risk tip: the progress of thin film lithium niobate modulator is not as expected, the market competition is intensified, the risk of exchange rate fluctuation, the lag of public information or the risk of untimely information update.
