\u3000\u3000 Eoptolink Technology Inc.Ltd(300502) (300502)
Event: on the evening of January 24, the company released the performance express of 2021. It is expected to realize the net profit attributable to the parent company of 640-680 million yuan, a year-on-year increase of 30.2-38.3%, deducting the non net profit of 578-618 million yuan, a year-on-year increase of 26.0-34.7%. It mainly benefits from the continuous growth of data center market demand outside China and the continuous and stable cooperation of customers in the telecom market.
The annual performance maintained a high growth, and the quarterly fluctuation did not change the long-term trend. Throughout the year, the construction of China Telecom Corporation Limited(601728) slowed down. With the overseas data communication and telecommunications market and the continuous strengthening of cooperation with customers outside China, the company still achieved the rapid growth of annual performance in the case of individual seasonal fluctuations. Looking forward to 2022, the continuous growth of traffic is still the general trend. Overseas technology giants have laid out new fields to strengthen the construction of data centers, and capital expenditure may continue to rise. The demand for 400g optical modules is expected to continue to increase. China's large cloud manufacturers will gradually enter a new cycle, including the telecom market, which will also maintain stable growth, and the company's long-term trend will continue to improve.
Accurate and sufficient goods preparation lays a solid foundation for delivery and performance. At the end of the third quarter of 2021, the company's inventory reached a record high of 1.38 billion yuan. The company's inventory has continued to increase since 20q3. Combined with the industrial chain research, we judge that the main reason is that the company has increased the reserves of chips and other key raw materials since the middle of 2020. Under the background of "core shortage" in 2021, chip reserve has become the key to limit the production capacity of each company. The company's sufficient raw material inventory helps it deliver orders on time and steadily release production capacity, which reflects the company's forward-looking judgment on the development of the industry, accurate supply chain management and better grasp the industry opportunities.
The layout of 800g and silicon light is complete, laying a good foundation for the future. The company acquired Alpine silicon photon technology platform, provided single wavelength 100g optical solution for data center connection, and provided pam4 products to strengthen the company's layout in the field of silicon light. At the same time, the company's 800g series product portfolio has been released for exhibition, and it is expected to conduct small-scale sample submission verification in the future. The company actively participates in the layout of the industry's cutting-edge technology development route. With the continuous iterative progress of the industry, we believe that the company's core technology experience will continue to strengthen, and its market position is expected to continue to improve, opening up a new space for 400g and subsequent development.
Continue to recommend and maintain the "buy" rating. Next year, the company's core focus is on the expansion of new customers and the continuous large-scale demand of overseas cloud manufacturers. We expect the net profit attributable to the parent company from 2021 to 2023 to be 650 / 81 / 960 million, yoy33% / 24% / 19%, corresponding to EPS of 1.29/1.60/1.90 yuan, corresponding to the current pe30 / 24 / 20x. Referring to the historical valuation of the industry, since the acquisition of Suzhou xuchuang, the Zhongji Innolight Co.Ltd(300308) PE (TTM) has been at 35-188x in recent 5 years; Accelink Technologies Co.Ltd(002281) PE（TTM）37-73X。 Considering the prosperity of the industry and the growth of the company's performance, the current valuation is attractive.
Risk tip: 5g progress does not meet expectations and market competition intensifies.
