\u3000\u3000 Eoptolink Technology Inc.Ltd(300502) (300502)
Event: on January 24, the company released the annual performance forecast for 2021. It is estimated that the net profit attributable to the parent company will reach 640-680 million yuan in 2021, with a year-on-year increase of 30.15% - 38.28%, deducting 578-618 million yuan of non net profit, with a year-on-year increase of 26.01% - 34.73%. The performance is in line with the expectation.
Event: according to the performance forecast, the net profit attributable to the parent company is expected to be 175-215 million yuan in 2021q4, with a month on month increase of 23.24% - 51.41%; The non net profit deducted in 2021q4 was RMB 145-185 million, with a month on month increase of 10.69% - 41.22%. Throughout the year, despite the fluctuation of Q3 single quarter performance, the company still achieved rapid growth of annual performance. During the reporting period, the revenue and profit increased significantly, mainly benefiting from the continuous capital expenditure of data center operators outside China, proper cost control, stable profitability and continuous and stable cooperation with customers in the telecommunications market.
It is expected that the capital expenditure of head cloud manufacturers will enter the expansion cycle in 2022, the 5g capital expenditure of operators will rise steadily, and the long-term demand is still good. Under the catalysis of the epidemic, the use of the whole traffic market has been accelerated, and the capital expenditure of operators in the field of data communication has increased significantly; Overseas, the demand for data centers is growing, and 400g digital communication optical modules have entered the stage of rapid volume. With the gradual change of overseas office and living habits, it is expected that the digital communication optical module market is expected to maintain rapid growth in the future. According to the data of Dell'Oro group, the global data center capital expenditure will increase by 17% year-on-year in 2022, including the data center expenditure of super large-scale cloud service providers will increase by 30% year-on-year. It is estimated that the data center capital expenditure of the top four cloud service providers Amazon, Google, meta and Microsoft will exceed US $20 billion, According to the data analysis, the capital expenditure of head cloud manufacturers will enter the expansion cycle in 2022. In China, the capital expenditure of 5g investment of the three major telecom operators has increased steadily, and the demand for Telecom grade optical modules is expected to continue in large quantities.
The acquisition of assets forces silicon light to actively layout future development. The company has made many breakthroughs in R & D projects related to high-speed optical modules, 5g related optical modules, optical devices, silicon optical modules and 800g high-speed optical modules. According to the company's announcement, the company is one of the few enterprises in China to deliver 100g optical modules and 400g optical modules in batches, master high-speed optical device chip packaging and optical device packaging, and successfully sample 400g qsfp-dd DR4 silicon optical modules and 800g optical module product portfolio based on EML and siph solutions. In addition, CFIUS issued a notice approving the company to acquire the remaining equity of Alpine. Through this acquisition, the company will deeply participate in the market competition of silicon optical module, coherent optical module and silicon photonic chip technology. We believe that the company has maintained a good development trend in recent years, established good cooperative relations with global mainstream equipment manufacturers and Internet manufacturers, continued to optimize its core technology experience, and is expected to continue to improve its advantageous position in the high-end market driven by self research + acquisition.
Investment suggestion: the company's annual performance is in line with market expectations. In the future, driven by the large volume of overseas digital + China Telecom Corporation Limited(601728) business optical modules, the company is expected to fully and continuously obtain head dividends. We expect the company to achieve revenue of 2.795 billion yuan, 3.753 billion yuan and 4.494 billion yuan from 2021 to 2023; The net profit is expected to be 667 million yuan, 912 million yuan and 1108 million yuan. Maintain the target price of 54 yuan and maintain the "Buy-A" investment rating.
Risk tip: the capital expenditure of overseas Internet giants is lower than expected, the demand for optical modules in China is lower than expected, the risk of rising raw material costs, M & A integration is lower than expected, and the progress of silicon light is lower than expected
