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2026-11-05 14:23:27 HSBC Global Investment Research published a research report stating that ZJ INNOLIGHT (03308.HK) (300308.SZ), as a leader in the optical module market, is expected to maintain its dominant position as optical module transmission speeds begin doubling to 3.2T. The broker initiated coverage on the company for the first time, assigning Buy ratings to both its H shares and A shares, with a TP of HKD865 for H shares and RMB727 for A shares. HSBC Global Investment Research noted that AI infrastructure is driving bandwidth demand and expanding demand for high-speed optical modules. Its model shows that ZHONGJI INNOLIGHT (300308.SZ) may achieve around a 44% market share in 1.6T optical modules by 2027. The broker expects 1.6T products to drive the next phase of earnings growth, while 3.2T and near-packaged optics (NPO) could extend opportunities as architectures evolve. Customers may broaden procurement sources, and the broker therefore forecasts the company's market share in 3.2T to be lower than in 1.6T, though it still expects the company to remain one of the leading suppliers. The broker believes that a faster transition from 800G to 1.6T and then to 3.2T will help maintain a favorable product mix structure for a longer period. Its model indicates gross margin may remain around 44% to 45% through 2028. The broker forecasts net profit of RMB71.3 billion and RMB105.8 billion for 2027 and 2028, respectively, compared with RMB10.8 billion in 2025. R&D expenses are expected to rise from RMB1.6 billion in 2025 to RMB10 billion in 2028, though as a percentage of sales they are projected to decline from 4.2% to 3%. The broker adopted a PEG valuation approach, applying the industry average PEG of 0.14x to the company's 2026-2028 net profit CAGR of 84%, deriving a target 2027 PE ratio of 12x. Based on forecast 2027 EPS of RMB60.57, it arrived at an A-share TP of RMB727. Using the FX team's forecast of HKD1.19 against RMB1 by end-2027, the H-share TP was converted to HKD865. Major downside risks include customer concentration, faster erosion in average selling prices and competitive pressure, as well as stricter US restrictions on Chinese optical suppliers.(da/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |