The rapid growth of AI has led to the high growth of the company's optical module ceramic shell business, and consumer products have opened a second space for growth: the company's optical communication device shell business, which can be used to encapsulate a full range of optical communication devices such as TOSA, ROSA, ICR, WSS, etc., with transmission rates ranging from 2.5Gbps to 800Gbps, used in scenarios such as optical fiber backbone network, metropolitan area network, broadband access, CATV, Internet of things and data center. According to Lightcounting statistics, the global optical module market will be 7.37 billion US dollars in 2021. It is expected that with the rapid development of data communications in the next few years, the optical module market will usher in a period of rapid growth. In 2025, the global optical module market is expected to reach 11.32 billion US dollars, with CAGR about 11%.

The company adds new precision ceramic parts business, mainly specializing in semiconductor equipment parts, domestic replacement space is broad: with the gradual ploughing in the field of electronic ceramics, the company broke through the more technically difficult precision ceramic parts business in 2022. Precision ceramic parts are one of the key components of semiconductor equipment, including ceramic rings, arms, vacuum chucks, ceramic heating plates and electrostatic chucks. It is mainly used in etching machine, glue developer, lithography machine, ion implantation machine and other key semiconductor equipment. On the demand side, only electrostatic chucks, according to QYResearch statistics, the global market sales of 1.714 billion US dollars in 2021, is expected to reach 2.412 billion US dollars in 2028.

Orderly progress of restructuring and mergers and acquisitions to expand the third-generation compound semiconductor business: on July 13, 2023, the company received a reply from the Securities Regulatory Commission to issue shares to purchase assets, and the project is expected to be launched this year. After the implementation of the project, China Ceramic Electronics will have the design and production capacity of GaN RF chips and SiC power devices, further expand the company's layout in the semiconductor field, and at the same time enhance the collaboration capability of the parent company's wireless power device shell business.

Investment suggestion: from 2023 to 2025, we expect the company to achieve a total operating income of 1.704 million yuan, 2.308 billion yuan, and a net profit of 1.91 million yuan. The corresponding PE is 64.10 times as much as 127.01 shock, which is covered for the first time and given the rating of "over-holding".

Risk hints: reorganization and integration and poor management of multi-main business; deviation or lag of technological research and development; production capacity of consumer electronic ceramic shell can not be digested in time.