Multiple factors influence 23-year results
The company released an annual report for '23 and a quarterly report for '24. In '23, the company achieved operating income of 755 million yuan, a year-on-year decrease of 16%. Net profit to mother was a loss of 47.55 million yuan, and profit of 64.28 million yuan for the same period in '22.
The main reasons for the company's losses include: a year-on-year decrease in operating income; a decrease in gross margin due to price cuts for some products; a 15 percentage point year-on-year decrease in gross margin for optical chips and device products; a year-on-year increase in R&D expenses, of which material costs increased sharply by 13.44 million yuan; and preparation for impairment of related assets, about 27.28 million yuan.
1Q24 Reversed losses and revenue resumed growth
Operations resumed in the first quarter. In the first quarter of '24, the company achieved operating income of 198 million yuan, a year-on-year increase of 33%, and net profit of 8.44 million yuan to mother, turning losses into profits year-on-year and month-on-month. Among them, revenue from optical chips and devices, indoor optical cables, and cable materials all increased to varying degrees over the same period last year.
CW light sources have achieved small-batch shipments, and optical fiber connectors have grown rapidly in 23 years. Among optical chips and device products: 1) AWG chip series revenue was 127 million yuan, a decrease of 41% year on year, mainly due to falling demand in the first half of '23 and recovery in the second half of the year. In addition, 200G-800G parallel optical components (silicon optical connectors) have been mass-produced and 1.6T products are in a state of sample delivery; 2) The revenue of the PLC splitter chip series was 86 million yuan, a decrease of 23% year on year; 3) DFB laser chip revenue was 50 million yuan, up 9% year on year. Among them, access network products have been shipped steadily, CW light sources have been shipped in small batches, digital high-speed EML is still being developed, and 50G PON EML has completed initial process development; 4) Optical fiber connectors reached 72 million yuan, an increase of 55% over the previous year. Its revenue mainly comes from multi-core beam connectors and single- and double-core optical fiber connectors.
Other reserve products
1) MPO-FA products have been developed, applied to 800G/1.6T modules, CPO & silicon optical solution mode-field conversion FA series products, and coherent optical module solutions to achieve small-batch shipment; 2) In the field of satellite and laser sensing, the company has developed narrow outer cavity linewidth lasers and high saturated power semiconductor optical amplifiers. In many customer performance tests, some customer performance tests have passed. 3) The lidar seed source customer verified that the performance was qualified and began small-batch sales.
Profit forecasting and investment advice
According to the company's annual report and the situation for the first quarter, we expect net profit to be RMB 61 million, RMB 92 million and RMB 120 million for 2024-2026, respectively (the original forecast was RMB 68 million and RMB 101 million for 2024 and 2025, respectively). Based on the company's passive+active optical chip layout, products such as CW light sources, AWG, and parallel light modules are expected to benefit from 400G/800G/1.6T of silicon light and maintain an “increase” rating.
Risk warning: risk of technology upgrade iteration; risk of R&D failure; risk of loss of key technical talent; demand for optical chips falls short of expectations; expansion of silicon light business falls short of expectations.