Incidents:
On April 22, 2024, Xinyisheng released the 2023 Annual Report and 2024 Quarterly Report:
In 2023, the company achieved operating income of 3,098 billion yuan, a year-on-year decrease of 6.43%; net profit attributable to shareholders of listed companies was 688 million yuan, a year-on-year decrease of 23.82%. In the first quarter of 2024, the company achieved operating income of 1,113 billion yuan, an increase of 85.41% year on year; net profit attributable to shareholders of listed companies was 325 million yuan, an increase of 200.96% year on year.
Opinions:
Demand for optical modules grew rapidly, and the company performed well in the first quarter. With the rapid development of the AIGC market, AI models are putting greater demand on the network bandwidth of AI data centers, and the development of AI data centers is also accelerating the development and application of high-speed optical modules. Currently, the company can provide 100G, 200G, 400G, 800G and 1.6T optical module products for cloud data center customers. In the first quarter of 2024, benefiting from the release of optical module products, the company's performance was high, achieving operating income of 1,113 billion yuan, an increase of 85.41% year on year; net profit attributable to shareholders of listed companies was 325 million yuan, an increase of 200.96% year on year. In addition, the company's profit level was high in the first quarter. The company's gross margin for the first quarter was 42%, up 7.96 percentage points year on year, up 5.23 percentage points from month to month; net interest rate was 29.16%, up 11.19 percentage points year on year, up 3.55 percentage points from month to month.
Promote the development of the high-end optical module market and continuously enhance the company's competitiveness and profitability. The company has now achieved batch shipment of 100G, 400G, and 800G optical module products, and has successfully launched the industry's latest 800G/1.6T optical module products based on single-wave 200G optical devices. The high-speed optical module product portfolio covers technical solutions such as VCSEL/EML, silicon light, and thin-film lithium niobate; it has launched 400G, 800GZR/ZR+ coherent optical module products, and 400G/800G optical modules based on LPO solutions. With the release of high-speed optical modules, the company's revenue scale and profitability will further increase.
Profit forecast and investment rating: With the capital raised by the company to invest in the completion and commissioning of the high-speed optical module production line project and the further expansion of the overall scale of the Thai factory, the company's R&D and production capacity will be further improved, and the product and customer structure will continue to be optimized to achieve a continuous improvement in the company's overall competitiveness. We expect the company to achieve net profit of 1,511 billion yuan, 2,062 billion yuan, and 3,013 billion yuan respectively in 2024-2026. The current stock price corresponds to PE of 39.4, 28.8, and 19.7 times, respectively. The first coverage gives a “buy” rating.
Risk warning: Optical module market demand falls short of expectations; optical module product prices fall; industry competition intensifies; risk of exchange rate fluctuations; adverse changes in the macro environment; the cited data sources publish erroneous data.