The company plans to issue convertible bonds. The company issued an announcement to issue convertible corporate bonds to raise capital. The total amount raised will not exceed 1.88 billion yuan. Of this, 960 million yuan was used for the Chengdu high-speed optical module expansion project, and 920 million yuan was used for the new high-speed optical module construction project in Thailand.
Demand for optical modules is growing rapidly, and production capacity determines the right to speak. Global demand for computing power is rapidly expanding. As a core component for connecting to servers and forming AI computing power clusters, overseas demand is exploding intensively. At the same time, optical modules for AI place higher demands on product performance, quality, and supply stability. Since the cloud computing era, domestic leaders Zhongji Xuchuang, Xinyisheng, and Tianfu Communications have achieved breakthroughs in the global high-end optical communication market with excellent product quality and stable product supply. In the AI era, whether China's optical module industry can provide stable and large production capacity for computing power is gradually beginning to determine the speed of global AI expansion. We believe that standing at the starting point of a new round of global technological revolution, the production capacity reserve for optical modules, the core AI link, is an essential part not only for the company, but also for China's optical module industry, and even China's voice in the global high-end manufacturing industry.
The company achieved remarkable results in the last round of fixed growth, helping the company seize the AI trend. The company completed its last round of financing in December 2020, raising a total of 1.65 billion yuan for the construction of high-speed optical module production capacity. We believe that the company's new production capacity, which was expanded after the last round of financing, is a key part of the company's ability to seize opportunities in the global AI wave. After the company completed financing, the diluted ROE continued to grow in 2021 and 2022, and in 2023, it used new production capacity to seize the AI window and break out of the bottom of the industry. As a leader in the optical module industry, the company meets the core needs of major overseas customers and has a sharper grasp of the industrial cycle and production capacity needs. We believe that similar to the previous round of financing, the company is expected to further improve the company's operating quality and industry position through the second round of financing.
Overseas AI demand continues to be strong, and giants are speeding up the internal volume of AI hardware. Recently, overseas AI development has continued to accelerate, from the release of Nvidia B-series products to the evolution of capabilities of the GPT-4O model. At the same time, changes are continuing at the industry level. At the Nvidia earnings conference, Huang Renxun said that Nvidia will enter the Ethernet market with Spectrum-X switches, and the company expects Spectrum-X to become a multi-billion dollar product line within a year. Meanwhile, Musk's artificial intelligence company xAI plans to launch a supercomputer to provide computing power support for the next version of its chatbot, Grok. Meanwhile, overseas giants such as Amazon and Meta all continue to bet on AI infrastructure. The rapid changes in overseas industries will also bring more development opportunities to domestic optical module leaders.
Investment advice: We expect that under the continuous impetus of AI demand, the demand and market space for high-speed optical modules will be further opened up, and the volume of high-speed products is expected to accelerate. We expect the company's net profit to be 15.28, 22.45, and 2,998 billion yuan in 2024-2026, corresponding PE of 40.3, 27.4, and 20.5 times.
This announcement is an initial proposal. Information such as the share transfer price has not yet been finalized, and the “buy” rating is maintained.
Risk warning: AI development falls short of expectations, demand for computing power falls short of expectations, market competition risks.