Group 1 - The industry investment rating is "Buy" [2] - The report indicates that the communication sector's fund holdings have continued to rise quarter-on-quarter, with a notable increase in the allocation towards optical modules in Q4 2025 [6][20] - The communication sector's PE-TTM as of December 31, 2025, is 49.5 times, ranking it 7th among all Shenwan first-level industry indices, with a slight increase compared to the previous quarter [14][20] Group 2 - In Q4 2025, the total market value of fund holdings in the communication sector reached 186.39 billion CNY, an increase of 23.88 billion CNY from Q3 2025, marking the highest proportion of fund stock holdings in four years at 9.5% [23][25] - The report highlights a significant trend of increasing fund concentration in optical modules, with major holdings in companies like Zhongji Xuchuang, Xinyi Sheng, and Tianfu Communication [28][31] - The report notes a shift in fund strategies, with increased holdings in China Telecom (H shares) and a reduction in holdings of telecom equipment manufacturers like Zhongtian Technology and ZTE [46][54]

Investment Rating - The report maintains an "Overweight" rating for the communication industry, expecting the industry index to outperform the market index by more than 10% in the next six months [2][44]. Core Insights - The communication industry index has shown a cumulative increase of 1.61% over the past two weeks (January 9 to January 22), outperforming the CSI 300 index by 1.91 percentage points, ranking 21st among 31 first-level industries [4][11]. - In January, the communication sector has risen by 2.48%, again surpassing the CSI 300 index by 0.45 percentage points [4][11]. - The report highlights a critical period of annual performance forecasts for listed companies, which serves as a key window to validate the growth potential and market conditions of various sectors [4][39]. Industry Performance Review - The communication sector's six sub-sectors have varied performance over the past two weeks, with the highest increase in the SW Communication Application Value-Added Services (+11.59%) and the lowest in SW Communication Terminals and Accessories (-1.64%) [4][15]. - The report notes that the communication industry is entering a phase of technological iteration and policy benefits, with new growth drivers expected from AI, quantum communication, and low-altitude economy [4][39]. Industry News and Company Announcements - IDC predicts that by 2030, AI agents will become a significant part of the global workforce, with a projected increase from approximately 28.6 million active agents in 2025 to 2.216 billion [16]. - China Mobile has established a special office for computing power strategy, marking a new phase in its systematic approach to computing power deployment [17][19]. - The Ministry of Industry and Information Technology reports that AI has penetrated over 70% of business scenarios in leading smart factories [20]. - Tianfu Communication expects a net profit increase of 40%-60% for 2025, driven by the growth in AI and data center construction [23]. - Changxin Bochuang anticipates a net profit increase of 344%-413% for 2025, fueled by demand in cloud computing and AI [24]. Industry Data Updates - As of November 2025, the mobile phone user base reached approximately 1.828 billion, a year-on-year increase of 2.20% [27]. - The internet broadband access user base was about 697 million, reflecting a year-on-year increase of 4.28% [29]. - The length of optical cable lines reached approximately 74.44 million kilometers, with a year-on-year growth of 3.63% [30]. - By November 2025, the total number of 5G base stations reached 4.83 million, with a net increase of 579,000 from the previous year [36]. Investment Recommendations - The report suggests focusing on companies that align with the themes of "technology commercialization, policy catalysis, and earnings certainty," highlighting potential opportunities in the sector [4][39]. - Recommended stocks include China Mobile (600941.SH), China Telecom (601728.SH), ZTE Corporation (000063.SZ), Changfei Optical Fiber (601869.SH), and Weisheng Information (688100.SH) [40][42].

Market Overview - The Shanghai Composite Index closed at 4136.16 points, up 0.33%, with a trading volume of 1.3369 trillion yuan. The Shenzhen Component Index rose 0.79% to 14439.66 points, with a trading volume of 1.7484 trillion yuan. The ChiNext Index increased by 0.63% to 3349.50 points, with a trading volume of 822.63 billion yuan. The STAR Market 50 Index closed at 1553.71 points, up 0.78%, with a trading volume of 110.8 billion yuan. The total trading volume of both markets was 3.0853 trillion yuan, an increase of 393.5 billion yuan compared to the previous trading day [1]. Sector Performance - The market saw more sectors gaining than losing, with notable increases in power equipment, non-ferrous metals, precious metals, defense and military, steel, media, computer, environmental protection, and textile and apparel sectors. Concepts such as perovskite batteries, commercial aerospace, satellite internet, sapphire, lithium mining, cultivated diamonds, small metals, gold, and interactive short dramas were particularly active. In contrast, sectors like communication, insurance, banking, coal, and home appliances experienced declines [1]. Individual Stock Performance - A total of 3707 stocks rose, while 1336 stocks fell, with 134 stocks remaining flat and 6 stocks suspended. Excluding newly listed stocks, there were 120 stocks hitting the daily limit up and 2 stocks hitting the limit down [2]. - Among the stocks that hit the daily limit up, 23 stocks had consecutive limit-up days of 2 or more, with Fenglong Co., Ltd. leading with 18 consecutive limit-ups [3]. Capital Flow - The net capital outflow from the two markets was 4.167 billion yuan, with the ChiNext seeing a net inflow of 1.515 billion yuan. The CSI 300 index experienced a net outflow of 1.005 billion yuan, while the STAR Market saw a net outflow of 3.171 billion yuan. Out of 31 sectors, 13 sectors had net capital inflows, with the power equipment sector leading with a net inflow of 8.977 billion yuan [4][6]. - The top sectors with net inflows included non-ferrous metals (4.552 billion yuan), media (2.173 billion yuan), and defense and military (2.157 billion yuan). Conversely, the communication sector had the highest net outflow of 7.992 billion yuan, followed by electronics (6.350 billion yuan) and machinery (5.077 billion yuan) [4][6]. Notable Stocks - 191 stocks had net capital inflows exceeding 1 billion yuan, with Jin Feng Technology receiving the highest net inflow of 1.861 billion yuan. Other notable stocks included Lens Technology (1.594 billion yuan), Qian Zhao Optoelectronics (1.267 billion yuan), and Xian Dao Intelligent (1.217 billion yuan) [7][8]. - Conversely, 116 stocks experienced net capital outflows exceeding 1 billion yuan, with Xin Yi Sheng leading with a net outflow of 3.471 billion yuan, followed by Zhong Ji Xu Chuang (3.103 billion yuan) and Li Ou Shares (2.604 billion yuan) [10][11]. Institutional Activity - Institutional investors had a net selling of approximately 1.02 billion yuan, with 22 stocks seeing net purchases and 14 stocks net sales. Jin Feng Technology was the most purchased stock by institutions, with a net purchase amount of approximately 266 million yuan [13][14].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative increase of over 15% compared to the CSI 300 index in the next six months [1][17]. Core Insights - The company is a leading provider of optical device solutions and advanced packaging services, focusing on high-speed optical devices and passive optical components, with a strong emphasis on R&D and international expansion [7]. - The company anticipates a significant growth in net profit for 2025, projecting a range of 1.881 to 2.150 billion yuan, representing a year-on-year increase of 40% to 60% [5]. - The demand for high-speed optical modules is expected to surge due to the growth of AI servers and data centers, with the market for optical devices projected to grow over 60% year-on-year [8]. Financial Performance - The company reported a gross margin of 51.87% and a diluted return on equity of 30.04% as of September 30, 2025 [1]. - The projected revenues for 2025 to 2027 are 5.514 billion yuan, 8.274 billion yuan, and 10.762 billion yuan, respectively, with corresponding net profits of 2.061 billion yuan, 3.190 billion yuan, and 4.174 billion yuan [10][15]. - The company’s R&D expenses for the first three quarters of 2025 were 200 million yuan, reflecting a year-on-year increase of 15.82% [8]. Market Position and Strategy - The company has established dual headquarters and production bases in Suzhou and Singapore, with R&D centers in Japan, Shenzhen, and Suzhou, and production facilities in Jiangxi and Thailand [7]. - The company is focusing on the development of 1.6T optical modules, which are expected to see a compound annual growth rate (CAGR) of 180% from 2024 to 2029 [8]. - The company’s strategy includes enhancing its core technology competitiveness through continuous R&D investment and expanding its product offerings in response to market demands [8].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][17]. Core Views - The company is an industry-leading provider of optical device solutions and advanced packaging manufacturing services, focusing on high-speed optical devices and optical sensing products [7]. - The company is expected to see significant growth in net profit, with forecasts for 2025 indicating a year-on-year increase of 40% to 60%, driven by the demand for high-speed optical devices and AI server growth [5][8]. - The company is strategically expanding its production capacity in Thailand and Jiangxi, which will enhance the value of its 1.6T supporting products [8]. Financial Performance - The company anticipates a net profit for 2025 in the range of 1.881 to 2.150 billion yuan, with a year-on-year growth of 40% to 60% [5]. - The projected net profit for Q4 2025 is estimated to be between 416 to 685 million yuan, reflecting a year-on-year increase of 50.14% [8]. - Revenue forecasts for 2025 to 2027 are 20.61 billion yuan, 31.90 billion yuan, and 41.74 billion yuan, respectively, with corresponding P/E ratios of 75.42X, 48.74X, and 37.25X [8][10]. Market Dynamics - The demand for AI servers is expected to drive growth in high-speed optical modules, with the optical device market projected to grow over 60% year-on-year [8]. - The company is focusing on the development of 1.6T optical modules, which are anticipated to experience explosive growth with a CAGR of 180% from 2024 to 2029 [8]. - The company has established a dual-headquarters and multiple production bases strategy, enhancing its international presence and R&D capabilities [7].

Core Viewpoint - Tianfu Communication is expected to achieve a year-on-year growth of 40.00% to 60.00% in net profit attributable to shareholders and a growth of 39.19% to 60.40% in net profit after deducting non-recurring gains and losses by 2025, indicating a sustained rapid growth trend in performance [1] Group 1: Performance Drivers - The core driver of the company's performance improvement is the accelerated development of the artificial intelligence industry, leading to continuous upgrades in global data center construction and computing power infrastructure, resulting in a significant increase in demand for high-speed optical communication systems [1] - The company's long-term technological accumulation and product layout in the fields of high-speed optical engines and core optical devices are gradually translating into order growth [1] Group 2: Strategic Initiatives - The global layout strategy is facilitating market expansion, with the CPO technology layout solidifying new advantages [1] - The company is continuously advancing the construction of its production base in Thailand as part of its global capacity layout [1] Group 3: Investment Outlook - As a leader in core optical devices for high-speed optical communication, the company is achieving strategic upgrades through a dual drive of "product technology + global capacity" [1] - The company is believed to have clear growth opportunities and valuation enhancement potential, with a target price of 236.3 yuan based on a 56 times PE for 2026, maintaining a "Buy-A" investment rating [1]

Group 1 - The core viewpoint of the article highlights the impressive performance of fund manager Ren Jie, who achieved a 233% annual return in 2025, and his latest portfolio reveals new investments and adjustments in holdings [1][2] - Ren Jie's top ten holdings include new positions in Dongshan Precision, Jingwang Electronics, Industrial Fulian, and Cambridge Technology, while he increased stakes in Shengyi Technology, Huadian Shares, Xinyi Technology, Shenzhen South Circuit, and Tianfu Communication, and reduced his position in Zhongji Xuchuang [1][2] - The report indicates that Ren Jie remains optimistic about AI, focusing on global cloud computing investments, and notes the performance of various indices during the fourth quarter of 2025 [2] Group 2 - The AI industry is experiencing a significant leap due to the launch of new multimodal models by leading companies, showcasing unique advantages in model iteration efficiency and application capabilities [3] - The application ecosystem is transitioning from scale expansion to structural upgrades, with a focus on user segmentation, differentiated capabilities, and deeper service offerings in high-barrier verticals like healthcare and enterprise-level applications [4] - The global AI model industry is in a phase of continuous capability enhancement and expanding application scenarios, indicating strong sustainability and certainty in development [5]

Group 1 - The CPO concept stocks in the A-share market experienced a collective decline, with notable drops in companies such as Xinyisheng and Zhongji Xuchuang falling over 6% [1] - Other companies like Tianfu Communication and Hengtong Optics also saw significant declines, with drops exceeding 5% and 4% respectively [1] - The overall trend indicates a bearish sentiment in the CPO sector, impacting multiple stocks negatively [1] Group 2 - Specific stock performance data shows Xinyisheng down by 6.65% with a total market value of 380.1 billion, and a year-to-date decline of 11.24% [2] - Zhongji Xuchuang decreased by 6.12%, with a market capitalization of 647.8 billion and a year-to-date drop of 4.43% [2] - Tianfu Communication fell by 5.58%, holding a market value of 146.8 billion and a year-to-date decline of 6.99% [2]

Group 1 - The A-share market is experiencing a rotation of hotspots, with strength in new energy and non-ferrous metals, while AI hardware is undergoing a collective pullback [1] - The AI ETF Huaxia (159381) saw a significant inflow of funds, with a net subscription of 966 million yuan over the past 60 days, despite a midday drop of 0.68% [1] - The ETF tracks an index with half of its weight in optical module CPO, with the top three weighted stocks being Zhongji Xuchuang (15.64%), Xinyi Sheng (15.57%), and Tianfu Communication (6.85%) [1] Group 2 - The communication ETF Huaxia (515050) tracks the CSI 5G communication theme index, with a latest scale exceeding 8 billion yuan, focusing on electronic and communication computing hardware [2] - The index has a combined weight of over 76% in CPO and CPB concept stocks, ranking first in the entire market [2] - The top five weighted stocks in the communication ETF include Zhongji Xuchuang, Xinyi Sheng, Luxshare Precision, Industrial Fulian, and Zhaoyi Innovation [2]

Market Overview - The A-share market showed mixed performance with the Shanghai Composite Index up by 0.27%, the Shenzhen Component Index up by 0.24%, and the ChiNext Index down by 0.17% as of midday trading [1][2] - The North Star 50 Index surged by 3.36%, with total trading volume in the Shanghai, Shenzhen, and Beijing markets reaching 19,136 billion yuan, an increase of 1,239 billion yuan compared to the previous day [1][2] Sector Performance - Key sectors that saw significant gains include photovoltaic equipment, precious metals, commercial aerospace, pharmaceutical retail, AI applications, horse racing, and battery industries [1][2] - Conversely, sectors that experienced declines include insurance, coal mining and processing, semiconductors, banking, and shale gas [1][2] Notable Stocks - Commercial aerospace and space photovoltaic sectors experienced a collective surge, with stocks like Jieli Suojue achieving three consecutive trading limits, while Zhongchao Holdings, Junda Co., and Western Materials recorded two consecutive limits [1][2] - The retail pharmacy sector performed well due to policy support for mergers and acquisitions, with stocks like Renmin Tongtai and Yifeng Pharmacy hitting trading limits [1][2] - International gold prices approached 5,000 USD, leading to a significant rise in gold stocks, with Baiyin Youse recording four consecutive trading limits [1][2] Market Dynamics - AI applications, battery, and chemical sectors showed notable activity during the trading session [1][2] - Some computing hardware stocks experienced a pullback, with Xinyi Sheng dropping over 6%, and stocks like Tianfu Communication, Zhongji Xuchuang, and Industrial Fulian also declining [1][2] - Several broad-based ETFs saw increased trading volumes, putting pressure on the three major indices [1][2]