Hua Er Jie Jian Wen·2025-09-11 11:55Core Viewpoint - Morgan Stanley believes that the positive fundamentals of the optical module industry have largely been reflected in stock prices after several months of significant increases, suggesting investors take profits during high market sentiment [1] Group 1: Rating Adjustments - Morgan Stanley has made significant rating adjustments for several leading optical module stocks, with New Ease being downgraded to "Underweight," marking the largest rating change [1] - The firm warns that after a 338% year-on-year growth in Q2 2025, New Ease's growth rate may significantly slow in the coming quarters, likely triggering a valuation downgrade [1] - Since April, New Ease has surged by 460%, while other companies like Zhongji Xuchuang and Tianfu Communication have seen increases of 312% and 269%, respectively [1] Group 2: Valuation Considerations - Morgan Stanley's cautious stance is primarily based on valuation considerations, noting that Zhongji Xuchuang and Tianfu Communication's valuations have exceeded historical +1 standard deviation levels, indicating that positive fundamentals have at least been partially absorbed [3] - The forward P/E ratio for Zhongji Xuchuang has risen from 14x to 24x, while New Ease's has increased from 8x to 20x since the beginning of 2025 [4] Group 3: Investment Recommendations - For the "Yizhongtian" trio (New Ease, Zhongji Xuchuang, Tianfu Communication), Morgan Stanley provides different investment recommendations: - New Ease: Downgraded to "Underweight" with a target price of 255 CNY, citing limited upside potential due to market consensus viewing it as the second-largest global player with the best profit margins [6] - Zhongji Xuchuang: Maintained "Overweight" rating with a target price of 435 CNY, expected to achieve significant growth as a pioneer of 1.6T new products in 2026 [6] - Tianfu Communication: Downgraded to "Underweight" with an increased target price of 142 CNY, as its growth potential is already reflected in the current stock price [6] Group 4: Future Catalysts - Morgan Stanley views the rapid rollout of 1.6T products as a potential catalyst for the second half of 2025 and 2026, despite delays affecting the shipment schedule [7] - With the restart of high-end GPU deliveries, the shipment volume of 1.6T modules is expected to gradually increase in the second half of 2025 [7] - The demand for 800G is anticipated to remain strong, helping to offset pricing and sales pressures on lower-end optical modules [7]