EOPTOLINK(300502) 华创证券·2024-09-29 09:06Investment Rating - The report initiates coverage on Xinsheng (300502) with a "Recommend" rating [1] Core Views - Xinsheng is a leading provider of optical module solutions, specializing in the R&D, manufacturing, and sales of optical modules since its establishment in 2008 [1] - The company has successfully delivered high-speed optical modules such as 100G, 200G, 400G, and 800G, and has established strong relationships with global communication equipment manufacturers and internet companies, with overseas revenue accounting for 83.8% in 2023 [1] - Xinsheng has released 800G and 1.6T high-speed products, with its 800G optical module achieving a power consumption of only 11.2W, setting a new industry standard [1] - The company is deeply involved in LPO (Linear-drive Pluggable Optics) technology and has showcased 800G LPO modules, which are expected to be widely used in short-distance interconnection scenarios [1] - Xinsheng's profitability is industry-leading, with a focus on high-margin products and continuous optimization of cost control and production processes [1] - The company is expanding its production capacity, with its Thailand factory expected to be fully operational by 2024, and plans to issue convertible bonds to fund the construction of new high-speed optical module production lines [1] Financial Projections - Revenue is projected to grow significantly, with 2024-2026 revenues estimated at 7.564 billion, 13.159 billion, and 17.184 billion yuan, representing year-on-year growth rates of 144.2%, 74.0%, and 30.6% respectively [1][8] - Net profit attributable to shareholders is expected to reach 2.099 billion, 3.521 billion, and 4.542 billion yuan in 2024-2026, with year-on-year growth rates of 205.0%, 67.7%, and 29.0% respectively [1][8] - The company's gross margin and net margin are expected to remain strong, with gross margins of 37.4%, 34.8%, and 34.0% projected for 2024-2026 [8] Industry Analysis - The demand for 400G/800G optical modules is driven by AI infrastructure construction, with major cloud providers like Amazon and Meta continuing to deploy 400G solutions [7] - The 800G optical module market is expected to see significant growth by 2025, driven by AI inference demand and the adoption of high-performance Ethernet in data centers [7] - LPO technology, which offers lower power consumption and cost advantages, is expected to be widely deployed in short-distance interconnection scenarios, particularly within data center racks [7] Company Development - Xinsheng has a clear equity structure, with Gao Guangrong and Huang Xiaolei as the actual controllers, holding 7.4% and 7.1% of the company's shares respectively [13] - The company has four major subsidiaries, including Alpine, which focuses on silicon photonics and coherent optical technology [13] - Xinsheng has a comprehensive product matrix, covering various communication network interfaces, transmission rates, and wavelengths, with applications in data broadband, telecommunications, data centers, and more [12][15] Market Performance - Xinsheng's revenue and net profit have shown strong growth, with revenue increasing from 760 million yuan in 2018 to 3.311 billion yuan in 2022, and net profit growing from 32 million yuan to 904 million yuan over the same period [17] - The company's gross margin has remained above 30% since 2019, reaching 43.0% in the first half of 2024, while the net margin has stabilized above 20% since 2020, reaching 31.7% in the first half of 2024 [18][19]