T&S(SZ:300570) Guotai Junan Securities·2024-10-14 03:43Investment Rating - The report initiates coverage with a target price of 52.8 CNY, assigning a "Buy" rating [2][3]. Core Views - The report highlights that the company is a leading domestic optical connector device enterprise, with expectations for its optical interconnect business to exceed forecasts due to rapid AI development [2][3][14]. - The company has a strong order backlog, with a projected revenue growth of 30% year-on-year in the first half of 2024, and the second quarter nearing historical revenue highs [12][14]. - The company is expected to gradually introduce its self-developed MT chip solutions in the second half of 2024, which will alleviate capacity constraints and enhance overall profitability [3][12]. Financial Summary - The company’s revenue is projected to grow from 885 million CNY in 2023 to 1.267 billion CNY in 2024, reflecting a growth rate of 43.2% [4][13]. - Net profit attributable to the parent company is forecasted to increase from 155 million CNY in 2023 to 187 million CNY in 2024, representing a growth rate of 20.3% [4][13]. - The earnings per share (EPS) is expected to rise from 0.68 CNY in 2023 to 0.82 CNY in 2024 [4][13]. Company Overview - The company has over 20 years of experience in the optical connector industry, starting with ceramic inserts and expanding through acquisitions to cover the entire production process [14][20]. - It is a dominant player in the domestic ceramic insert industry and a leading supplier of MPO/MTP optical connectors, with significant exports to international data centers [20][21]. Market Dynamics - The report notes that the company’s revenue is highly concentrated in overseas markets, with over 70% of sales coming from international clients, particularly in North America [25][26]. - The demand for MPO/MTP connectors is expected to surge due to the ongoing upgrades in data centers to support AI and high-density connections [3][12][25]. Valuation Analysis - The report assigns a price-to-earnings (PE) ratio of 43x for 2025, leading to a target price of 52.8 CNY based on industry average valuations [15][17]. - A price-to-book (PB) ratio of 6.83x is also considered, suggesting a reasonable valuation range of 45.9 to 52.8 CNY [17][18].