ZHONGJI INNOLIGHT(SZ:300308)2024-10-23 08:03Investment Rating - The report maintains an "Outperform" rating for Zhongji Innolight with a target price of RMB 190.00, while the current price is RMB 170.00 [1][2][11]. Core Views - The company's Q3 revenue was RMB 6.51 billion, a year-on-year increase of 115%, while net profit reached RMB 1.39 billion, up 104% year-on-year. However, both revenue and net profit were below expectations by 11.9% and 6.7% respectively, primarily due to exchange losses and supply shortages of upstream optical chips [2][8][10]. - There is optimism regarding the demand for 800G and 1.6T products in 2025, with expectations of over 16 million units for 800G and 4 million units for 1.6T. The GB200 rack series is anticipated to become mainstream, with mass production starting in late January [9][10]. - The company expects a continued shortage of 100G EML chips into Q4 2024, with alleviation expected in the first half of 2025. The penetration rate of silicon photonics is projected to increase, which may enhance gross margins [10][11]. Financial Summary - For the fiscal year ending December 2023, revenue is projected at RMB 10.72 billion, with a net profit of RMB 2.17 billion. For 2024 and 2025, net profits are expected to be RMB 5.55 billion and RMB 10.09 billion, representing year-on-year growth of 147% and 94% respectively [3][5][11]. - The report forecasts a diluted EPS of RMB 5.01 for 2024 and RMB 9.19 for 2025, based on a P/E ratio of 38 and 21 respectively [5][11]. Performance Metrics - The gross margin is expected to remain stable around 33% for the next few years, with operating margins projected to be around 25% in 2024 and 23% in 2025 [7][11]. - The report highlights significant growth rates, with revenue growth expected at 147% for 2024 and 94% for 2025, alongside a net profit growth rate of 156% and 82% for the same years [3][5][11].