GOLDEN SUN SECURITIES·2025-08-24 09:44Investment Rating - The report assigns a "Buy" rating to key companies in the optical module sector, including Zhongji Xuchuang and Xinyi Sheng, indicating a positive outlook for their stock performance [11]. Core Viewpoints - The optical module market is currently experiencing a transition from rapid earnings growth to valuation enhancement, marking a critical phase for the industry [22][26]. - The driving factors for stock price movements are shifting from business performance alone to a combination of earnings and valuation [22]. Summary by Sections Investment Strategy - The report emphasizes the importance of focusing on the optical module sector, which is expected to see continued growth and valuation enhancement [14]. Market Review - The communication sector has shown an upward trend, with the optical communication index performing exceptionally well, reflecting strong market sentiment [18][21]. Valuation Comparison - Domestic leaders in the optical module sector are currently valued at historical averages, with companies like Xinyi Sheng and Zhongji Xuchuang showing relatively low forward P/E ratios compared to international peers like Nvidia and AMD [2][25][26]. Valuation Enhancement Logic - Three main reasons for valuation enhancement are identified: 1. Formation of an AI closed loop, leading to increased capital expenditure from major cloud service providers and a shift in the industry towards profitability [27]. 2. Increased inflow of capital favoring high-growth and high-elasticity sectors, with a notable rise in trading volumes in the A-share market [28]. 3. Continuous innovation creating barriers for leading companies, enhancing their market position and pricing power [29]. Recommended Companies - The report recommends focusing on leading companies in the optical module sector such as Zhongji Xuchuang and Xinyi Sheng, as well as other related infrastructure providers [8][29].