中际旭创：Pluggables first, new architecture later-20260206

Investment Rating - The report maintains a BUY rating on Innolight with a target price of RMB707, indicating a potential upside of 26.3% from the current price of RMB560 [3][7]. Core Insights - Innolight's share price has shown volatility due to market concerns regarding NPO/CPO adoption and upstream suppliers' capacity expansion, but the core investment theme remains that pluggable modules will dominate hyperscaler deployments through 2026-27E [1][7]. - The company is positioned as a key supplier of 1.6T pluggable modules, with expected shipment acceleration through 2026-2027, supported by strong demand for high-speed modules [7]. - Recent earnings from upstream suppliers like Lumentum and Coherent indicate a robust demand-driven industry backdrop, with significant capacity expansions underway [7]. Financial Summary - Revenue projections show substantial growth from RMB10,718 million in FY23A to RMB112,154 million in FY27E, with a YoY growth rate peaking at 122.6% in FY24A [2][11]. - Net profit is expected to increase from RMB2,174 million in FY23A to RMB38,357 million in FY27E, reflecting a remarkable YoY growth of 137.9% in FY24A [2][11]. - The gross margin is projected to improve from 33.0% in FY23A to 46.3% in FY27E, indicating a positive trend in profitability [2][11]. Market Position and Performance - Innolight's market capitalization stands at RMB622,216 million, with a significant average turnover of RMB18,922.1 million over the past three months [4]. - The company's share performance over the last month has been -8.2%, while it has seen a remarkable increase of 168.7% over the past six months [6]. - The shareholding structure shows that Shandong Zhongji Investment holds 10.9% and Wang Weixiu holds 6.3% of the shares, indicating a concentrated ownership [5].