ZHONGJI INNOLIGHT(SZ:300308)2024-04-07 16:00Investment Rating - The report initiates coverage with an "Outperform" rating for the company, targeting a price of RMB 210 based on a 30x and 21x PE for 2024 and 2025 respectively [10][61]. Core Insights - The optical module market is experiencing rapid growth driven by AI hardware trends, with significant demand for high-speed optical modules from key players like Google and NVIDIA [10][72]. - The company is positioned to benefit from the ongoing upgrades in optical modules, with expectations of leading the market in the deployment of 1.6T optical modules by late 2024 [10][72]. - The company has strong R&D capabilities, particularly in silicon photonics and LPO technologies, which are expected to enhance its competitive edge in the 800G and 1.6T segments [10][72]. Market Overview - The global optical module market is projected to grow significantly, with expectations of 7 million units shipped for 1.6T optical modules by 2025, driven by the demand from major cloud service providers [10][15][72]. - The company is one of the earliest manufacturers to release 400G and 800G optical modules, positioning itself favorably in the market [10][72]. Financial Forecast - The company is expected to achieve a net profit of RMB 55 billion and RMB 81 billion for 2024 and 2025 respectively, with EPS projected at RMB 6.9 and RMB 10.1, reflecting year-on-year growth of 163% and 47% [10][61]. - Revenue for 2023 is anticipated to be RMB 10.7 billion, with a significant increase expected in subsequent years due to the higher proportion of high-end product shipments [10][52]. Technology and Product Development - The company is leading in the development of new technologies such as silicon photonics, which is expected to lower BOM costs and increase market penetration in the 800G and 1.6T segments [10][72]. - The introduction of the 1.6T-LPO-DR8 OSFP product at the OFC demonstrates the company's commitment to expanding its low-power product matrix [10][72].