T&S(SZ:300570) Guolian Securities·2024-04-07 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 46.8 CNY based on a 45x PE for 2024 [3][13]. Core Insights - The company experienced a demand recovery in Q4 2023, driven by AI-related growth opportunities. The revenue for Q4 2023 reached 260 million CNY, a year-on-year increase of 13.8%, with a net profit of 50 million CNY, up 69.7% year-on-year [11][20]. - The overall gross margin for 2023 was 29.4%, a decrease of 3.38 percentage points year-on-year, primarily due to fluctuations in raw material prices and changes in revenue structure [2]. - The company is focusing on cost control, with R&D expenses at 7.17% in H1 2023, mainly invested in products like dense connectivity and optical waveguide chips [2][30]. Financial Forecast - Projected revenues for 2024, 2025, and 2026 are 1.304 billion CNY, 1.694 billion CNY, and 2.2 billion CNY, respectively, with year-on-year growth rates of 47.34%, 29.92%, and 29.89% [3][21]. - Expected net profits for the same years are 237 million CNY, 325 million CNY, and 433 million CNY, with growth rates of 52.88%, 37.03%, and 33.42% [3][21]. - The company's EPS is projected to be 1.04 CNY, 1.43 CNY, and 1.91 CNY for 2024, 2025, and 2026, respectively, indicating a 3-year CAGR of 40.86% [3][21]. Market Position and Strategy - The company is well-positioned in the passive optical device sector, with leading technology in certain products and strong partnerships with major North American manufacturers, which are expected to benefit from the increasing demand for AI computing power [12][20]. - The company is also expanding its production capacity by investing 6 million USD in its Hong Kong subsidiary to establish a subsidiary in Vietnam, aiming to enhance market share [12][20].