1Q24 results set stage for accelerated growth in 2024

Investment Rating - The report maintains a "BUY" rating for the company, with a target price (TP) raised to RMB183, reflecting a potential upside of 15.6% from the current price of RMB158.36 [4][3]. Core Insights - The company has demonstrated strong financial performance, with FY23 revenue growth of 11.2% YoY to RMB10.7 billion and net profit soaring by 77.6% YoY to RMB2.2 billion. The 1Q24 results were even more impressive, with revenue increasing by 163.6% YoY to RMB4.8 billion and net profit rising by 303.8% YoY to RMB1.0 billion [3][4]. - The growth is attributed to robust demand for high-speed optical transceivers, particularly 400G and 800G products, which accounted for over 90% of total revenue in FY23. The company expects 800G shipments to accelerate in the coming quarters as production capacity expands [3][4]. - Revenue forecasts have been revised upwards by 25% for 2024 and 44% for 2025, while net profit forecasts have been increased by 35% for 2024 and 59% for 2025 [3][4]. Financial Summary - For FY24E, the company is expected to generate revenue of RMB22.6 billion, with a gross margin of 33.8% and a net profit of RMB4.9 billion, translating to an EPS of RMB6.11 [7][11]. - The company’s revenue is projected to continue growing, with FY25E revenue expected to reach RMB29.7 billion and net profit of RMB6.3 billion [7][11]. - The balance sheet shows total assets of RMB20.0 billion and total liabilities of RMB5.2 billion as of FY23, indicating a strong equity position [11][13].