Investment Rating - Maintain Outperform rating; target price set at 149.21 RMB based on a 43x PE for 2026 [4][9][10] Core Insights - Overall performance meets expectations, with revenue slightly below forecasts; Q3 2025 revenue at 1.21 billion RMB, up 32.58% YoY; net profit attributable to shareholders at 0.26 billion RMB, up 78.55% YoY [10][11] - Revenue changes attributed to seasonal order fluctuations, while overall profitability remains stable with a Q3 gross profit margin of 36.15% and a net profit margin of 22.83% [10][11] - Strong industry demand noted, with a focus on the progress of the MDC business, which has potential for better development in high-density optical connections [11][12] Financial Summary - Projected total revenue for 2025-2027 is 1.39 billion RMB, 2.79 billion RMB, and 4.05 billion RMB respectively, with corresponding net profits of 0.39 billion RMB, 0.79 billion RMB, and 1.18 billion RMB [3][4] - EPS forecasted to be 1.72 RMB, 3.47 RMB, and 5.19 RMB for 2025, 2026, and 2027 respectively [4][6] - The company maintains a stable profitability outlook with a projected ROE of 22.0% in 2025, increasing to 41.8% by 2027 [3][4]

Core Viewpoint - The company has lowered its profit forecast and target price while maintaining a buy rating, with overall performance meeting expectations despite slight revenue shortfalls [2]. Financial Performance - The company announced its Q3 2025 results, with total revenue of 1.214 billion, a year-on-year increase of 32.58%, and a net profit attributable to shareholders of 260 million, up 78.55% year-on-year [2]. - Q3 revenue was 386 million, a year-on-year decline of 4.98%, while net profit for Q3 was 87 million, a year-on-year increase of 31.20% but a quarter-on-quarter decline of 7.46% [2]. - The company's Q3 gross margin remained stable at 36.15%, and the net profit margin reached 22.83%, an increase of 2 percentage points quarter-on-quarter [2]. Industry Demand and Business Development - Industry demand remains strong, with a focus on the advancement of the MDC business, as ultra-large clusters and rack-scale servers begin to ship, potentially making ultra-compact high-density connections the mainstream in new data centers [3]. - The company has received patent authorization for its MDC, indicating potential for better development in high-density optical connections in the future [3]. Catalysts - The acceleration of CPO technology implementation and continuous capacity expansion by the company are seen as positive catalysts for future growth [4].