Core Viewpoint - The recent trend of Chinese companies considering secondary listings in Singapore is gaining momentum, with Dekoli (688205) announcing plans for an S-share listing on the Singapore Exchange to enhance its global strategy and overseas market presence [2][3]. Group 1: Company Strategy - Dekoli aims to strengthen its overseas financing capabilities and expand its international capital platform through the S-share listing, which is expected to enhance its capital strength, global brand influence, and overall competitiveness [2][3]. - The decision to pursue a secondary listing in Singapore reflects Dekoli's business development needs and highlights the unique advantages of the Singapore Exchange in attracting Chinese tech companies [3][6]. Group 2: Financial Performance - Despite facing short-term pressure on profitability, with a reported revenue of 650 million yuan (approximately 65 million) for the first three quarters of 2025, representing an 8.6% year-on-year increase, Dekoli's net profit attributable to shareholders dropped by 47.4% to 40 million yuan (approximately 4 million) [3][4]. - The company's gross margin for the third quarter of 2025 was 27.4%, down 5.5 percentage points year-on-year, indicating challenges in maintaining profitability [3][4]. Group 3: Business Highlights - Dekoli's DCI business is experiencing accelerated growth, capitalizing on the increasing demand for distributed computing architectures as large model parameters rise [4]. - The company has made significant advancements in its OCS optical switch technology, with prototypes achieving microsecond and nanosecond switching speeds, and has secured orders worth millions for 2024 [4]. - The establishment of a production base in Thailand is expected to commence operations in the fourth quarter of 2025, enhancing Dekoli's global delivery capabilities [4]. Group 4: Market Trends - The trend of Chinese companies opting for secondary listings in Singapore is on the rise, with several firms, including Kangzhe Pharmaceutical and Hainan Huatie, also pursuing S-share listings to support their international strategies [6][7]. - The Singapore Exchange has become increasingly attractive for Chinese companies, with around 100 listed firms focusing on sectors such as healthcare, new energy, and technology, all of which align with the market's valuation preferences [7][8].

Summary of Conference Call on North American Optical Modules and Domestic Computing Chain Updates Industry Overview - The conference call focused on the North American optical module industry and the domestic computing chain, highlighting investment opportunities in the optical communication industry from 2026 to 2027, particularly for companies like Alibaba and Tencent [3][4][5]. Key Insights and Arguments - **Investment Timing**: Current low-budget conditions present a significant opportunity for investment in niche areas within the optical communication sector, with substantial flexibility across various segments [3][4]. - **Market Sentiment**: North American optical module manufacturers reported earnings that exceeded expectations, indicating strong market recognition of the optical module industry's trends [3][6]. - **Performance of Key Companies**: - **Lumentum**: Reported a significant increase in shipments of 100G eML, CW silicon photonics chips, and 200G eML, leading to a revenue forecast exceeding $600 million for the next quarter [6][10]. - **Coherent**: Achieved a quarter-over-quarter growth of approximately 10%, with expectations of strong demand and supply improvements accelerating data center business growth [3][6]. - **Fabrinet**: Surpassed revenue expectations due to growth in the telecom market and DCI business, with Amazon's advanced computing boards driving development [6][7]. Emerging Trends - **AI and Communication Sector Outlook**: Both domestic and international AI development trends are viewed positively, with major companies like Alibaba, Tencent, Google, AWS, and Meta expected to maintain robust capital expenditures [4][8]. - **1.6T Optical Module Demand**: There is a notable increase in demand for 1.6T optical modules, with Lumentum and Coherent highlighting the need for 200G EML and CW lasers, driven by customer demand [4][10]. - **Supply Chain Dynamics**: The optical chip shortage has worsened, with Lumentum reporting a shortfall increasing from 20% to 25-30%, leading to anticipated price increases in 2026 and plans to boost production capacity by over 40% [10][11]. Market Challenges and Opportunities - **Challenges**: The optical chip market faces supply-demand imbalances, with significant shortages reported by major suppliers [11]. - **Opportunities**: Despite supply challenges, strong demand for optical chips presents growth opportunities for companies actively preparing to increase production, including Chinese manufacturers [11]. OCS and DCI Market Prospects - **OCS Market**: The OCS market is expected to see rapid growth, with orders primarily concentrated among overseas manufacturers like Coherent and Lumentum, projecting sales reaching $100 million by Q4 2026 [12][13]. - **DCI Demand Growth**: DCI demand has shown consistent quarter-over-quarter growth, with companies like DeKeLi expected to secure more orders as they expand production capacity [14]. Overall Market Sentiment - The overall sentiment remains optimistic for the optical module sector, with key trends such as the rise of 1.6T modules, optical chip shortages, and DCI demand being critical areas for investment [15]. The upcoming earnings reports, particularly from Nvidia, may further enhance market sentiment [15].

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Investment Rating - The report maintains an "Accumulate-A" rating for the company [2] Core Views - The company reported a revenue of 430 million yuan in the first half of 2025, representing a year-on-year growth of 5.9%, but the net profit attributable to the parent company decreased by 48.2% to 30 million yuan [4] - The decline in performance is attributed to a decrease in telecom transmission demand and insufficient release of DCI capacity [5] - The company is expected to accelerate the release of DCI capacity in the second half of the year, with projections for net profits of 90 million, 290 million, and 590 million yuan for 2025, 2026, and 2027 respectively [8] Financial Performance - The company achieved a gross margin of 26.3% in the first half of 2025, down 5.2 percentage points year-on-year [4] - The revenue from the transmission product line was 330 million yuan, a year-on-year decrease of 7.9%, while the access and data product lines saw a significant increase of 104.7% to 100 million yuan [5] - The projected revenue for 2025 is 1.177 billion yuan, with a year-on-year growth of 39.9% [10] Market Trends - The global DCI market is expected to reach over 40 billion USD in 2025, growing by 14.3% year-on-year, driven by increased demand for data center connectivity and distributed training [6] - The company has received sample orders for its silicon-based OCS optical switch, indicating potential for future mass production [7] Profitability Forecast - The report forecasts a decline in net profit for 2025, with a projected net profit margin of 7.6% [10] - The company's earnings per share (EPS) for 2025 is estimated at 0.57 yuan, with a price-to-earnings (P/E) ratio of 247.3 [10]

Investment Rating - The industry investment rating is "Overweight" (maintained) [1] Core Viewpoints - The report highlights a strong performance in the AI sector, particularly in overseas markets, with significant capital expenditure increases from major players like Google and Celestica, indicating a bullish outlook for the AI computing and application sectors [5][6][7] Summary by Sections Industry Performance - The communication industry is projected to outperform the overall market, with a positive trend observed in the industry index compared to the CSI 300 index [2][1] Company Highlights - Celestica reported Q2 2025 revenue of $2.89 billion, a 21% year-on-year increase, exceeding company guidance, with a notable performance in its CCS business, which saw a revenue increase of 28% [5] - Google achieved Q2 2025 revenue of $96.4 billion, a 13.8% year-on-year growth, with its cloud business revenue rising by 31.7% [6] Investment Opportunities - The report identifies key investment opportunities in the AI computing supply chain, recommending specific companies in various segments such as optical modules, optical chips, liquid cooling, and AIDC [7]