Summary of Conference Call Notes Industry and Companies Involved - **Industry**: Communications Equipment - **Companies Covered**: - Accelink Technologies (002281.SZ) - Eoptolink Technology (300502.SZ) - EverProX Technologies (300548.SZ) - GDS Holdings (GDS.O) - Innolight (300308.SZ) - Suzhou TFC Optical Communication (300394.SZ) - T&S Communications (300570.SZ) - VNET Group (VNET.O) - ZTE (0763.HK) Key Points and Arguments EverProX Technologies (300548.SZ) - Target price raised to Rmb122 from Rmb63, reflecting a 46.5x 2026E EPS valuation, which is +1 standard deviation above the 5-year historical mean due to stronger earnings growth projected at a 152% 3-year CAGR [2][11] - 2025/26/27E earnings increased by 1%/26%/45% driven by robust overseas demand for MPO/AOC components, datacenter cables, and optical transceivers [2][11] - Rated as Neutral due to high current trading P/E of ~45x compared to T&S Communications at ~32x, indicating less upside potential [2][11] Suzhou TFC Optical Communication (300394.SZ) - Target price increased to Rmb222 from Rmb196, with 2026/27E earnings raised by 36%/56% due to anticipated growth in the 1.6T light engine market [3][15] - Maintained Buy rating, citing strong long-term earnings growth potential from CPO/OIO total addressable market opportunities and expected sales of FAU, ELSFP, and MT products [3][15] ZTE (0763.HK) - Downgraded to Neutral from Buy, with target price raised to HK$29.20 from HK$27.50 [4][19] - 2025/26/27E earnings reduced by 16%/14%/11% due to margin impacts from a ramping server business and memory price effects on the smartphone segment, partially offset by tighter operating expenses [4][19] - Valuation set at 15.0x 2026E P/E, which is 1.5 standard deviations above the stock's historical average, supported by positive sentiment towards AI server developments [4][19] Accelink Technologies (002281.SZ) - Coverage transferred with a maintained Sell rating and target price of Rmb24.60 [8][20] Eoptolink Technology (300502.SZ) - Coverage transferred with a maintained Buy rating and target price of Rmb472.00 [9][21] GDS Holdings (GDS.O) - Coverage transferred with a maintained Buy rating and target price of US$51.20 [12] Innolight (300308.SZ) - Coverage transferred with rating suspended [13] T&S Communications (300570.SZ) - Coverage transferred with a maintained Buy rating and target price of Rmb137.00 [16] VNET Group (VNET.O) - Coverage transferred with a maintained Buy rating and target price of US$20.00 [17] Other Important Information - The report indicates potential conflicts of interest due to the firm's business relationships with covered companies, advising investors to consider this report as one of several factors in their investment decisions [5] - The report is not for distribution in the People's Republic of China, excluding Hong Kong and Qualified Foreign Institutional Investors [5]

Group 1 - The core viewpoint of the article emphasizes the importance of selecting valuable research reports and understanding market trends to avoid missing investment opportunities [1] - The optical module market is experiencing a "price increase and volume rise" phenomenon, with a specific company achieving a global market share of 2nd in PLC and sending samples of 100G chips, projecting a net profit increase of 563% by 2025, with a PE significantly lower than peers [1] - The AI-driven testing machine market is surging, with a global scale exceeding $6 billion and a compound growth rate of 57%, revealing domestic replacement targets that have entered the leading supply chain [1]

Investment Rating - The report maintains a "Buy" rating for Innolight and Eoptolink, with target prices updated to Rmb569 and Rmb472 respectively [15][26]. Core Insights - The networking sector is viewed positively due to optimistic growth forecasts for ASICs from Broadcom, strong long-term capital expenditure outlooks from Meta/OpenAI, and Oracle's significant datacenter expansion plans, indicating better demand visibility beyond 2026 [2][11]. - Despite a strong year-to-date rally, profit-taking is expected; however, the overall narrative remains compelling with a potential re-rating of transceiver companies to a PE of 20x+ [2][3]. - The report highlights a revision in industry demand estimates for 800G and 1.6T transceivers, projecting shipments of 56.3 million and 19.2 million respectively for FY27, reflecting a 42% year-over-year growth [11][29]. Summary by Sections Industry Outlook - The report emphasizes the longevity of demand in the transceiver market, driven by significant AI investments from major US cloud service providers [11]. - The expected rollout of 3.2T SiPh transceivers in late 2027 is noted as a key development, with 800G and 1.6T remaining dominant solutions in the interim [11][29]. Company Performance - Innolight is expected to secure a higher market share due to its strong R&D capabilities and its role as a key supplier for Oracle, alongside benefiting from the anticipated EML shortage [26][27]. - Eoptolink is projected to gain market share as it capitalizes on its LPO capabilities and the rapid build-out of Oracle's datacenter [15][26]. Financial Estimates - Revenue estimates for FY26 have been revised upwards, with a projected revenue of Rmb46.287 billion, reflecting a 20% increase from previous estimates [19][30]. - Net profit estimates for FY26 have also been increased to Rmb19.535 billion, a 22% rise compared to earlier projections [19][30]. Market Dynamics - The report discusses the competitive landscape, noting that while some tier-2 companies are planning to enter overseas markets, significant progress has yet to be observed [3]. - The potential for a 20-30% penetration of CPO in the market by 2029-2030 is highlighted, although major CSPs have not yet shown signs of mass adoption [3][11].