TFC(SZ:300394)2024-07-30 14:33Summary of Conference Call Transcript Company Overview - The company discussed is Tianfu Communication, which operates in the optical device industry, particularly focusing on optical modules and components such as fiber optic connectors and related products [1][2]. Key Points and Arguments - Market Influences on Stock Price: Recent stock price fluctuations are influenced more by international factors (e.g., tariff changes) and U.S. stock market conditions rather than solely by fundamentals. Long-term investment value is still primarily determined by industry performance, expected growth rates, and trends [1]. - Stock Performance History: Tianfu Communication's stock experienced volatility in 2020 due to 5G inventory digestion. However, there was a significant rise in stock price driven by increased demand for new construction and cloud computing [1]. - Cloud Computing Impact: After rapid growth in cloud computing from 2020 to 2022, the sector entered a stabilization phase, which affected stock prices. Short-term themes may cause temporary price increases, but stocks tend to revert to normal levels once these themes fade [1]. - Recent Stock Volatility and Fundamentals: In early 2023, Tianfu Communication's stock saw a significant rise due to advancements in AI technology, although it faced adjustments after the first quarter report due to discrepancies between market expectations and actual performance. The company's optical engine business continues to grow rapidly [1]. - Company Structure and Business Focus: The actual controllers of Tianfu Communication are the founders, holding approximately 38% and 9% of the shares, respectively. The company has several subsidiaries focusing on different business areas, and it has shown steady growth with a compound annual growth rate (CAGR) of 34% in revenue and 26% in net profit from 2018 to 2023 [1]. - Product Development and Customization: The company has expanded its product line to include various components and customized products, which have higher added value and technical difficulty. This success is attributed to strong R&D capabilities and precise cost control [1]. - Supplier Strategy: The company prefers integrated optical device platform suppliers to simplify procurement and production processes, reduce supply chain risks, and ensure product quality and competitive pricing [1]. - Optical Engine Applications: The optical engine is responsible for optoelectronic conversion and integrates various active and passive devices. Its applications extend beyond traditional optical modules to include connections between various logic chips such as CPUs and GPUs [1]. - Competitive Advantages in Optical Engine Market: The company holds a competitive edge as an upstream supplier with extensive component supply capabilities and some active device packaging technology, making it an ideal partner for overseas optical module manufacturers. The company benefits from design patent protections, allowing it to earn substantial design fees [1]. Additional Important Information - The company has maintained a strong financial performance, significantly exceeding industry averages, and continues to adapt its strategies in response to market dynamics and technological advancements [1].