ZHONGJI INNOLIGHT(300308) 高盛·2025-04-22 05:42Investment Rating - The investment rating for Innolight is "Buy" with a 12-month price target revised to Rmb105 from Rmb115, indicating an upside potential of 32.7% from the current price of Rmb79.14 [13][20]. Core Insights - Innolight's 1Q25 net profit was Rmb1.58 billion, aligning with pre-announced expectations, while revenue was Rmb6.67 billion, which was 5% below expectations due to supply chain constraints [1]. - The gross margin (GM) improved to 36.7% in 1Q25, reflecting a 3.9 percentage points year-over-year increase and a 1.6 percentage points quarter-over-quarter increase, driven by better yield and product mix [1][2]. - The company anticipates a robust near-term outlook into 2Q25, supported by the commencement of 1.6T batch shipments and the ramp-up of 800G volume [1]. Summary by Sections Financial Performance - 1Q25 revenue was Rmb6.67 billion, indicating a 2% quarter-over-quarter growth, but the growth has slowed for three consecutive quarters [9]. - The company expects gradual improvement in supply constraints into 2Q/3Q25 as new supplier capacity comes online [9]. Margin Outlook - The gross margin has shown a consistent improvement over the past five quarters, with expectations for further upside in 2Q25 and 2H25 due to a favorable product mix and efficiency improvements [2]. - The ongoing increase in silicon photonics transceivers and the ramp-up of 1.6T transceivers, which have higher gross margins compared to the company average, are expected to contribute positively to margins [2]. Tariff Impact - Innolight's production base in Thailand allows it to mitigate tariff impacts, as transceiver shipments from Thailand to the US are exempt from tariffs, contrasting with shipments from China that face a 27.5% tariff [8]. - The company has established sufficient capacity in Thailand to meet US demand, which has significantly contributed to its revenue growth [8]. Future Projections - Revenue estimates for 2024, 2025E, and 2026E have been adjusted to Rmb23.86 billion, Rmb27.98 billion, and Rmb31.22 billion respectively, reflecting a downward revision due to slower shipment growth expectations [15]. - Net profit estimates have been revised upwards by 12% and 4% for 2025 and 2026E respectively, indicating a positive outlook despite revenue adjustments [12][15].