机构:招银国际
研究员:Lily YANG/Kevin ZHANG
Accelerated 1Q growth due to higher 400G shipments; 800G is expected to ramp up production and contribute greater revenue in the following quarters. 1Q24 revenue grew 164% YoY and 31% QoQ, partially due to higher-than-expected shipments of 400G transceivers, driven by strong overseas demand (particularly from Ethernet). We expect 800G shipments to accelerate starting in 2Q24, as production capacity expands on schedule (supply) and investment in AI infrastructure continues (demand). Mgmt. also noted that the company’s 1.6T product is currently undergoing certification at clients and is expected to begin production in 2H.
Innolight’s accelerated 1Q24 growth suggests 1) the impact from supply chain bottleneck was milder-than-anticipated and high-speed transceivers were delivered on time, and 2) the demand from AI continues to be strong. Therefore, we raise our revenue forecasts by 25%/44% for 2024/25E. We slightly revise down GPM forecasts by 0.2ppt and 0.3ppt, as 1Q24’s GPM was lowered by 1) an unfavourable mix in high-speed transceivers revenue (i.e., higher share of 400G revenue) and 2) a regular pricing adjustment. Overall we expect GPM to improve QoQ as 800G shipments pick up pace. We are optimistic that GPM will sustain a robust level of 33.8% in 2024E.
Maintain BUY, with new TP at RMB183. We revise up revenue forecasts by 25%/44% and NP forecasts by 35%/59% for 2024E/2025E. The new TP is based on the same 30x 2024E P/E, which is close to 5-year historical average of forward P/E (29x). We maintain a positive outlook on Innolight, given 1) the strong 400G/800G demand from hyperscalers, 2) the company is effectively scaling up 800G production with improved supply of key components, 3) pricing adjustment is better-than-feared (no severe margin erosion due to competition, demonstrating the company’s dominant industry leadership), and 4) USD/RMB tailwind (85% revenue from overseas markets). We think Innolight will remain the industry leader in high-speed optical transceivers and continue to ride the tailwind of the AI boom. Risks: 1) Intensified geopolitical tensions, 2) slower-than-expected new product ramp-up speed, and 3) further delay in US interest rate cut.