20230818-招银国际-Hardware_–_Optical_transceivers_Implications_from_Coherent_2Q23_results_and_guidance_2页_421kb

Equity Research: Optical Transceivers

Market Performance

The report maintains a "Market Perform" rating for the optical transceivers sector, with a conservative outlook due to uncertainties in AI demand sustainability.

Key Findings from Coherent's Q2 2023 Earnings

• Coherent's (COHR) stock declined abruptly following its Q2 earnings, exacerbated by supply chain constraints and market sentiment shifts.
• Short-term demand for 800G optical transceivers remains strong, driven by AI/ML-related applications, but long-term sustainability is questioned.
• Supply chain bottlenecks, intensified by inventory corrections post-pandemic, hinder capacity ramp-up and manufacturing efficiency.
• Hyperscalers are prioritizing AI investments, reducing demand for non-AI transceivers, leading to potential cannibalization effects.
• Coherent's FY23 revenue grew 55.6% YoY to US$5.2 billion, but net earnings turned negative. For FY24, revenue is forecast at US$4.5-4.7 billion, indicating a YoY decline, and AI-related sales were excluded from guidance due to supply chain issues.

Outlook

The sector faces risks from potential AI revenue roadblocks, such as regulatory concerns, which could disrupt the current investment frenzy. The report emphasizes cautiousness, noting that AI demand is transformative but not guaranteed long-term, and infrastructure buildouts are concentrated among major players.