20220829-招银国际-中际旭创-300308.SZ-Overseas_data_center_demand_to_remain_resilient_in_2H22_5页_1mb

报告摘要

Innolight (300308 CH) 2Q22 Summary and Outlook

Core Content

Innolight reported its 2Q22 financial results, showing a 2.6% QoQ revenue growth and 17.3% YoY growth, reaching RMB2.1bn. Net profit to shareholders grew 26.5% YoY to RMB275mn. The gross margin (GPM) for 2Q22 was 27.3%, an increase from 26.3% in 1Q22 and 23.8% in 2Q21, primarily driven by a favorable product mix and reduced operating expenses.

The company's overseas sales increased significantly, contributing 85.6% of total revenue in 1H22, up from 75.1% in FY21. This is attributed to strong demand from overseas cloud clients, particularly from major tech firms like Amazon, Google, and Meta, which saw 34.9% and 23.6% YoY capex growth in 1Q/2Q22, respectively. The rising demand for 200G/400G transceivers and the start of 800G optical module deployment in 4Q22 are expected to further benefit Innolight.

Despite the positive overseas performance, domestic Datacom demand remains weak. The analyst maintains a BUY rating with an adjusted target price of RMB42.0, based on a 26x 23E P/E multiple. However, the outlook for domestic sales has been lowered due to weaker-than-expected demand for optical transceivers.

Key Financial Highlights

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Revenue (RMB mn)	7,050	7,695	9,398	10,770	12,139
YoY growth (%)	48.2%	9.2%	22.1%	14.6%	12.7%
Gross margin (%)	25.4%	25.6%	26.3%	26.6%	26.6%
Net profit (RMB mn)	865	877	1,076	1,296	1,460
EPS (RMB)	1.23	1.21	1.34	1.62	1.82
YoY growth (%)	68.5%	-1.6%	11.1%	20.5%	12.7%
P/E (x)	24.5	24.9	22.4	18.6	16.5

Key Ratios

Ratio	FY20	FY21A	FY22E	FY23E	FY24E
Gross margin (%)	25.4%	25.6%	26.3%	26.6%	26.6%
Operating margin (%)	14.0%	12.5%	12.4%	13.1%	13.0%
Net profit margin (%)	12.3%	11.4%	11.4%	12.0%	12.0%
ROE (%)	11.0%	7.6%	8.7%	9.6%	10.0%
Current ratio (x)	2.1	3.2	3.2	4.3	4.3
Inventory turnover days	218	241	225	210	195
Payable turnover days	91	82	78	75	68

Outlook and Analysis

Overseas Demand: Strong and resilient, with major cloud providers reaffirming their capex commitments. This is expected to continue driving growth.
Domestic Demand: Soft, with a reduced outlook for optical transceivers. This is a concern for the company's overall performance.
Product Mix: Favorable mix of 200G/400G transceivers has improved gross margins.
Capex Trends: Despite some companies reducing spending, large cloud leaders like Amazon, Google, Meta, and Microsoft are expected to continue investing in infrastructure.
Market Confidence: There is a lack of confidence in some clients' demand, especially with Amazon and Meta guiding lower sales growth for 3Q.
Opportunistic Approach: The analyst believes in allocating resources to key growth drivers, which could help Innolight outperform when the macroeconomic environment improves.

Target Price and Rating

Target Price (TP): Adjusted to RMB42.0, reflecting a 26x 23E P/E.
Previous TP: RMB45.60
Current Price: RMB30.13
Up/Downside: +39.4%

Potential Risks

Reduced Capex from Global Cloud Companies
Slower Deployment of 5G Infrastructure
Faster-than-Expected Tech Advancements

Analysts and Contact Information

Lily Yang, Ph.D
(852) 3916 3716
lilyyang@cmbi.com.hk
Alex Ng
(852) 3900 0881
alexng@cmbi.com.hk
Lana Lin
(852) 3761 8912
lanalin@cmbi.com.hk

Stock Data

Metric	Value
Market Cap. (RMB mn)	24,094
Avg. 3mths t/o (RMB mn)	450
52W High/Low (RMB)	43.96/28.45
Total Issued Shares (mn)	799.7

Shareholding Structure

Shareholder	% Ownership
Zhongji Investment	11.74%
HKSC	9.31%
Wang Weixiu	8.02%

Share Performance

Period	Absolute (%)	Relative (%)
1-mth	-11.6%	-11.1%
3-mth	0.2%	-9.5%
6-mth	-18.2%	-12.3%

Auditor

PWC Zhong Tian

Recent Reports

Data Center Demand to Remain Resilient in 2H22 – 12 Jul 2022
Corporate Day Takeaways – 23 Jun 2022

CMBIGM Ratings

BUY: Stock with potential return of over 15% over next 12 months
HOLD: Stock with potential return of +15% to -10% over next 12 months
SELL: Stock with potential loss of over 10% over next 12 months
NOT RATED: Stock is not rated by CMBIGM

Industry Outlook

OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over next 12 months
MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark over next 12 months
UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark over next 12 months

Legal and Regulatory Disclosures

CMB International Global Markets Limited
Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong
Tel: (852) 3900 0888, Fax: (852) 3900 0800
Affiliated with China Merchants Bank
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