3Q26 earnings：Solid fundamentals amid supply chain tightness
中际旭创(300308)
Innolight reported3Q26revenue of RMB27.8bn,up172%YoY/24.6%QoQ.Netprofit reached RMB8.6bn,up174%YoY/8.5%QoQ,while net profit excludingnon-recurring items increased to RMB9.0bn,up190%YoY/22.3%QoQ.GPMexpanded to46.6%,continuing to accelerate from46.1%/46.4%in1Q/2Q26,supported by strong800G/1.6T shipments,a favorable product mix andoperating leverage.Fair-value losses on equity investment and FX lossesrelated to the H-share proceeds weighed on earnings,masking strongerunderlying profitability.We view the recent share price weakness as largelysentiment-driven rather than a reflection of operating performance,andmaintain BUY with unchanged TP at RMB1400(26x2027E P/E).
Demand visibility and margins remain solid.The Company disclosedduring earnings call that major overseas hyperscalers’orders alreadyextend into2027,while certain key clients have provided explicit demandguidance for2028.Product pricing remained broadly stable in3Q26,andthe Company described the current pricing environment as healthy andcustomer quotations as rational.Although DSP supply remains tight,mgmt.indicated that the Company has sufficient supply to support deliveries,reinforced by strategic relationships and LTAs with core suppliers.
NPO is expected to ramp from2H27E.Mgmt.expects2.4T/NPO/XPO toenter initial volume production in2H27,followed by faster scale-updeployment in2028.The Company has already commenced jointdevelopment and sample deliveries with select key clients.Opticalinterconnects currently account for only c.5%of global AI capex,per mgmt.,while this share is expected to increase to c.10%or more over the long termas scale-out/-up/-across/-in applications expand.Mgmt.expects200G-per-lane to remain mainstream through2027-2028E,with400G-per-lanesolutions beginning to emerge in2028E.
Maintain BUY.Despite the recent share-price correction and geopoliticalrisk overhang,we see no imminent or material deterioration in Innolight’sfundamentals or global leadership in high-speed optical interconnects.Order visibility,pricing,margins and supply-chain execution remain solid.Key risks include supply chain disruptions,change in tech upgraderoadmaps,geopolitical uncertainties,etc.
