中际旭创（A）长期利好，从规模扩张到规模升级：将目标价上调至780元人民币，重申买入

Long-term positives, from scale-out toscale-up: lift PO to CNY780, reiterate Buy Reiterate Rating:BUY| PO:780.00 CNY| Price:619.60 CNY Reiterate Buy; raise PO on strong long-term positivesWe liftInnolight’s PO to CNY780 (30x 2H26-1H27E P/E) from CNY580 (30x 2026E P/E), after our 2-14% upward earnings revision to 2025-27E EPS and a valuation baserollover. Our positive view is backed by an extended earnings upcycle scenario, under: (1)stronger 800G/1.6T demand into 2026-27E, and (2) potential upside from increasingoptics in AI server scale-up. We reiterate our Buy rating on Innolight. Pluggablemomentum continuesWe expect global800G/1.6T supply to grow substantively into 2027, aided by strong demand and rising core component supply. We note upstream suppliers are committingfor more capacity expansion into 2026–Lumentum aims to expand capacity by 40%over the next few quarters, while Tower Semi aims to triple Si-Ph capacity by mid-2026(vs. 2024). This could help drive faster 800G/1.6T transceiver delivery into 2H26, and weexpect the global 800G/1.6T shipment to further expand to 50mn/28mn units into 2027.We believe pluggable will continue to be a mainstream in AI server scale-out, backed bycontinued 1.6T demand and achievable 3.2T design. These could support transceivermakers’earnings/valuation beyond 2026-27. Scale-up optics could bring more opportunities into ’27-28Innolight has been actively workingon new technologies like LPO/NPO and even OCS. We also note that optics’role is becoming more critical in AI server scale-up on materiallyrising bandwidth vs. scale-out. We believe Innolight will not miss out on the scale-upopportunities—by leveraging its Si-Ph know-how—despite its limited exposure to theNvidia CPO supply chain. We believe NPO could be a more preferrable solution for CSPs,as open-socket NPO could help drive a flexible system-level design while maintaining alower repair/replacement cost vs. CPO. Based on our check, Innolight has been workingwith several key CSP customers and could see revenue contribution from 2027. This research report provides general information only. No part of this report may be usedor reproduced or quoted in any manner whatsoever in Taiwan by the press or otherpersons without the express written consent ofBofA Securities.>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. iQprofileSMZhongji Innolight (A) CompanySectorIT Hardware Company Description Zhongji Innolight, a China-based high-speed opticaltransceiver solution provider, was founded in 2008 andlisted in 2017 (via a reverse takeover). Innolight is now tiedas the largest optical transceiver provider globally. It has acomplete product portfolio for datacenter, 5G, networkingand fiber to the home. Its key customers are mainly UShyperscalers and GPU providers. Investment Rationale We have a Buy rating on Zhongji Innolight. Innolight, theglobal number-1 optical transceiver supplier, is a keybeneficiary of the AI uptrend, led by (1) rapidly risingvolume/content at transceivers and (2) its strong projectline-up. Stock Data Price to Book Value21.9x Reiterate Buy, lift PO to CNY780We revise up 2025-27E earnings by 2-14%, and our positive view is backed by an extended earnings upcycle scenario, under: (1) sustained strong 800G/1.6T demand into2026-27E, and (2) likely upside from increasing optics in AI server scale-up. Our new PO of CNY780 is based on 30x 2H26-1H27E P/E after a valuation base rollover,vs. previous PO of CNY580 (30x 2026E P/E), to reflect the extended upcycle. We believeInnolight will remain as an industry leader in the pluggable transceiver space, while notmissing out opportunities in scale-up optics. We reiterate Buy on Innolight. Exhibit1:Weexpecthigh-margin1.6T transceiverto be a majorrevenue driver into 2026-27 Innolight’s revenue trend, 2022-27E Innolight’s net income trend, 2022-27E Exhibit6:The stock trades ataroundthehistoricalaverage comparedwith the trading range since 2017Innolight’s historical 1-year forward P/E trend Exhibit5:The stock tradesat around+1SD 1-year forward P/Ecompared with the trading range since 2021Innolight’s 1-year forward P/E since 2021 Pluggable continues to grow, led by demand and upstreamexpansion We note transceiver demand has been strong since 2024, but 2H25 supply is capped byupstream core components shortage. Into 2027, we expect global 800G/1.6T supply togrow substantively, amid sustained demand and rising core components supply. We noteupstream suppliers are committing for more capacity expansion into 2026. Lumentumaims to expand capacity by 40% over the next few quarters, and to prioritize 200G EMLto support 1.6T ramp-up. Meanwhile, Tower Semi aims to triple the Si-Ph capacity bymid-2026 (vs. 2024), which coul