中际旭创(A)：将目标价上调至1650元；全栈光器件供应商受益于强劲周期

supplier riding on stronger cycleReiterateRating:BUYIPO:1,650CNY/Price:1,180CNY RaiseearningsestimatesandPOtoCNY1,650 rising contribution from new solutions.We expect 1.6T/NPO to contribute ~68%/~14% ofInnolight's revenue in 2027.We lift our PO to CNY1,650 (25x 2027E P/E) from CNY1,100 (30x 2H26-1H27E P/E). We lowered our P/E target multiple to reflect the market's forwardlooking on earnings amid extended lead-timeas well as lingering debates around CPO.Wesee market tend to value more on further earnings upside for transceiver makers and morediscussions around new techs could warrant further share price upside. Reiterate Buy.Pluggables demand trending stronger KeyChanges larger commitment for 2028;(2) Lumentum's capacity fully booked through 2028; and (3)higher supply/demand gap to over 30%.We also see stronger Google TPU volume asanother driver to 1.6T volume, and we expect global 1.6T shipment to reach 20mn/56mnunits in2026/27, while we expect Innolight to maintain over 40% share into 2027.New solutions: NPO visibility improving, CL emerging Merill Lynch (Hong Kong)kexin.zhu@bofa.comRobert Cheng >>Research AnalystMerrill Lynch (Taiwan) NPO demand is becoming increasingly visible in 2027, and we expect more than oneCSP to deploy NPO in its scale-up systems. Based on our analysis, each 5mn-unit NPO robert.cheng@bofa.comDoris Kao >Research Analyst order could generate CNY1Obn+ in earnings for Innolight.We are also seeing growingmarket discussions around a 2.4T Coherent-Lite (CL) solution, which could potentially bedeployed by Google. This suggests that high-value Coherent solutions are moving fromscale-across to scale-up architectures. We note that the Coherent optics market remainslargely dominated by US vendors, while Innolight is one of the few China suppliers. Webelieve Innolight could be a key beneficiary of Google's potential Coherent-Lite adoptioninto 2027-28, backed by its deep relationship with Google.Estimates (Dec) (CNY)2024A2025A2026E2027E2028E Merill Lynch (Taiwan)doris.kao@bofa.com This research report provides general information only. No part of this report may be usedor reproduced or quoted inany manner whatsoeverinTaiwanbythepress or otherpersons without the express written consent of BofA Securities.>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst NPO:near-packaged opticsSiPh: silicon photonicsTPU: tensor processing unitCSP Common Security Platform under the FINRA rulesRefer to'Other Important Disclosures' for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 9 to 11. Analyst Certification on page 6. PriceObjective Basis/Risk on page 6. iQprofile s" Zhongji InnolightKey Income Statement Data (Dec)2024A2025A IT Hardware Zhongji Innolight, a China-based high-speed optical transceiver 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. We have a Buy rating on Zhongji Innolight. Innolight, the global number-1 optical transceiver supplier, is a keybeneficiary of the Al uptrend, led by (1) rapidly risingvolume/content at transceivers and (2) its strong projectline-up. Stock Data Price to Book Value18.6x Key Metrics We raise our 2026-28E earnings by 16-70% to reflect the strong 1.6T demand into 2027 and rising contribution from new solutions. We expect 1.6T/NPO to contribute~68%/~14%of Innolight's revenue in 2027.We lift our P0 to CNY1,650 (25x2027E P/E)from CNY1,100 (30x 2H26-1H27E P/E). We lowered our P/E target multiple to reflectmarket's forward looking on earnings amid extended lead-time as well as lingeringdebates around CPO. We note Innolight has traded above 27x (+1SD)previously butgiven more crowded market and lingering concern on Nvidia's CPO adoption, we viewmarket tend to focus more on what can drive further earnings upside. Thus, surprise onearnings and more discussions around new techs should warrant further share priceupside. (CNY mn) NPOordersShare price trend since June 2025 Pluggables trending stronger, NPO taking offWe expect 1.6T demand to trend even stronger into 2027 and last into 2028, as indicated by upstream suppliers' extended backlog. We expect global 1.6T shipments toreach20mn/56mnunits in2026/27,whilewe expect Innolight to maintainover 40%share into 2027. Besides pluggables, NPO demand is becoming increasin