东山精密（002384.SZ）宣布将投资12亿美元用于人工智能光学扩展。

Dongshan Precision (002384.SZ)Announced US$1.2bn Investment in AI Optics Expansion CITI’S TAKEDongshan Precision announced that its subsidiary, Source Photonics, will invest US$1.2bn in self-raised funds to expand optical chips andtransceivers production in Changzhou and other regions. This project aimsto resolve capacity shortages and fulfill surging AI computing demands from downstream clients. We believe the investment announcement islikely in-line with investors’ expectation in terms of 2027 received ordersand decent 2028-2029 outlooks, and we also note that Sina (dated 4th Karen HuangAC+852-2501-2755karen.xw.huang@citi.com Kyna Wong+852-2868-7820kyna.wong@citi.com Kevin Chen+852-2501-2125kevin.y.chen@citi.com See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations Bull/Bear: Dongshan Precision Dongshan Precision ValuationWe use SOTP methodology to derive our TP of Rmb225.0. We apply (1) 15x P/E to DSBJ’s original biz 2026 net profits (past 5- year average); (2) 15x 27E P/E to the optical transceiver biz, in-line with the optical transceiver names average fwd P/E; (3) 50x27E P/E to the optical chip biz, in-line with the optical chip names average fwd P/E; (4) 20x to the 27E AI-PCB biz, in-line with Risks Key downside risks that could impede the stock from reaching our TP include: (1) slower-than-expected progress in modulesFPC and share gain from overseas peers; (2) slower-than-expected Tesla business growth due to fierce competition in the ChinaNEV market; (3) continued optoelectronic business loss due to weak demand and intensified competition; (4) increasing If you are visually impaired and would like to speak to a Citi representative regarding the detailsof the graphics in this document, please call USA 1-888-500-5008 (TTY: 711), from outside the Appendix A-1 ANALYST CERTIFICATIONThe research analysts primarily responsible for the preparation and content of this research report are either (i) designated by “AC” in the author block or (ii) listed in bold alongside content which is attributable to that analyst. If multiple ACanalysts are designated in the author block, each analyst is certifying with respect to the entire research report other than(a) content attributable to another AC certifying analyst listed in bold alongside the content and (b) views expressed solelywith respect to a specific issuer which are attributable to another AC certifying analyst identified in the price charts orrating history tables for that issuer shown below. Each of these analysts certify, with respect to the sections of the report IMPORTANT DISCLOSURES Citigroup Global Markets Inc. or its affiliates received compensation for products and services other than investment bankingservices from Dongshan Precision in the past 12 months. Citigroup Global Markets Inc. or its affiliates currently has, or had within the past 12 months, the following as clients, and theservices provided were non-investment-banking, securities-related: Dongshan Precision.Citigroup Global Markets Inc. or its affiliates currently has, or had within the past 12 months, the following as clients, and the Analysts’ compensation is determined by Citi Research management and Citigroup’s senior management and is based uponactivities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates (the “Firm”).Compensation is not linked to specific transactions or recommendations. Like all Firm employees, analysts receivecompensation that is impacted by overall Firm profitability which includes investment banking, sales and trading, and For financial instruments recommended in the Product in which the Firm is not a market maker, the Firm is a liquidity providerin such financial instruments (and any underlying instruments) and may act as principal in connection with transactions insuch instruments. The Firm is a regular issuer of traded financial instruments linked to securities that may have been Unless stated otherwise neither the Research Analyst nor any member of their team has viewed the material operations of theCompanies for which an investment view has been provided within the past 12 months. For important disclosures (including copies of historical disclosures) regarding the companies that are the subject of this CitiResearch product ("the Product"), please contact Citi Research, 388 Greenwich Street, 6th Floor, New York, NY, 10013,Attention: Legal/Compliance [E6WYB6412478]. In addition, the same important disclosures, with the exception of the https://www.citivelocity.com/cvr/eppublic/citi_research_disclosures.Valuation and Risk assessments can be found in thetext of the most recent research note/report regarding the subject company. Pursuant to the Market Abuse Regulation ahistory of all Citi Research recommendations published during the preceding 12-month period can be accessed via Citi Velocity Guide to Citi Research Fundamental Researc