The sustained release of demand for AI computing power is keeping the optical communications industry chain in a state of high prosperity. Against this backdrop, Yuanjie Semiconductor Technology Co.,Ltd., a leading optical chip company that once topped the A-share market as the highest-priced stock, has disclosed a strong half-year earnings forecast.
On July 21st, the company released its preliminary results for the first half of 2026. It expects to achieve operating revenue between 9 billion and 9.5 billion yuan, representing a year-on-year increase of 339% to 364%. Net profit attributable to shareholders is projected to be between 6 billion and 6.5 billion yuan, soaring by 1,197% to 1,305% compared to the same period last year. After excluding non-recurring gains and losses, net profit is estimated to be between 5 billion and 5.5 billion yuan, marking an increase of approximately 10 to 11 times.
The company attributed the strong performance primarily to the rapid revenue growth from its data center business. On one hand, the increased proportion of high-margin data center products has improved overall profitability. On the other hand, the swift expansion of revenue scale has further amplified operating leverage, leading to a profit growth rate that significantly outpaces revenue growth.
However, prior to the release of these impressive figures, the company's stock price had already undergone a notable correction. On July 20th, the share price hit a daily down-limit of 20% intraday. Since reaching its historical peak in late June, the stock has retreated by over 28%. The market widely believes that, following a substantial surge over the past year and a valuation that had far exceeded industry averages, investors are beginning to reassess whether such high growth can be sustained.
Data Center Business Fuels Profitability
Yuanjie Semiconductor Technology Co.,Ltd. specializes in high-speed optical communication laser chips, positioning it as a key upstream supplier in the optical module industry chain.
With the continuous advancement of AI infrastructure development, demand for high-speed optical modules is growing rapidly. The company's data center business has entered a phase of significant volume expansion. According to the earnings forecast, the revenue contribution from the data center segment has further increased, driving an improvement in overall gross margin. This has become the primary driver of the period's performance growth.
In terms of the performance figures, the company expects operating revenue to have grown by approximately 3.4 times year-on-year, while net profit attributable to shareholders surged by about 12 times. The significantly faster profit growth compared to revenue growth reflects how both product mix optimization and economies of scale have jointly enhanced profitability.
Revenue Expansion Lowers Expense Ratio, Unleashing Operating Leverage
Beyond product mix improvements, the rapid growth in revenue scale has also led to a decline in the expense ratio.
While growth in period expenses such as R&D, sales, and management remained relatively stable, the substantial increase in revenue helped to dilute fixed costs. This further manifested the effect of operating leverage, leading to a marked improvement in net profit margin.
This change also indicates that the current round of profit growth is not solely attributable to expanding industry demand but also benefits from enhanced operational efficiency driven by the enlarged business scale.
Non-Recurring Gains of ~1 Billion, Core Business Remains Growth Driver
The earnings forecast shows that net profit attributable to shareholders is estimated between 6 billion and 6.5 billion yuan, while the non-GAAP net profit is between 5 billion and 5.5 billion yuan, a difference of approximately 1 billion yuan.
The company explained that this portion of income primarily stems from equity investments held indirectly through private equity funds. A rise in the valuation of the invested companies led to changes in the fair value of these fund investments, generating certain non-recurring gains for the company.
However, judging by the earnings structure, the non-GAAP net profit is still projected to have increased by about 10 to 11 times year-on-year. This shows that the current performance growth is predominantly driven by the core business operations, not by investment returns. As the revenue share from the data center business continues to rise, the improvement in profitability increasingly reflects enhanced operational quality from business structure optimization, rather than one-off factors.
High Growth Delivered, But Lofty Valuation Remains a Focus
Despite the outstanding performance, market focus is gradually shifting from "whether growth can be achieved" to "whether the valuation has already fully priced in growth expectations."
Over the past year, fueled by the explosion in demand for high-speed optical modules driven by AI computing infrastructure, Yuanjie Semiconductor Technology Co.,Ltd.'s stock price once surged over 10-fold, breaking the 1,000 yuan barrier and reaching a peak of 1,968.14 yuan, making it one of the highest-priced listed companies on the A-share market. As the stock price climbed rapidly, the company's valuation also soared.
According to a previous risk disclosure announcement from the company, as of the end of June, its trailing P/E ratio once reached 659 times. In contrast, the average trailing P/E ratio for the computer, communication, and other electronic equipment manufacturing industry was around 67 times during the same period, meaning the company's valuation approached 10 times the industry average. The company had also cautioned at the time about the risk of a correction following the rapid short-term price appreciation.
Simultaneously, competition within the optical chip industry continues to intensify. Overseas, companies like Nvidia are strengthening the optical communication supply chain through investments in suppliers such as Lumentum and Coherent. Domestically, optical module manufacturers like Zhongji Innolight and Eoptolink are accelerating their in-house optical chip development to increase the self-sufficiency rate of core components. As competition along the industry chain heats up, the market's requirement for sustained profitability from highly valued companies will become even more stringent.
Therefore, although this half-year report once again validates the high prosperity of the data center business, following the substantial stock price rally, the company's future share performance may depend more on whether its earnings growth rate can consistently exceed market expectations, rather than merely on the growth of the earnings themselves.
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