The artificial intelligence boom is driving rapid growth for optical communication companies, with Henan's sole listed chip firm experiencing a surge in its optical chip and device business. Henan Shijia Photons Technology Co., Ltd. saw its first-half net profit jump 45.3%, with a second-quarter sequential increase of 70.96%. Crucially, the company has built a complete IDM (Integrated Device Manufacturer) business system covering chip design, wafer manufacturing, chip processing, and packaging and testing, establishing a differentiated competitive advantage centered on optical chips. This has led to a continuous strengthening of its core competitiveness.
The optical chip and device segment continued its explosive growth, leading to a 45% increase in net profit for the first half of the year. On the evening of August 1st, Henan Shijia Photons Technology Co., Ltd. released its 2026 semi-annual report, showing revenue of RMB 1.495 billion for the first half, a 50.66% year-on-year increase. Net profit attributable to shareholders was RMB 315 million, up 45.3%, and non-GAAP net profit was RMB 309 million, a 44.42% rise. The company attributed this growth to a fast-growing data communications market driven by AI computing power demand, a strong product competitive advantage, and increased customer recognition, leading to higher order volumes. Improved operational management, cost reduction, and improved product yield also contributed to enhanced profitability. Further analysis reveals that the company's second-quarter profitability was particularly strong, with net profit reaching RMB 199 million, a 60.88% year-on-year increase and a sequential surge of over 70%, indicating sustainable growth momentum. Notably, the company's cost control has been effective, with sales and administrative expenses growing only 14.32% and 11.41% respectively, well below the revenue growth rate. The period expense ratio fell from 12.82% to 10.72%, highlighting improved efficiency.
The optical chip and device business is the absolute core driver of Henan Shijia Photons Technology Co., Ltd.'s performance growth. According to the semi-annual report, revenue from this segment reached RMB 1.243 billion in the first half, a 77.64% year-on-year surge, accounting for 84.2% of total revenue. In contrast, the indoor optical cable business revenue fell 34.97% to RMB 97.52 million, the only segment to decline. Revenue from cable polymer materials was RMB 137 million, up 8.77%. The company also saw robust overseas business expansion, with overseas revenue surging 95% year-on-year to RMB 881 million, significantly outpacing domestic market growth and creating a balanced growth pattern between domestic and international demand.
The company's growth is sustainable as it accelerates its transformation from an optical chip vertical integration company to a core supplier of AI computing infrastructure components. Its future growth potential centers on three main areas. First, the product structure upgrade from PLC optical splitter chips to passive and active chips like AWG, EML, and CW will unlock long-term profit potential. For passive components, CWDM AWG and LAN WDM AWG components are already widely used by global optical module leaders, with AWG chips and components for 1.6T optical modules achieving small-batch shipments. For active components, CW DFB light sources and devices for data center silicon photonics have reached small-batch supply, while 100G EML lasers for data centers are undergoing customer sampling and verification, with 200G EML products in internal R&D and testing. The expansion of AI cluster scales and the advancement of new technologies like CPO are increasing the density and complexity of optical fibers within data centers, driving growth in high-density connectivity solutions like MPO. Henan Shijia Photons Technology Co., Ltd. indirectly controls Fuxinkama, filling a key link in the MPO industry chain, with MPO and MMC products already entering global major cabling manufacturers for mass production.
Second, the continuous release of production capacity for high-speed optical chips and devices will be a key driver of performance growth in the coming years. On July 15th, the company disclosed a 2026 private placement plan, aiming to issue up to 136 million shares to no more than 35 specific investors, raising up to RMB 2.8 billion. The funds will be directed towards high-speed optical chip and optical interconnect capacity building. Specifically, RMB 1.4 billion will be used for CW laser chip and COC industrialization projects, RMB 750 million for high-speed AWG chip and optical interconnect component capacity, and RMB 170 million for high-density interconnect device capacity expansion. All projects are located at the company's headquarters in Hebi, Henan, with a three-year construction period.
Third, overseas market expansion and efficiency improvements will further strengthen the company's sustainable profitability. The company's management has proposed to steadily advance expansion projects in Hebi and Thailand and accelerate the construction and operation of the Thailand subsidiary. The semi-annual report shows that the Thailand subsidiary, SJ Photons (Thailand) Co., Ltd., achieved revenue of RMB 169 million and a net profit of RMB 23.71 million, with total assets of RMB 379 million, becoming a key overseas production base. As of the end of the first half, the company's total overseas assets reached RMB 527 million, accounting for 15.85% of total assets, a significant increase from RMB 291 million (11.99% of total assets) at the end of 2025. The rapid growth in overseas revenue validates the feasibility of the company's global expansion strategy. As overseas channels and production capacity further improve, the proportion of overseas revenue is expected to continue rising.
Multiple securities research institutions predict that net profit attributable to shareholders for Henan Shijia Photons Technology Co., Ltd. in 2026 could grow by over 70%, with further acceleration in 2027, and while slowing in 2028, it could still maintain over 40% growth. As of August 3, 2026, the company's stock price was RMB 96.77, with a total market capitalization of RMB 43.74 billion, corresponding to a P/E (TTM) of approximately 69.47 times and a price-to-book ratio of 25.48 times. This valuation is above the industry average in the optical communication sector but significantly below the company's own historical average. Some industry analysts suggest that from a performance perspective, the current valuation already incorporates optimistic expectations for capacity release and product upgrades, but it has not formed a significant bubble. Guojin Securities research report notes that the company, as one of the few domestic platform companies simultaneously deploying both active and passive optical chips, is developing strongly under the AI wave. It gives the company a 60x valuation for 2027, implying a market capitalization of RMB 95.43 billion and a target price of RMB 211.13, representing an 118.18% upside from the current price. However, some institutions also caution that if the optical chip capacity ramp-up falls short of expectations, market competition intensifies, product iteration lags, or cost control measures prove ineffective, the performance growth rate could fall short of expectations, putting pressure on the valuation. For investors, key variables to monitor going forward include the shipment progress of high-speed optical chips and devices, changes in gross margin, and the landing of overseas orders.
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