Citi has issued a research report maintaining its "Buy" rating and HK$1,394 target price for ZJ INNOLIGHT (03308.HK), while keeping its target price for the A-shares (300308.SZ) unchanged at RMB1,212.
The investment bank noted that ZJ INNOLIGHT's A-shares and H-shares fell 12.7% and 10.9% respectively on November 3, which it believes was related to investor concerns over order cuts. However, management has clarified that the company has not experienced any broad-based order reductions, with only limited structural adjustments made by a small number of individual customers.
Citi believes the share price correction may be excessive, as the company's fundamentals remain solid, though the stock has been weighed down by cooling sentiment in the artificial intelligence market.
The bank pointed out that demand for ZJ INNOLIGHT's 800G and 1.6T products remains strong, with most 2027 orders already locked in, and at least one major customer having provided clear demand guidance for 2028. No signs of demand slowdown were observed during the period from the fourth quarter of 2026 to the first quarter of 2027.
Optical module supply remains tight, product pricing is resilient, and the overall pricing environment is favorable. On the supply chain side, DSP, optical chips, and PCB supply have been gradually improving since the third quarter of 2026, which is expected to support quarter-on-quarter shipment growth in the coming quarters. The company believes that the potential merger between leading DSP and laser suppliers will have no significant impact on supply availability.
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