On the evening of July 18, Suzhou Tfc Optical Communication Co.,Ltd. (ASX: 300394) released a voluntary earnings forecast, projecting a net profit attributable to shareholders of between 1.124 billion and 1.304 billion yuan for the first half of 2026, representing a year-on-year increase of 25% to 45%. Its adjusted net profit, excluding non-recurring gains and losses, is forecast to be between 1.089 billion and 1.284 billion yuan, up 25.56% to 48.02% year-on-year.
This non-mandatory forecast immediately sparked heated debate, revealing significant market divergence. Multiple brokerage sell-side teams were unanimous in their assessment, judging the company's second-quarter performance to have increased significantly quarter-on-quarter and exceeded market expectations. However, some industry insiders pointed out that compared to the full-year 2025 growth exceeding 50% and the market consensus for over 60% growth for the current year, the company's first-half growth rate has decelerated, falling short of expectations.
Some observers view this divergence in performance expectations as a typical example of the current cautious market sentiment as high-flying tech stocks in the AI supply chain enter a period of earnings verification.
Following the release of the forecast, a round of intense discussion unfolded within the industry regarding the company's growth rate, with opinions sharply divided.
Some insiders believe the disclosed forecast is below expectations. A senior technology analyst at a securities firm commented that failing to reach 50% growth likely indicates a miss. Another industry professional with a long-term focus on the electronics sector also stated the forecast should be considered below expectations. According to sell-side estimates, the company's Q2 net profit midpoint is around 720 million yuan. Calculated this way, the year-on-year growth for Q2 is approximately 28%, compared to 49.6% in 2025 and 160.9% in 2024. While growth exists, the stock price has multiplied over the past year.
In contrast, among some sell-side analysts, this controversial forecast is seen as commendable. Several brokerage teams issued views last night, consistently stating that TFC Optical's Q2 2026 results exceeded expectations.
Observations indicate a degree of similarity in these brokerages' statements. For instance, most noted that the company's Q2 performance showed a quarter-on-quarter increase of about 47%, surpassing expectations where the market had anticipated only a slight sequential rise. Additionally, several brokerages suggested that supply shortages for components like EML optical chips are expected to ease in the third quarter.
Regarding the forecast, the aforementioned long-time electronics sector observer explained that the evaluation logic for quarter-on-quarter versus year-on-year growth is distinctly different. The first quarter typically includes the Chinese New Year holiday with fewer working days, giving Q2 a natural base for sequential growth. The industry places greater emphasis on year-on-year growth across fiscal years to gauge true business momentum.
It is noteworthy that during the earlier surge in the optical communications sector, several major brokerages raised their target prices for TFC Optical. In early May, CITIC Securities set a target as high as 347 yuan. In April, Guotai Junan Securities and Huatai Securities set targets of 384.56 yuan and 464.65 yuan, respectively, up from their previous targets.
However, even as sell-side firms expressed optimism about the company's fundamentals and market outlook, its stock price has undergone a significant correction recently. As of July 17, the closing price was 211.37 yuan, representing a 35% decline since June.
Despite the starkly different interpretations of the current forecast, earlier investor questions about the company's performance received largely positive responses from institutions. During the first-half rally in the optical communications sector, earnings forecasts for TFC Optical were continuously revised upward. According to data, the market consensus for the company's full-year 2026 net profit has been raised by about 10% over the past six months. Based on the latest consensus of 3.354 billion yuan, this implies a year-on-year growth of 66.3% for 2026. Achieving this target would require a stronger performance in the second half of the year.
Analysis suggests that, judging by the recent performance of some AI supply chain star stocks, the market is currently highly sensitive to whether company results meet expectations. For example, storage concept stock DMY Technology Ltd. (ASX: DMYI) saw its stock price surge dramatically from 62 yuan to a high of 980 yuan since 2025. However, after releasing a forecast on July 14 for a first-half 2026 net profit of 5.7-6.5 billion yuan (compared to a loss in the prior-year period), its stock suffered three consecutive limit-down sessions as the market interpreted a quarter-on-quarter decline in Q2 performance as a miss, despite the sector's high growth.
Simultaneously, other AI star companies that released interim forecasts interpreted by institutions as "exceeding expectations" still experienced significant stock price adjustments. For instance, after Moore Threads (ASX: MTT) forecasted first-half revenue growth of 135.12% to 149.37% on July 16, which some deemed "above expectations," its stock price fell sharply with the broader market the next day.
Industry insiders believe the recent sharp correction in tech stocks reflects a shift in market sentiment. The mood has turned cautious, leading to price declines. Companies with solid earnings may see relatively smaller declines, while those missing expectations could perform even weaker in this environment.
Notably, high levels of margin financing in tech stocks have recently drawn market attention. During DMY Technology's consecutive limit-down sessions, trading volume did not expand significantly, raising concerns about potential forced liquidation risks for margin positions.
Data shows that as of July 16, 22 A-share listed companies had margin financing balances exceeding 10 billion yuan, with a high proportion being tech stocks. Among them, Suzhou Tfc Optical Communication Co.,Ltd. (ASX: 300394) had a margin balance of 10.06 billion yuan, accounting for 3.78% of its free-float market capitalization, ranking 22nd in the market. Despite recent significant price corrections, margin balances for these leading tech stocks remain near historical highs. How the pressure from these high-level margin positions will evolve if stock prices decline further remains to be seen.
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