The expansion of AI computing infrastructure is increasingly impacting upstream sectors, with optical module manufacturers entering a period of robust earnings growth.
CIG Shanghai Co.,Ltd. released a preliminary earnings forecast for the first half of 2026 on July 14, projecting a net profit attributable to shareholders in the range of 310 million to 359 million yuan. This represents a year-on-year increase of approximately 156.65% to 197.18%. Profit after deducting non-recurring gains and losses is expected to be between 302 million and 351 million yuan, marking a growth of 153.72% to 194.97%.
The company attributed the strong performance primarily to the rapid development of its high-speed optical module business. Accelerated construction of AI data centers is fueling demand for these modules, leading to a substantial year-on-year increase in order volume and shipment value. Furthermore, a higher sales mix of high-rate products like 800G modules is optimizing the product structure and improving gross margins.
Analyzing the Quality of Earnings
The growth appears to be fundamentally driven by improvements in core operations. The net profit attributable to shareholders in the same period last year was 121 million yuan; the lower end of the current forecast range is already more than double that figure. Additionally, the close alignment between the non-GAAP profit figure and the headline net profit indicates that non-recurring items had a limited impact on the results.
High-Speed Optical Module Demand Fuels Profitability
The core driver behind this earnings surge is the high-speed optical module segment. As the demand for training and inference of large AI models continues to rise, global data centers are rapidly expanding capacity, leading to fast-growing demand for high-speed interconnect products. 800G optical modules are becoming crucial components for AI cluster construction, with the industry already moving towards even higher rates like 1.6T.
Amid this trend, CIG Shanghai Co.,Ltd. is benefiting from both market demand growth, which is expanding its order book, and an improved product mix. The increasing proportion of higher-rate products enhances product value and profitability, driving growth in both revenue and earnings. The company's announcement clarified that the forecasted growth is not due to significant non-recurring items or special accounting treatments, confirming that core business improvement is the primary source of profit growth.
Foreign Exchange Headwinds and Future Mitigation
Despite the high growth in the optical module business, currency fluctuations have exerted notable pressure on profits. The company retained a portion of the funds raised from its Hong Kong IPO and subsequent placements in Hong Kong dollars. The weakening of the US dollar this year, which influences the Hong Kong dollar, turned previous foreign exchange gains into losses. The company estimates a foreign exchange loss of approximately 202 million yuan for the first half of 2026, compared to a gain of 13.65 million yuan in the same period last year.
However, as the raised capital is deployed according to plan for capacity building and business development, the scale of the related foreign currency assets is expected to gradually decrease. Consequently, the impact of foreign exchange factors on future profits is anticipated to diminish.
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