Amid a pullback in the optical module sector and persistent rumors of overseas clients cutting demand, Zhongji Innolight Co.,Ltd. (ASX: 300308) has issued its latest response. The company stated that the vast majority of clients have not reduced demand or orders, and while a few clients have made structural product adjustments, some clients' 1.6T demand has actually increased further from previous levels. Overall industry demand for 2027 remains within prior forecasts, and demand from leading clients remains strong.
On the evening of November 3, Zhongji Innolight Co.,Ltd. (ASX: 300308) released a record of investor relations activities, clarifying recent market rumors regarding overseas client order cuts, demand downgrades, and foreign brokerage target price reductions.
The company said that for 2027, the vast majority of orders already cover the full year, data center clients are maintaining a normal pace of taking delivery, and no clients have slowed their intake. Optical module supply remains generally tight, and there has been no situation where products were manufactured but formed abnormal inventory and could not be delivered to clients.
Regarding 2028 demand, which the market is more focused on, the company disclosed that at least one key client has already provided clear demand guidance, and that demand is strong, while guidance from other clients is still being collected. The company remains optimistic about overall industry demand and prosperity in 2028.
Meanwhile, the commercialization progress of next-generation optical interconnect technology was also a focus of this exchange.
Zhongji Innolight Co.,Ltd. (ASX: 300308) expects NPO to begin ramping in the second half of 2027, with more demand expected to be released in 2028. However, manufacturing yield for new products, as well as upstream materials such as CW light sources and electrical chips, still need to go through a ramp-up process. Once related preparations are completed, client demand is expected to scale further.
Nomura's 330 Yuan Target Price Rumor Is False; Actual Report Maintains Buy Rating
According to Jiemian News, on November 3, a screenshot of a research report marked as issued by Nomura, claiming a downgrade of Zhongji Innolight Co.,Ltd. (ASX: 300308) A-share target price to 330 yuan, was rapidly circulating in investor communities. With sentiment in the optical module sector already sensitive, this news quickly spread and stirred the stock's trading. A Nomura representative responded, saying, "The matter is not true."
Nomura never published this target price downgrade report, and the circulated content is false information. Regardless of the named analyst, document number, or profit calculation methodology, no corresponding formal research report record can be found, and no action of lowering the target price to 330 yuan exists.
Tracing the spread of this rumor, during intraday trading on November 3, the news began fermenting on stock forums, WeChat groups, and multiple self-media channels. The circulated content included screenshots mimicking the format of sell-side research flash notes, seemingly listing the industry chain, profit forecasts, and downgrade logic, claiming that industry demand was slowing and overseas client orders were below expectations, and therefore lowering Zhongji Innolight Co.,Ltd. (ASX: 300308) target price to 330 yuan.
In fact, Nomura's latest report shows it maintains a "Buy" rating on Zhongji Innolight Co.,Ltd. (ASX: 300308), with an A-share target price of 1,196 yuan and a Hong Kong share target price of HK$1,387.
The original text of Zhongji Innolight Co.,Ltd. (ASX: 300308) investor activity content is as follows:
I. Management Opening Remarks
At the request of many investors, we clarify relevant rumors that appeared in the market today.
1. Regarding rumors that some overseas clients have downgraded demand or cut orders: The vast majority of clients have not downgraded demand or orders. A few clients have structural product adjustments, and some clients' 1.6T demand has even increased from previous levels. Therefore, even considering structural adjustments by a few clients, overall industry demand for 2027 remains within the original forecast range, with demand from leading clients still strong.
2. Regarding rumors that a certain foreign brokerage downgraded the company's rating and target market value: The company has verified with that foreign brokerage, which stated that it still maintains its rating on the company and that there is no downgrade of rating or target price. The related information is false content spread by someone impersonating the brokerage's name.
3. Regarding 2027-2028 demand: The vast majority of the company's 2027 orders already cover the full year. Regarding 2028 demand, at least one key client has already provided clear demand guidance, and demand is strong. Guidance from other clients is still being continuously collected. The company remains optimistic about overall industry demand and prosperity in 2028.
II. Q&A
Q1: What is the current pricing situation for 800G and 1.6T products in 2027? A1: The annual price decline is limited, and some product prices have even not declined.
Q2: What is the pace of downstream clients' pull-in from Q4 this year to Q1 next year? A2: Currently, data center clients' pace of taking delivery is normal, with no slowdown. Optical module supply remains generally tight, and there has been no situation where products were produced but formed abnormal inventory that could not be shipped, nor have clients slowed their pace of taking delivery.
Q3: Does the company have further arrangements regarding shareholder returns, buybacks, and dividends? A3: The company implemented a buyback of approximately 5 billion yuan in August-September 2026 and has proposed a resolution to cancel all corresponding repurchased shares, to be implemented after approval by the shareholders' meeting. Whether to continue buybacks will depend on subsequent conditions. The company has established a long-term shareholder return mechanism, increasing dividend frequency from once a year to twice a year. As profitability improves, the company is confident in gradually increasing the dividend payout ratio.
Q4: Has the supply of core materials in Q4 improved further compared with Q3? A4: Material supply is gradually improving, and it is expected that some core materials will improve marginally over the next several quarters. The company's shipment volume is also expected to maintain sequential growth for several consecutive quarters.
Q5: Market reports say a major chip company showcased a new-generation OIO technology solution. What impact does this have on the company? A5: The company has targeted development and布局 for new application scenarios, technology routes, and product directions, and assists clients in defining product forms in related fields. Related work is currently underway.
Q6: How do you view demand and capex trends in 2029? A6: Clients usually do not provide specific demand guidance two years in advance, but the company can clearly see clients' technology routes for the next two to three years, including technology trends and solutions in areas such as scale-up and scale-in. The company believes that future computing power, bandwidth, and optical connection application scenarios will continue to increase, requiring higher-end optical interconnect solutions. The company will actively assist clients in continuously developing product solutions. Industry clients continue to adopt optical interconnect solutions, the future technology iteration roadmap is clear, and there is room for sustained growth.
Q7: What is the demand situation for NPO in 2028? Which links in the supply chain need to ramp up? A7: NPO is expected to begin ramping in the second half of 2027, with more demand expected to be released in 2028. In the early stage of new product introduction, manufacturing yield needs to ramp up. In addition, new upstream materials such as higher-power CW light sources and electrical chips all need to go through yield ramp-up, which is a normal process for mass production of new products. After related preparations are completed, client demand in 2028 is expected to be released on a larger scale.
Q8: At OCP, multiple vendors showcased XPO, and some clients also promoted the USFP protocol. Can you share related industry progress? A8: XPO progress is relatively fast. The company showcased related solutions at OFC 2026 and will subsequently send samples to clients for testing. Demand is expected to emerge in 2027. Other new technology solutions still require a certain process to achieve scale.
Q9: When will clear demand emerge in the scale-in market? How broad is the company's client coverage? A9: The timing for demand emergence is still early. The company is discussing with some clients and assisting in product definition, which may correspond to clients' subsequent generations of ASIC chips. As bandwidth increases, in-cabinet connections are expected to gradually shift from copper connections to optical connections. However, industry standards and technical standards are not yet clear and still require a long period of R&D, refinement, and deployment. It is temporarily difficult to give a clear timetable.
Q10: Will material tightness cause net profit to decline? A10: Some materials are indeed in tight supply, but that does not mean the prices of all materials are rising. Gross margin depends on client prices, product structure, and the company's internal cost reduction capabilities. Generally speaking, a higher proportion of high-end products helps maintain competitive advantage. At the same time, silicon photonics products have better gross margins than traditional solutions. As the proportion of silicon photonics increases, yield and production efficiency improve, silicon photonics chip capabilities strengthen, and the BOM structure of silicon photonics products optimizes, the company is expected to further reduce costs and maintain stable or even improved gross margins.
Q11: Can you introduce the current demand situation of some specific clients? A11: Specific client order situations involve trade secrets and cannot be responded to one by one. The company once again emphasizes that for 2027, industry demand for 800G and 1.6T still maintains the guidance previously communicated to the market. Total demand has not changed, and we hope investors will judge rationally.
Q12: How much DSP required for 1.6T next year has been locked in? A12: The scale of DSP the company has locked in is relatively close to order demand and also matches the share obtained from clients.
Q13: Gross margins have been high and stable over the past three quarters. Given continuous changes in product mix, what are the main reasons gross margin has remained at a good level? A13: Mainly due to a higher share of high-end product shipments, improvements in processes and technology, a higher proportion of silicon photonics, and improvements in yield and production efficiency. These factors jointly promote cost reduction and gross margin improvement, among which the share of high-end products is particularly critical.
Q14: When CPO achieves large-scale widespread application in 2029-2030, what strategy will the company adopt to maintain competitiveness and industry position? A14: Multiple solutions will coexist in different application scenarios. In scale-out scenarios, pluggable solutions such as 3.2T and 1.6T will still exist, and high-density pluggable solutions such as XPO and USFP will also coexist. In scale-up scenarios, NPO has been widely recognized by clients. The company is in talks with multiple clients, and related demand is expected to be released successively in 2028-2030.
Q15: Facing the trend of CPO solutions, besides FAU and light source modules, what other links might the company participate in in the future? A15: Currently, in CPO solutions, the main links the company can participate in are FAU and ELS external light sources, which are also the two types of products the company is participating in fastest at this stage.
III. Management Summary
From the company's perspective, industry demand in 2027 is still good, prosperity is very high, and there has been no situation of large-scale client order cuts as rumored in the market or feared. We hope investors will view industry demand and the company's investment value rationally.
IV. Meeting Ended.
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