ACCELINK TECHNOLOGIES(002281)：AN OPTICAL COMMUNICATION LEADER WITH A FULL PRESENCE ALONG THE VALUE CHAIN

　　Core views:
　　Accelink is one of the few optical communication leaders in China with a full presence along the value chain from chips to modules and systems, with products covering telecom transmission networks, data communication networks and broadband access networks. We believe that Accelink’s strong R&D capabilities, extensive presence along the value chain, and inhouse R&D and production capabilities in optical chips will further enhance its barrier to competition. Meanwhile, the Company is venturing into the data center interconnect (DCI) business, which is likely to bring new growth momentum. We put our 2022E/23E/24E attributable net profit (ANP) estimates at Rmb640mn/761mn/910mn and assign 20x 2023E PE to derive a target price of Rmb22. We initiate coverage with a “BUY” rating.
　　Abstract:
　　As a domestic leader in optical communication, Accelink has built a full presence along the value chain. Accelink is mainly engaged in the development and manufacturing of optoelectronic devices. The Company has acquired the ability to vertically integrate the whole value chain of optical communication via organic growth and acquisitions after more than two decades of development, and its products have achieved a full coverage of solutions from chips to devices, modules and subsystems. Accelink's operating revenue and profit have maintained continuous growth. It recorded robust earnings as a whole, with operating revenue growing from Rmb4.059bn in 2016 to Rmb6.486bn in 2021 at a CAGR of 0.8% over 2016-2021, and ANP increasing from Rmb285mn in 2016 to Rmb567mn in 2021 at a CAGR of 14.8% over 2016-2021.
　　Promising prospects in optical communication with vast growth headroom in the optical chip market. We believe that booming data traffic is the underlying driving force for the development of optical communication, and we are optimistic about the secular prosperity of the industry. For the telecom access market, we believe that China's dual-gigabit policy will continue to drive demand growth for passive optical networks (PON) modules, etc. For the digital communication market, we believe the new data center switches and the growing popularity of the leaf ridge architecture will increase the demand for digital communication optical modules, and the demand for high-speed, low-power and low-cost solutions has become increasingly urgent, boding well for renewal demand. Meanwhile, the optical chip market plays a vital role along the optical communication value chain, and China's optical chip market size is likely to exceed US$1bn by 2025. The current domestic high-speed optical chip self-sufficiency rate is relatively low, which presents vast growth headroom.
　　Accelink: Strong R&D capabilities with a wide presence along the value chain and a significant advantage in independent optical chips. R&D advantages: Accelink's predecessor is the Institute of Solid State Devices of Wuhan Institute of Post & Telecom Science. It has profound technical know-how, and its core management boasts rich experience in R&D and management. Meanwhile, the Company attaches great importance to R&D input with a sector-leading R&D expense ratio. A full presence along the value chain: Accelink is an integrated solution provider rarely seen in China, with a full coverage of solutions from chips to devices, modules and subsystem, providing one-stop services for digital communication and telecom customers. An edge in independent optical chips: Accelink is one of the few companies in China that can independently develop optical chips, which can significantly reduce the production costs and improve the profitability of optical devices and modules. Meanwhile, Accelink leads in the R&D of silicon optical chips and is likely to gain first-mover advantage in future competition. Venturing into the DCI market: Under the "east-data-west-computing" policy, a project that aims at sending data gathered from the more prosperous eastern regions of China to the less developed but resource-rich western regions for storage, calculation and feedback, as well as establishing more data centers in western China, DCI demand is likely to maintain growth going forward. The Company has preemptively built a presence in this area with an extensive product portfolio. Therefore, we are optimistic about its growth potential in relevant areas.
　　Potential risks: Intensified market competition; the R&D progress of optical chips missing expectations; the progress of DCI-related segments falling short of expectations; disappointing market expansion; lower-than-expected domestic demand; geopolitical risks.
　　Investment recommendation: As a scarce domestic leader in optical communication with a full presence along the value chain from chips to modules and systems, Accelink boasts strong R&D capabilities with a wide business coverage along the value chain. Accelink is also one of the few domestic companies that can independently develop optical chips, which can significantly reduce the production costs and improve the profitability of optical devices and modules. We believe that Accelink’s revenue is likely to grow steadily amid market tailwinds in optical communication both at home and abroad. In addition, the Company's presence in DCI may also provide new growth momentum. We estimate its 2022E/23E/24E ANP at Rmb640mn/761mn/910mn and assign 20x 2023E PE to derive a target price of Rmb22. We initiate coverage with a “BUY” rating.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。