2 Nov 2026 CMB International Global Markets | Equity Research | Company Update

Innolight (300308 CH)

3Q26 earnings: Solid fundamentals amid supply chain tightness

Innolight reported 3Q26 revenue of RMB27.8bn, up 172% YoY/24.6% QoQ. Net profit reached RMB8.6bn, up 174% YoY/8.5% QoQ, while net profit excluding non-recurring items increased to RMB9.0bn, up 190% YoY/22.3% QoQ. GPM expanded to 46.6%, continuing to accelerate from 46.1%/46.4% in 1Q/2Q26, supported by strong 800G/1.6T shipments, a favorable product mix and operating leverage. Fair-value losses on equity investment and FX losses related to the H-share proceeds weighed on earnings, masking stronger underlying profitability. We view the recent share price weakness as largely sentiment-driven rather than a reflection of operating performance, and maintain BUY with unchanged TP at RMB1400 (26x 2027E P/E).

 Demand visibility and margins remain solid. The Company disclosed during earnings call that major overseas hyperscalers’ orders already extend into 2027, while certain key clients have provided explicit demand guidance for 2028. Product pricing remained broadly stable in 3Q26, and the Company described the current pricing environment as healthy and customer quotations as rational. Although DSP supply remains tight, mgmt. indicated that the Company has sufficient supply to support deliveries, reinforced by strategic relationships and LTAs with core suppliers.

 NPO is expected to ramp from 2H27E. Mgmt. expects 2.4T/NPO/XPO to enter initial volume production in 2H27, followed by faster scale-up deployment in 2028. The Company has already commenced joint development and sample deliveries with select key clients. Optical interconnects currently account for only c.5% of global AI capex, per mgmt., while this share is expected to increase to c.10% or more over the long term as scale-out/-up/-across/-in applications expand. Mgmt. expects 200G-perlane to remain mainstream through 2027-2028E, with 400G-per-lane solutions beginning to emerge in 2028E.

 Maintain BUY. Despite the recent share-price correction and geopolitical risk overhang, we see no imminent or material deterioration in Innolight’s fundamentals or global leadership in high-speed optical interconnects. Order visibility, pricing, margins and supply-chain execution remain solid. Key risks include supply chain disruptions, change in tech upgrade roadmaps, geopolitical uncertainties, etc.

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 23,862 38,240 106,599 175,373 234,707

YoY growth (%) 122.6 60.3 178.8 64.5 33.8 Gross margin (%) 33.8 42.0 46.6 47.7 47.9 Net profit (RMB mn) 5,171.5 10,797.3 36,006.7 59,809.4 82,085.6

YoY growth (%) 137.9 108.8 233.5 66.1 37.2 EPS (Reported) (RMB) 4.72 9.80 32.41 53.83 73.88 P/E (x) 117.2 56.4 17.1 10.3 7.5 Source: Company data, Bloomberg, CMBIGM estimates

Innolight (300308 CH) - 3Q26 earnings: Solid fundamentals amid supply chain tightness

Target Price RMB1400.00 Up/Downside 153.2% Current Price RMB553.00

China Semiconductors Zhimin ZHOU

(852) 3850 5268 zhouzhimin@cmbi.com.hk

Kevin ZHANG

(852) 3761 8727 kevinzhang@cmbi.com.hk

Aaron GUO

(852) 3916 3715 aaronguo@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn) 616,705.6 Avg 3 mths t/o (RMB mn) 24,956.5 52w High/Low (RMB) 1382.33/456.80 Total Issued Shares (mn) 1115.2

Source: FactSet

Shareholding Structure

Shandong Zhongji Investment Holdings Co.

10.9% Wang Weixiu 6.3%

Source: Bloomberg

Share Performance

Absolute Relative 1-mth -31.6% -20.1% 3-mth -36.0% -26.2% 6-mth -35.5% -13.0%

Source: FactSet

12-mth Price Performance

Source: FactSet

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

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Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 10,718 23,862 38,240 106,599 175,373 234,707 Cost of goods sold (7,182) (15,796) (22,166) (56,958) (91,683) (122,363) Gross profit 3,536 8,067 16,074 49,641 83,690 112,343 Operating expenses (1,042) (2,017) (2,477) (5,028) (11,164) (12,805) Selling expense (51) (47) (78) (397) (263) (352) SG&A expense (558) (879) (987) (2,194) (3,673) (5,150) R&D expense (739) (1,244) (1,615) (2,632) (8,769) (11,735) Others 306 153 202 196 1,541 4,433 Operating profit 2,494 6,050 13,597 44,612 72,526 99,539 Other income 2 5 10 4 7 9 Other expense (4) (2) (7) (9) (15) (21) Pre-tax profit 2,492 6,052 13,600 44,607 72,518 99,528 Income tax (285) (681) (2,020) (6,107) (9,561) (13,122) After tax profit 2,208 5,372 11,580 38,501 62,957 86,406 Minority interest 34 200 782 2,494 3,148 4,320 Net profit 2,174 5,171 10,797 36,007 59,809 82,086

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 11,319 18,196 31,084 68,948 135,002 209,015 Cash & equivalents 3,317 5,054 10,987 21,572 78,874 141,233 Account receivables 2,581 4,604 6,277 20,592 22,651 26,220 Inventories 4,295 7,051 12,681 24,771 30,490 36,559 Prepayment 59 80 134 299 492 658 Other current assets 1,067 1,407 1,005 1,714 2,495 4,347 Non-current assets 8,687 10,671 14,205 20,722 31,078 44,226 PP&E 3,948 5,820 7,081 13,140 18,275 25,535 Right-of-use assets 27 34 105 1,060 2,427 4,025 Deferred income tax 82 222 541 541 1,070 1,982 Intangibles 401 378 378 295 384 569 Goodwill 1,939 1,939 1,939 1,939 1,939 1,939 Other non-current assets 2,291 2,279 4,163 3,748 6,982 10,175 Total assets 20,007 28,866 45,289 89,670 166,080 253,241

Current liabilities 4,360 6,497 11,558 19,361 35,985 41,760 Short-term borrowings 62 1,426 301 913 3,279 3,113 Account payables 1,857 2,991 7,330 11,396 21,258 22,323 Tax payable 213 244 1,250 2,475 4,584 6,990 Other current liabilities 2,039 1,545 2,287 3,806 5,446 7,188 Contract liabilities 3 10 26 51 83 111 Accrued expenses 187 282 364 720 1,334 2,034 Non-current liabilities 872 2,076 2,109 3,677 6,375 9,453 Long-term borrowings 319 606 510 510 510 510 Bond payables 0 0 0 0 0 0 Deferred income 216 270 291 577 1,068 1,628 Other non-current liabilities 337 1,200 1,308 2,590 4,797 7,314 Total liabilities 5,232 8,573 13,668 23,038 42,360 51,213

Share capital 803 1,121 1,111 1,111 1,111 1,111 Retained earnings 5,870 10,624 20,248 52,188 105,167 177,838 Other reserves 7,589 7,388 8,406 8,984 9,943 11,261 Total shareholders equity 14,261 19,134 29,765 62,282 116,222 190,210 Minority interest 513 1,159 1,856 4,350 7,498 11,818 Total equity and liabilities 20,007 28,866 45,289 89,670 166,080 253,241

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 2,492 6,052 13,600 44,607 72,518 99,528 Depreciation & amortization 525 713 934 1,205 1,573 2,194 Tax paid (285) (681) (2,020) (6,107) (9,561) (13,122) Change in working capital (830) (3,210) (1,958) (21,050) 3,749 (7,650) Others (6) 290 340 2,510 2,715 2,482 Net cash from operations 1,897 3,165 10,896 21,166 70,994 83,432

Investing Capital expenditure (1,704) (2,866) (2,760) (7,279) (10,220) (13,675) Acquisition of subsidiaries/ investments (3,971) (2,725) 0 0 0 0 Net proceeds from disposal of short-term investments

4,435 2,619 0 0 0 0

Others 65 37 121 1,035 1,697 2,272 Net cash from investing (1,176) (2,935) (2,639) (6,244) (8,523) (11,403)

Financing Dividend paid (207) (399) (1,083) (3,630) (6,034) (8,279) Net borrowings (884) 1,685 (1,114) 612 2,366 (166) Proceeds from share issues (109) 246 205 0 0 0 Others 884 (40) (152) (1,150) (1,317) (1,317) Net cash from financing (316) 1,492 (2,144) (4,168) (4,985) (9,762)

Net change in cash Cash at the beginning of the year 2,809 3,234 4,988 10,944 21,529 78,831 Exchange difference 20 39 (178) 0 0 0 Cash at the end of the year 3,234 4,988 10,944 21,529 78,831 141,189

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 11.2% 122.6% 60.3% 178.8% 64.5% 33.8% Gross profit 25.1% 128.1% 99.3% 208.8% 68.6% 34.2% Operating profit 87.9% 142.6% 124.7% 228.1% 62.6% 37.2% Net profit 77.6% 137.9% 108.8% 233.5% 66.1% 37.2%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 33.0% 33.8% 42.0% 46.6% 47.7% 47.9% Operating margin 23.3% 25.4% 35.6% 41.9% 41.4% 42.4% Return on equity (ROE) 16.6% 31.0% 44.2% 78.2% 67.0% 53.6%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec Current ratio (x) 2.6 2.8 2.7 3.6 3.8 5.0

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E 276.5 117.2 56.4 17.1 10.3 7.5 P/E (diluted) 280.5 119.4 57.0 17.1 10.3 7.5

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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