[Sinolink Communications] Changxin Bochuang Order Announcement Interpretation - 260727

English summary

Changxin Bochuang announced that subsidiary Changxinsheng signed an order with a major customer for optical fiber/cable products, #estimated sales of RMB 4.5 billion, with contract period through 2030. The agreement has no fixed total amount; revenue is recognized on a net basis. 1. # Product: Expected to be optical fiber/cable, not complex MPO products (announcement says no material impact on 2026 and future results). 2. # Why net method: The company sells parent's fiber/cable to overseas customers as an intermediary earning cabling fees; net method is more appropriate (gross method would apply if complex MPO processing). 3. # Net profit impact: Referencing industry average net margin of 3-5%, this only implies approx RMB 135-225 million net profit increase for CXS, if spread over four years, #about RMB 3-5 million per year, limited accretion (consistent with announcement's statement of no material impact). ...