Zhongji Innolight Co Ltd | Asia Pacific Updating estimates

Research evidence excerpt

Zhongji Innolight Co Ltd | Asia Pacific Updating estimates

2027, and 80mn units to 150mn units for 2028. The significant upward revisions in (Rmb mn)

P/E 62.8 32.7 15.5 11.8

2027 and 2028 stem mainly from a more positive view on 1.6T demand. Given these

P/BV 22.8 11.9 6.9 4.6

revisions, we now forecast the AI transceiver industry TAM to grow from US$18bn in RNOA (%) 73.7 189.3 178.9 142.3

ROE (%) 56.4 111.6 76.6 58.8

2025 to US$102bn in 2028, expanding >4x within three years. EV/EBITDA 46.9 23.1 11.5 8.2

Div yld (%) 0.5 0.4 0.9 1.2

Global leader in AI transceivers: Innolight is a first mover in 800G and 1.6T FCF yld ratio (%)** 1.1 1.1 4.0 7.0

Leverage (EOP) (%) (38.5) (59.6) (61.7) (69.2)

commercialization and, given its expertise, we expect it will remain a pioneer in the

next node (3.2T). The company’s long-term partnerships with global CSPs, close Unlessframeworkotherwise noted, all metrics are based on Morgan Stanley ModelWare

joint R&D, and differentiated new product introductions (NPI) support faster yield §**==ConsensusBased on consensusdata is providedmethodologyby Refinitiv Estimates

improvements and cost reductions, making Innolight more competitive than peers e++= =MorganStock Rating,StanleyPriceResearchTargetestimatesor Estimates are not available or have been

on key metrics such as time-to-market, time-to-volume and time-to-cost. removed due to applicable law and/or Morgan Stanley policy.

Potential new growth drivers beyond 2027: We expect accelerated new

technology innovation, such as optical circuit switching (OCS) and near-packaged

optics (NPO), to become technological breakthroughs in the coming years. We

believe Innolight is well positioned to capture such growth opportunities, and these

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