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Zhongji Innolight Reports 54.43% Increase First Quarter Net Profit

2020-04-23

Today, Zhongji Innolight (300308) reported its performance for the first quarter of 2020. Despite the pandemic, the net profits attributable to its parent company rose by 54.43%, reaching 154 million yuan. The increase was due largely to increasing demand from overseas markets.
According to the report, the company's operating revenue in the first quarter was 1.326 billion yuan, up 51% year-on-year, and its net profit attributable to the parent company was 154 million yuan, up 54.43% year-on-year.

Despite the COVID-19 outbreak in the first quarter, the company still achieved a remarkable growth. The company reports that the main reason was the mass production of 400G products in overseas markets, the stable demand for 100G products, and growth in the domestic market for optical modules due to the construction of new digital infrastructure, including 5G networks and data centers.

The company also disclosed its annual performance for 2019 together with the first-quarter report. Last year, its operating revenue was 4.758 billion yuan, down 7.73% year-on-year. Its operating profit was 576 million yuan, down 15.47% year-on-year, and its net profit attributable to shareholders of listed companies was 513 million yuan, down 17.59% year-on-year.

Despite a slight decline in last year's performance against the backdrop of increased CAPEX from major cloud manufacturers in North America and China and also the resumed data center business, the company relied on its advantages of high delivery capacity and solutions for achieving price-performance ratios. InnoLight Technology continued to maintain its share of datacom products, such as 100G and 40G products in the cloud data center market, and achieved quarter-on-quarter revenue growth.

In recent years, cloud manufacturers in North America have boosted the large-scale data center market to meet demand created by the rapid increase in global traffic. Network equipment has also seen a wave of new deployment, which has contributed to the boom in the datacom market. With the support of national industrial policy, China is accelerating 5G network deployment and the development of its cloud data center industry.

Regarding expectations of future performance growth, the company stated that the mass production of 400G products and the stable demand for 100G products in North America this year will ensure market delivery capacity of the international market and consolidate the company’s overseas market share. At the same time, the development and rollout of high-end products, such as 800G optical modules, 400G silicon optical chips, and coherent optical modules, will also increase.
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