Third-quarter growth accelerated. Why did profit grow faster?

  • Accelink’s revenue rose 54.3% year on year in the third quarter of 2026, while net profit rose 102.6% year on year; they increased 32.2% and 105.2% respectively quarter on quarter. The quarterly year-on-year growth rates exceeded the cumulative rates of 36.94% and 78.65% for the first three quarters, marking a further acceleration.
  • Net profit for the first three quarters was 1.28 billion yuan, within the company’s previous earnings forecast range of 1.19 billion–1.31 billion yuan. The disclosure confirmed strong growth, with earnings in line with the company’s earlier forecast.
  • Nomura sees strong demand for optical modules and components from AI data centers and a large-scale upgrade to 800G optical modules in the Chinese market as the main drivers. A higher share of datacom optical modules also improved the product mix. Third-quarter gross margin rose 1.4 percentage points year on year and 0.9 percentage points quarter on quarter, supporting faster growth in profit than in revenue.

Why did operating cash flow turn negative alongside profit growth?

  • Net cash flow from operating activities for the first three quarters turned negative to an outflow of 1.88 billion yuan. Nomura attributes this mainly to increased purchases and the buildup of inventory reserves: payments for goods needed for expansion flowed out first, producing a cash performance that moved in a different direction from profit growth.
  • Prepayments rose 818.72% year on year to 975.6 million yuan. Nomura believes the company uses prepayments to secure supplies of upstream components; this helps prepare supply but also means more capital is committed to procurement in advance. Cash tied up in inventory buildup is a cost that must be considered when assessing this growth cycle.

How can new demand translate into future revenue?

  • Nomura is positive on Chinese cloud providers’ active investment in AI infrastructure and believes Accelink, as one of the country’s leading suppliers of optical modules and optical communications equipment, is positioned to meet the related demand.
  • The key supply-side milestone is the G2 factory, which was handed over in the second quarter of 2026. Nomura expects capacity to be brought online gradually from the second half of 2026 through the first half of 2027. The new factory still needs to ramp up after handover, and support for revenue growth will build gradually as capacity comes online.

What earnings assumptions underpin Nomura’s maintained price target?

  • Nomura maintains its “Buy” rating and price target of 217.5 yuan, using forecast earnings per share of 3.45 yuan for 2027 and a price-to-earnings multiple of 63 times. The current share price shown in the report corresponds to a forecast price-to-earnings ratio of 37.3 times for 2027.
  • The 63-times target valuation is based on Nomura’s forecast that earnings will grow at a compound annual rate of 63% over 2026–2028. This valuation framework depends on sustained high growth; weaker-than-expected demand in the datacom and telecommunications markets and intensified price competition that dilutes margins would directly affect the earnings trajectory. The bank also lists optical chip research and development progress and technology sanctions as constraints.