Shares of optical transceiver maker Zhongji Innolight declined 3.9% to close at 540.01 yuan in Shenzhen trading on Friday, with trading volume reaching 17.91 billion yuan. The drop comes as the stock has retreated roughly 12% from its peak in late December, drawing attention ahead of China's market reopening on Monday.
Strong Forecasts Contrast with Market Pressure
In a late-January filing, the company projected its 2025 net profit could reach between 9.8 billion and 11.8 billion yuan, representing a year-over-year increase of up to 128%. Management attributed the robust outlook to soaring demand for high-speed products and an improving product mix. However, the filing also noted several factors that could create quarterly volatility, including equity incentive costs, inventory adjustments, credit loss provisions, and foreign exchange impacts.
Long-Term Orders and Supply Challenges
According to recent investor communications, a significant portion of customer orders are already booked through the end of 2026. Executives confirmed that production is ramping up for advanced 800G and 1.6T modules—key for next-generation data centers—but highlighted that supply for certain optical chips remains tight.
Some analysts suggest the recent share price weakness may reflect profit-taking by funds after strong earnings projections, as well as short-term sentiment pressure from shareholder reductions. Conversely, other market observers point to continued capital expenditure plans from major North American cloud providers as a positive sector catalyst, with one describing optical modules as a "clear industry trend."
Traders are now looking ahead to the company's earnings release scheduled for March 31. The stock often attracts dip-buying interest when the sector stabilizes, but remains sensitive to shifts in sentiment, global AI investment trends, and supply chain dynamics.
