Goldman Sachs Maintains Buy Rating on Eoptolink, Raises Target Price to Rmb737

Overview

This is a company research and earnings review report on Eoptolink (300502.SZ) by Goldman Sachs. The report maintains a positive outlook following the 4Q25/1Q26 results, emphasizing that the company will continue to improve revenue and product mix quality supported by the expanding total addressable market for AI servers, growth in the optical module market, improved chip supply, ramp-up of 1.6T/3.2T and SiPh products, and capacity expansion in Thailand.

Core views

The core view is that Eoptolink’s high-speed optical module shipments and product portfolio upgrades remain in an upward cycle. Goldman Sachs expects 2Q26E optical module shipments to grow sequentially due to improved supply and capacity expansion in Thailand, and 1.6T optical modules will accelerate their ramp-up in 2H26E. Higher shipments of 800G/1.6T and increased share of SiPh solutions will drive revenue growth and deliver long-term gross margin improvement; the report forecasts gross margins rising from 47.8% in 2025 to 48.5% by 2028E.

Analysis framework

The report combines earnings revisions, shipment forecasts, product mix analysis, and relative valuation methods. On the earnings side, it incorporates the 4Q25/1Q26 results, revises upward net profit forecasts for 2026-2027E by 2%/14%, and introduces a 2028E forecast for the first time. On the valuation side, it uses a near-term P/E approach, rolling forward from the 2026E P/E to the 2027E P/E, and references the peer group’s trading P/E relative to forward fundamentals to arrive at a target 2027E P/E of 26x.

Methodology notes

• Valuation methodsNear-Term P/E Valuation Method

  Target price derived based on the 2027E P/E

  The report adopts a target 2027E P/E of 26x and, combined with the revised earnings forecasts, raises the 12-month target price to Rmb737; this multiple is broadly consistent with the company’s historical forward P/E average of around 29x since September 2018.

• Factor AnalysisGS Factor Profile

  Comparison of Growth, Financial Returns, Valuation Multiples, and Composite Scores

  Goldman Sachs’ factor profile compares individual stocks against market and industry peers through growth, financial returns, valuation multiples, and composite metrics, providing additional context for investment decisions.

• M&A ScenarioM&A Rank

  M&A Probability Score

  The report discloses an M&A Rank of 3, indicating a low probability of becoming an acquisition target and typically not factored into the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Eoptolink (300502.SZ)

  Core coverage asset in the report, rated Buy, with a target price of Rmb737.

  Strengths

  Benefiting from upgrades in AI servers and data center networks, growth in high-speed optical module shipments, SiPh and 1.6T/3.2T product portfolio upgrades, and supply support from capacity expansion in Thailand.

  Weaknesses

  1Q26 gross margin below expectations; upward revision of earnings forecasts accompanied by lower gross margin assumptions; valuation sensitive to high-speed shipments and earnings realization.

  Comparison

  The target 2027E P/E of 26x is higher than the previously implied 21x but lower than or close to the company’s historical forward P/E average of around 29x since September 2018.

  Risks

  800G ramp-up slower than expected, geopolitical impacts on optical transceiver supply chains, intensified competition leading to price erosion and margin decline.

Key data

• 12-Month Target PriceRmb737.00Raised from the previous Rmb518.
• Current Stock PriceRmb525.79Price disclosed in the report table.
• Implied Upside40.2%Based on the target price and current price.
• RatingBuyMaintaining a buy rating.
• 2026-2028E Shipment Forecast Increase for 800G and Above14% / 29% / 33%Reflects ramp-up in AI server shipments and shift toward higher-end models.
• 2026-2027E Net Profit Forecast Revision+2% / +14%Mainly driven by higher revenues, partially offset by lower gross margin assumptions.
• Target Valuation Multiple26x 2027E P/EPreviously implied 2027E P/E was 21x.
• 2025 to 2028E Gross Margin Forecast47.8% to 48.5%Improving with SiPh and high-speed product portfolio upgrades.
• 2026E / 2027E / 2028E Revenue ForecastRmb48,550.3mn / Rmb69,704.1mn / Rmb78,753.4mnFrom the GS Forecast table.
• 2026E / 2027E / 2028E EPS ForecastRmb19.55 / Rmb28.33 / Rmb32.00From the GS Forecast table.

Impact & implications

If the report’s assumptions hold true, Eoptolink will continue to benefit from the expanding demand for AI data center networks as they upgrade from 800G to 1.6T/3.2T, and the growth in revenue and higher-end product mix could support earnings and valuation re-rating. For investors, the key lies in whether shipments ramp up as scheduled, whether the SiPh product mix improves gross margins, and whether capacity expansion in Thailand proceeds smoothly.

Risks

• 800G shipments ramp up slower than expected.
• Geopolitical issues may affect optical transceiver supply chains.
• Competition stronger than expected, potentially leading to price erosion and margin decline.
• SiPh and 1.6T/3.2T product ramp-ups falling short of expectations could weaken the logic behind product portfolio upgrades.
• Capacity expansion in Thailand delayed could limit short-term deliveries and revenue growth.

What to watch

• Whether 2Q26E optical module shipments grow sequentially.
• Whether 1.6T optical modules accelerate their ramp-up in 2H26E.
• Progress in improving chip supply.
• Share of SiPh solutions and changes in EML and SiPh product mix.
• Capacity expansion in Thailand and delivery pace.
• Whether gross margins can gradually rise from 47.8% in 2025 to 48.5% by 2028E.
• Whether TAM for AI servers and optical modules continues to be revised upward.