---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 197985
conversation_id: 98ca9b27-ebbb-4631-9299-bb552142a7c3
citations: 0
created: 2026-05-31 18:54:31Z
---

# Is CLSA incrementally more positive/negative on Zhongji Innolight. If so, why?

## CLSA on Zhongji Innolight (300308 CH) — Incrementally MORE NEGATIVE, despite maintained Outperform

**Short answer**: Yes — CLSA has turned **incrementally more negative** on Zhongji Innolight over 2025 (vs. their bullish 2024/early-2025 stance), even though analyst Tony Zhang has kept the **Outperform** rating intact. The de-rating has been expressed almost entirely through **earnings cuts and PE-multiple compression**, taking the target price down roughly 50% from peak (Rmb203 → Rmb102.6) across two consecutive cuts in Feb-25 and Apr-25 [10][12]. The rating discipline has stayed positive because CLSA still sees the stock as cheap (~12x 25CL PE) [19] and views the tariff overhang as manageable via Thailand capacity [13] — but every directional revision since January has been downward.

### 1) Rating & target-price trajectory

| Date | Rating | Target | PE basis | Implied stance |
|---|---|---|---|---|
| 16 Nov 2023 | BUY | Rmb97.5* | — | Constructive [1] |
| 12 Apr 2024 | BUY | Rmb149.3* | — | Bullish [1] |
| 17 Jun 2024 | BUY | Rmb185.0 | — | Peak conviction [1] |
| 28 Jun 2024 | O-PF | Rmb185.0 | — | Rating-system reset (BUY→O-PF) [1] |
| 23 Oct 2024 | O-PF | Rmb203.0 | 23x 25CL PE | TP upgrade — bullish [1] |
| 8 Jan 2025 | O-PF | Rmb203.0 | 23x | "Intact growth in 2025... valuation seems attractive" [3] |
| 21 Jan 2025 | O-PF | Rmb203.0 | 23x | +70% upside vs Rmb119 spot [2] |
| **9 Feb 2025** | **O-PF** | **Rmb203.0 → Rmb164.6** | **23x → 18x** | **Negative revision #1** [4][7] |
| **23 Apr 2025** | **O-PF** | **Rmb164.6 → Rmb102.6** | **18x → 13x** | **Negative revision #2** [9][10] |

*Adjusted for corporate action. Source: CLSA's own rec-history table [1].

The cumulative TP cut from the October-2024 peak is **49.5%** (Rmb203 → Rmb102.6) [10], and the PE multiple applied has been compressed from **23x to 13x** — a 43% derating of the valuation lens — within roughly five months [10].

### 2) Why CLSA turned more negative — the three drivers

**(a) DeepSeek and slowing AI-training capex (Feb 2025)**
CLSA's 9-Feb "Acceleration in AI application" note explicitly cited DeepSeek as a structural overhang: "We lower our PE multiple from 23x to 18x, to factor in possible slower model training demand" [4][6]. The same note pointed to "slower-than-expected 1.6T ramp-up dragged by unsmooth GB200/300 rack shipment with technical issue" — leading to a **9.3% cut to 25CL net profit** (Rmb9.59bn → Rmb8.69bn) and a **6.6% cut to 26CL** [7]. The 1Q25 read-through is broader than Zhongji: the same Feb-9 publication simultaneously cut TPs on TFC Optical, FII and others, framing optical-transceiver names as facing "industry headwinds" from DeepSeek [4].

**(b) Component shortage + 1.6T product delay (Apr 2025)**
The 23-Apr standalone update ("Tariff impact manageable") doubled-down on the negative revisions. 1Q25 results were "dragged by continued component supply shortage in 100G electro-absorption-modulated laser (EML) and delay of 1.6T products" [8][17]. CLSA cut **25/26/27CL net profit by 13.5%/13.0%/12.6%** (Rmb8.69bn → Rmb7.52bn for 25CL) [12], and importantly cut the PE multiple **again from 18x to 13x** — citing "AI capex growth slowing down in 26CL and increasing adoption of co-packaged optics (CPO) in the long run" [9][11]. The target multiple is now well below the five-year historical average of 28x, signalling that CLSA assigns meaningful weight to a structural CPO substitution risk that did not appear in the 2024 valuation framework [11].

**(c) Trump tariffs — flagged, then de-escalated as a risk**
April's "Shared burden" / "iPhone exempt from tariff" pieces (6 Apr / 13 Apr) initially raised tariff concerns when transceivers from China to the US were facing a stacked 27.5% tariff (7.5% Section 301 + 20% fentanyl) [15][16]. By the 23-Apr update, CLSA framed this as **manageable**: "currently there was no tariff on exports of transceivers from its Thailand factory to US... company is increasing capacity of Thailand base to meet US clients demand" [13]. The company also **maintained 800G shipment guidance of 15–20mn units globally** for 2025 [14], which CLSA accepted at face value. So tariffs went from incremental negative to neutralised — but did not offset the PE/EPS cuts.

### 3) What's still keeping CLSA at Outperform (the counter-weights)

- **1Q25 still delivered**: net profit +57% YoY / +12% QoQ to Rmb1.6bn, GPM expanded 1.6ppt QoQ to 36.7% on Thailand yield improvement [17].
- **Valuation cushion**: at Rmb80.07 (22 Apr 2025 close) the stock trades at **~12x 25CL PE / ~10x 26CL PE** vs. the 13x target multiple [10], leaving +28% upside to TP [14].
- **800G volume guidance intact** + 1.6T ramp from 2Q25 + strong domestic hyperscaler 400G/800G demand from 4Q25 [14].
- **Thailand tariff workaround functional** — CLSA explicitly: "Zhongji Innolight has established the capability to fulfil US market demand from Thailand plant" [16].

### 4) Bottom line on the direction of travel

Holding the headline rating constant masks a clearly negative incremental trajectory in CLSA's substantive view:

| Metric | Oct-2024 peak | 23-Apr-2025 | Change |
|---|---|---|---|
| Target price | Rmb203.0 | Rmb102.6 | **–49.5%** [10] |
| Applied PE multiple | 23x | 13x | **–43%** [10] |
| 25CL net profit forecast | Rmb9.59bn (pre-Feb) | Rmb7.52bn | **–22% cumulative** [7][12] |
| 26CL net profit forecast | Rmb10.64bn (pre-Feb) | Rmb8.64bn | **–19% cumulative** [7][12] |
| Thesis additions | — | DeepSeek de-rating, CPO long-term risk, EML shortage, 1.6T delay | All negative [9][11] |

CLSA's narrative arc is: **bullish "intact growth + attractive valuation"** (Jan 2025) → **DeepSeek + 1.6T disappointment cut** (Feb 2025) → **second EPS + multiple cut on chip shortage + CPO risk** (Apr 2025). The fact they have not downgraded to Hold reflects (i) the stock's already-derated multiple and (ii) the still-intact 800G volume story — not an unchanged fundamental view. The latest piece of CLSA-coverage data point we have in this archive is the 29-Jun-2025 "Global Themes 2025 (Half-time review)" which lists Zhongji among broader China tech names but does not include a fresh standalone update; the 23-Apr-2025 Rmb102.6 / O-PF call remains the latest dedicated stance on the name in the CLSA archive.

---

**Sources**
[1] Recommendation history of Zhongji Innolight — CLSA (21 Jan 2025) — 607948572LinqAlpha.PDF
[2] CLSA ratings table (300308 O-PF, TP Rmb203, +70% upside) — CLSA "Solid progress" (21 Jan 2025) — 607948572LinqAlpha.PDF
[3] ATC Daily — Zhongji Innolight "Intact growth in 2025" — CLSA (8 Jan 2025) — 607947723LinqAlpha.PDF
[4] China Technology — "Affected by chip shortage" / TP Rmb203 → Rmb164.6 — CLSA (9 Feb 2025) — 607949941LinqAlpha.PDF
[5] DeepSeek thesis impact + 2025 AI applications — CLSA (9 Feb 2025) — 607949941LinqAlpha.PDF
[6] Valuation table — PE 23x → 18x — CLSA (9 Feb 2025) — 607949941LinqAlpha.PDF
[7] Earnings revision table (24/25/26CL cuts) — CLSA (9 Feb 2025) — 607949941LinqAlpha.PDF
[8] Zhongji Innolight 1Q25 — "Tariff impact manageable" — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[9] Tariff impact / TP cut to Rmb102.6 / PE 18x → 13x — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[10] Valuation change table (TP Rmb164.6 → Rmb102.6) — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[11] Valuation details — 13x 26CL PE vs 28x five-year average — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[12] Earnings change table (25/26/27CL net profit −13.5%/−13.0%/−12.6%) — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[13] Increasing Thailand capacity to mitigate tariff impact — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[14] 800G guidance 15–20mn units / +28% upside to TP Rmb102.6 — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[15] Tariff stack on optical transceivers — CLSA China Technology (13 Apr 2025) — 607955785LinqAlpha.PDF
[16] Thailand plant fulfils US demand — CLSA "Shared burden" (6 Apr 2025) — 607955106LinqAlpha.PDF
[17] 1Q25 results detail (NP +57% YoY, GPM 36.7%) — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[18] Companies mentioned — Zhongji Innolight Rmb80.07 OUTPERFORM — CLSA (23 Apr 2025) — 607956627LinqAlpha.PDF
[19] CLSA China Technology — Solid progress (21 Jan 2025) — 607948572LinqAlpha.PDF

