Suzhou TFC Optical Communication Co., Ltd. (TFC Optical, 300394) (300394)

Individual Stock Analysis Report | Industry: Optical Communication Components and Optical Interconnect | Report Date: September 13, 2026 | Data as of the close on September 11, 2026; some technical indicator data are intraday/near-close data, and Bollinger Bands are self-approximated based on historical closing prices from August 17 to September 11, 2026.

This report is automatically compiled and generated by AI based on public information, for reference only, and does not constitute investment advice.

1. Core Summary

TFC Optical achieved operating revenue of RMB 2.828 billion in the first half of 2026, up 15.15% year-on-year; net profit attributable to shareholders of the parent company was RMB 1.204 billion, up 33.92% year-on-year; net profit attributable to shareholders excluding non-recurring gains and losses increased 36.76% year-on-year; and net cash flow from operating activities increased 64.57% year-on-year. However, revenue growth slowed markedly compared with full-year 2025, with growth mainly driven by passive optical components: revenue from passive optical components increased 77.40% year-on-year with a gross margin of 71.90%, while revenue from active optical components decreased 19.57% year-on-year, mainly due to tight supply of some core materials.

The company is positioned in the mid-to-upstream segment of the optical interconnect industry chain. In 2025, optical interconnect components revenue accounted for 98.43% of operating revenue, overseas revenue accounted for 74.35%, and active optical components revenue accounted for 58.06%. The company has achieved mass production of 1.6T optical engines at scale and is positioning itself in CPO, NPO, and high-speed optical components, but its performance is relatively sensitive to data center and AI computing power capital expenditure, customer validation, core material supply, Thailand base ramp-up, and product price changes. The comprehensive gross margin fell from 57.22% in 2024 to 53.96% in 2025, with the gross margin of active optical components at 46.63%.

The company has relatively high customer and supplier concentration. In 2025, sales to the top five customers accounted for 89.73%, with the largest customer Fabrinet accounting for 63.31%; purchases from the top five suppliers accounted for 61.51%, with the largest supplier accounting for 34.81%. As of June 30, 2026, accounts receivable were RMB 1.122 billion and inventory was RMB 457 million. The scale of accounts receivable remains significantly higher than accounts payable, and changes in customer orders, procurement policies, and the supply chain may have a relatively large impact on operating cash flow and earnings stability.

As of September 11, 2026, the company's share price closed at RMB 261.96, with a total market capitalization of approximately RMB 285.75 billion. Based on institutional consensus estimates, the dynamic price-to-earnings ratios for 2026–2028 are approximately 81.1x, 51.0x, and 34.3x, indicating that the market has already priced in relatively high earnings growth for the next several years to a considerable extent. Technically, the share price is in a dense area of multiple moving averages, RSI is approximately 49.94 in the neutral range, short-term indicators are relatively weak, and main funds had a net outflow of approximately RMB 735 million on September 11, with the share price still in a state of relatively high volatility.

2. Company Overview

2.1 Basic Information

2.2 Main Business and Product Layout

• Precision micro-optical component solutions, mainly used in data centers and telecommunications
• Wavelength division multiplexing system-level passive solutions, including AWG, WDM, Mux/Demux, Filter, etc.
• High-precision packaging solutions, including OSA, BOX, and other optical component packaging products
• Passive solutions supporting data center AOC
• Passive solutions supporting data center PSM/DR
• Multi-channel high-speed optical engine packaging and integration solutions
• High-density optical interconnect integration solutions
• ELS solutions, i.e., external light source-related products
• Emerging applications such as LiDAR and biophotonics, but as of the disclosure of the 2025 annual report, the related businesses have had relatively short mass production timelines, and customer numbers and order scale remain smaller than the main optical interconnect business

2.3 Position in the Industry Chain Upstream and Downstream and Cost-Profit Structure

TFC Optical is positioned in the mid-to-upstream segment of the optical interconnect industry chain, mainly undertaking optical components, passive optical components, active optical components, optical engines, and advanced optical packaging, and is not a complete optical module manufacturer. The industry chain is roughly "optical chips, basic materials → optical components → optical devices/optical engines → pluggable optical modules, CPO → data centers, telecommunications networks, and AI computing power infrastructure."

• Actual inputs purchased and used include precision ceramics and zirconia materials, engineering plastics, composite metals, optical glass, optical chips, laser chips, detector chips, optical fibers, optical filters, wavelength division multiplexing-related components, precision molds, mechanical parts, packaging materials, automation equipment, testing equipment, and production consumables.
• In 2025, among the operating costs of optical communication components, raw material costs were RMB 1.758 billion, accounting for 74.56%; direct labor was RMB 308 million, accounting for 13.07%; and manufacturing expenses were RMB 292 million, accounting for 12.37%. The proportion of raw materials rose from 68.58% in 2024 to 74.56% in 2025, mainly related to the increase in the revenue scale and proportion of active optical components.
• The company has partial in-house manufacturing capabilities in precision ceramics, engineering plastics, composite metals, optical design, component manufacturing, assembly, testing, and packaging, but it is not a fully self-sufficient enterprise and still depends on external supply for optical chips, lasers, detectors, and other key materials.
• As of December 31, 2025, purchases from the top five suppliers amounted to RMB 1.472 billion, accounting for 61.51% of total annual procurement; the largest supplier accounted for 34.81%. This data comes from the company's 2025 annual report, but the names of suppliers and specific procurement categories were not disclosed, so it is impossible to cross-verify the materials or equipment categories corresponding to the largest supplier.
• In segments such as basic ceramics, engineering plastics, and ordinary metal materials, the company has some bargaining power due to scale procurement, internal processing, and supplier diversification; suppliers of high-end optical chips, lasers, detectors, some imported equipment, and key precision materials have relatively stronger bargaining power.
• Some raw materials and equipment are imported from abroad. The company faces risks from international trade disputes, tariffs, changes in import and export conditions, and periodic tightening of supply of key materials, and overall remains somewhat passive regarding the cost and supply of some key upstream inputs.
• Direct downstream customers mainly include optical module manufacturers, communications equipment vendors, data center optical interconnect equipment suppliers, LiDAR manufacturers, and other optoelectronic device integration companies. End applications cover AI computing data centers, traditional telecommunications, automotive LiDAR, ADAS, surveying and mapping, and biophotonics, among others.
• In 2025, sales to the top five customers amounted to RMB 4.633 billion, accounting for 89.73% of total annual sales; sales to the largest customer Fabrinet amounted to RMB 3.269 billion, accounting for 63.31% of total annual sales. The above concentration data are based on the company's 2025 annual report.
• Fabrinet is a global manufacturing services company for optical communications and optoelectronic products. The company's annual report did not disclose the names of the second to fifth largest customers, so it is impossible to further verify their corresponding end customers or specific products; the top five customer concentration data come from a single source and should be based on the latest annual report.
• The company sells through direct sales and a major-customer strategy. Products need to go through customer certification, reliability testing, and long-term introduction, and technology, processes, and certification create a certain degree of customer stickiness and basis for bargaining.
• However, the company's sales are highly dependent on large customers, and customer procurement scale, product roadmaps, and price negotiations can significantly affect revenue and gross margin. Competition in the optical component industry is relatively intense, and most products face price reduction pressure; if product prices decline faster than improvements in materials, yield, and manufacturing efficiency, the company's overall gross margin may decline.
• The company's downstream bargaining relationship is not determined solely by technical barriers: on the one hand, certification barriers for optical engines and key components provide some bargaining power; on the other hand, the top five customers accounting for nearly 90% and the largest customer accounting for more than 60% make the company relatively sensitive to major customer orders, procurement policies, and price changes.
• As of December 31, 2025, on a consolidated basis, accounts receivable were RMB 1.122 billion, inventory was RMB 457 million, accounts payable were RMB 403 million, and contract liabilities were RMB 161 million. Accounts receivable were approximately equivalent to 21.7% of 2025 operating revenue and 55.6% of net profit attributable to shareholders of the parent company; accounts receivable increased from RMB 776 million in 2024 to RMB 1.122 billion in 2025, an increase of approximately 44.5%, lower than the 58.8% growth in operating revenue. Accounts payable increased from RMB 231 million in 2024 to RMB 403 million in 2025, and contract liabilities were RMB 161 million, providing some offset against the capital occupation of part of accounts receivable, but the absolute scale of accounts receivable remains significantly higher than accounts payable. The company's annual report did not directly disclose accounts receivable turnover days. The above ratios are static calculations based on year-end balances and annual data and cannot alone prove that the company has strong bargaining power over downstream customers.
• As of December 31, 2025, the top five suppliers accounted for 61.51% of total annual procurement, with the largest supplier accounting for 34.81%; the top five customers accounted for 89.73% of total annual sales, with the largest customer Fabrinet accounting for 63.31%. Customer and supplier concentration data mainly come from the company's 2025 annual report; the names of the top four customers other than Fabrinet and all major suppliers were not disclosed, and the specific business relationships, material categories, and concentration risks cannot be further cross-verified.

The company is positioned in the mid-to-upstream segment of the optical interconnect industry chain, in a high-technology, highly certified, and high-precision manufacturing segment. Its profit level is higher than that of most complete optical module manufacturers, but it is not the highest value-added segment of upstream chips or end brands. Future further improvement in profit margin mainly depends on volume ramp-up of 1.6T optical engines and CPO-related products, product mix upgrades, key material cost control, improvement in yield and capacity utilization at the Thailand base, and reduced dependence on a single major customer; if product price reductions outpace improvements in materials, yield, and manufacturing efficiency, profit margin will still face downward pressure.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

As of September 12, 2026, the latest disclosed financial report was the 2026 semi-annual report, disclosed on August 19, 2026. In the first half of 2026, net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses was RMB 1.18626 billion, up 36.76% year-on-year; basic earnings per share were RMB 1.1057, diluted earnings per share were RMB 1.1038, and weighted average return on equity was 19.60%. Net cash flow from operating activities was RMB 1.00088 billion, up 64.57% year-on-year; R&D investment was RMB 194.93 million, up 55.32% year-on-year.

In the first half of 2026, revenue growth slowed markedly compared with full-year 2025, but net profit attributable to shareholders of the parent company still grew faster than revenue. By business, revenue from passive optical components was RMB 1.53036 billion, up 77.40% year-on-year, with a gross margin of 71.90%; revenue from active optical components was RMB 1.25992 billion, down 19.57% year-on-year, with a gross margin of 47.03%. Revenue growth was mainly driven by passive optical components, while active optical components were affected by tight supply of some core materials. In the same period, exchange losses were RMB 85.8465 million, financial expenses were RMB 37.4554 million, compared with financial income of RMB 25.1428 million in the same period of the previous year, and exchange factors somewhat dragged on profit margin. As of June 30, 2026, net assets attributable to shareholders of the listed company were RMB 6.24858 billion, and total assets were RMB 7.58783 billion; based on total share capital of approximately 1.091 billion shares, net assets per share were approximately RMB 5.73. The previously disclosed 2026 first-half earnings forecast projected net profit attributable to shareholders of the parent company of RMB 1.124–1.304 billion, and the final result was RMB 1.20429 billion; the forecast range for net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses was RMB 1.089–1.284 billion, and the final result was RMB 1.18626 billion, both within the forecast ranges.

3.2 Profit Forecast

As of September 12, 2026, Tonghuashun F10 showed that a total of 24 institutions had made forecasts for 2026 performance over the past 6 months, and 23 institutions had made forecasts for 2027 and 2028 respectively. The above revenue forecasts come from Tonghuashun institutional forecast details; net profit and EPS are multi-institution averages and are a summary of institutional research reports, not official company performance commitments. Revenue is expected to grow by approximately 66.9% year-on-year in 2026, approximately 57.7% in 2027, and approximately 44.3% in 2028. There is considerable divergence in forecast ranges for 2027–2028, with the lowest 2028 net profit attributable to shareholders of the parent company forecast at RMB 5.831 billion and the highest at RMB 16.854 billion.

3.3 Valuation Level and Institutional Ratings

As of the close on September 11, 2026, the share price was RMB 261.96, down 2.62% from the previous trading day, with a total market capitalization of approximately RMB 285.75 billion. Under market data platform conventions, the TTM price-to-earnings ratio was approximately 123.05x, the ex-non-recurring PE was approximately 124.49x, the price-to-book ratio was approximately 45.68x, and TTM earnings per share were approximately RMB 2.13. Based on the closing price of RMB 261.96 and Tonghuashun institutional consensus estimates, the dynamic PE for 2026–2028 is approximately 81.1x, 51.0x, and 34.3x; based on net assets attributable to shareholders of the parent company as of June 30, 2026 and total share capital of approximately 1.091 billion shares, net assets per share are approximately RMB 5.73, corresponding to a static PB of approximately 45.7x. Public institutional ratings are generally dominated by Buy and Overweight, with target prices ranging from approximately RMB 282 to RMB 576.50, and domestic brokerage target prices mostly concentrated in the RMB 304 to RMB 465 range. The current valuation is significantly higher than that of most communications equipment companies, and the market has already priced in relatively high earnings growth for the next several years to a considerable extent. Valuation is relatively sensitive to the pace of 2027–2028 performance realization, product prices, supply chain bottlenecks, customer demand, and industry competition; the volume ramp-up of active optical components and 1.6T products is also affected by core materials, customer validation, and capacity ramp-up. TTM price-to-earnings ratios differ across market platforms due to methodology differences, and valuation comparisons should prioritize using the same platform, same date, and same earnings basis.

4. Recent News and Announcements

4.1 2026 Semi-Annual Report: Net Profit Attributable to Shareholders of the Parent Company Up 33.92% Year-on-Year

The company disclosed its 2026 semi-annual report on August 19, 2026. In the first half, operating revenue was RMB 2.828 billion, up 15.15% year-on-year; net profit attributable to shareholders of the listed company was RMB 1.204 billion, up 33.92% year-on-year; net profit after deducting non-recurring gains and losses was RMB 1.186 billion, up 36.76% year-on-year; and net cash flow from operating activities was RMB 1.001 billion, up 64.57% year-on-year.

4.2 Company Discloses Demand and Capacity Arrangements for Passive Optical Components Supporting High-Speed Optical Modules

In an investor relations activity on September 1, 2026, the company stated that, affected by growing demand for passive optical components supporting high-speed optical modules, it had expanded capacity in the first half of 2026 according to customer demand and maintained relatively high capacity utilization. The company will dynamically deploy capacity based on market demand, customer order pace, raw material supply, and project construction progress, and will advance expansion and related capacity preparation in multiple locations globally. The above content is investor communication information and does not constitute an order commitment or formal performance guidance.

4.3 2026 Semi-Annual Equity Distribution Plan Determined

The company disclosed the "2026 Semi-Annual Equity Distribution Implementation Announcement" on September 9, 2026. Based on total share capital of 1,090,825,093 shares, it will distribute a cash dividend of RMB 5.00 per 10 shares (including tax) to all shareholders, without bonus shares and without converting capital reserve into share capital; the total proposed cash dividend is RMB 545,412,546.5. The announcement stated that the company's total share capital did not change from the disclosure of the equity distribution plan to the implementation period.

4.4 Interim Dividend Registration and Ex-Rights/Ex-Dividend Dates Not Yet Reached

The record date for this equity distribution is September 16, 2026, the ex-rights/ex-dividend date is September 17, 2026, and cash dividends are expected to be credited to shareholder fund accounts on September 17, 2026. As of September 12, 2026, the above arrangements had not yet been completed, and it cannot be stated that the dividend has already been implemented. After the dividend is implemented, the company will adjust the grant prices of restricted shares under the 2023 and 2026 restricted stock incentive plans in accordance with relevant regulations.

4.5 2026 Restricted Stock Incentive Plan Approved by Shareholders' Meeting

The company disclosed the "2026 Restricted Stock Incentive Plan (Draft)" on August 13, 2026, proposing to grant 2.2887 million second-class restricted shares, accounting for 0.2098% of the company's total share capital on the announcement date; there were 745 incentive recipients in total, the grant price was RMB 120 per share, the plan was a one-time grant with no reserved rights, and the maximum validity period was no more than 60 months. On August 31, 2026, the company's second extraordinary general meeting of shareholders for 2026 approved the relevant incentive plan draft, assessment and management measures, and the authorization of the board of directors to handle related matters.

4.6 Self-Inspection of Insider Information Persons and Incentive Recipients Under Equity Incentive Found No Violations Involving Trading on Insider Information

The company disclosed a self-inspection report on September 1, 2026, with the self-inspection period from February 13, 2026 to August 13, 2026. Among 42 insider information persons, 25 had changes in shareholdings, of which the non-trading transfers of 25 persons mainly stemmed from the vesting of the 2023 restricted stock incentive plan and the capital reserve conversion into share capital in June 2026; 15 insider information persons sold company shares in the secondary market between February 24 and June 24, 2026. In addition, 478 incentive recipients had share transactions or non-trading transfers. The company's self-inspection conclusion was that no insider information persons or incentive recipients were found to have used insider information of this equity incentive plan to buy or sell shares. This conclusion is a self-inspection opinion formed by the company based on query results from China Securities Depository and Clearing Shenzhen Branch; as of September 12, 2026, no regulatory penalties or case filings related to this matter had been found.

4.7 One Block Trade Occurred on September 10, with Transaction Amount of RMB 196.3262 Million

On September 10, 2026, the company had one block trade, with a transaction volume of 730,000 shares, a transaction price of RMB 268.94 per share, and a transaction amount of RMB 196.3262 million, at a discount of approximately 0.02% to the day's closing price of RMB 269.00. Both the buying and selling brokerage seats were institutional dedicated seats. Public information cannot confirm the ultimate transferee, transferor, or transaction motive, and it cannot be directly judged from this as a controlling shareholder reduction, institutional position building, or negative signal.

4.8 Another Small Block Trade on September 11 Pending Further Verification

A third-party trading data page showed that on September 11, 2026, the company had a block trade of approximately 12,100 shares, with a transaction amount of approximately RMB 3.1697 million, at a transaction price of approximately RMB 261.96 per share. This information mainly comes from a third-party trading data page and is recommended to be verified against the final disclosure data of the Shenzhen Stock Exchange.

4.9 No New Active Increase or Decrease Plans by Controlling Shareholder or Actual Controller Found

Among the September 2026 announcements and trading information retrieved as of September 12, 2026, no new active increase or decrease plan announcements were found from the controlling shareholder Suzhou TFC Renhe Investment Management Co., Ltd. or the actual controller. The arrangement for self-distribution of cash dividends to shareholders listed in the semi-annual equity distribution announcement is a dividend distribution matter and does not constitute new shareholding or reduction behavior.

4.10 No New Share Repurchase Announcements Retrieved as of September 12

As of September 12, 2026, no newly issued share repurchase plan, repurchase progress, or repurchase cancellation announcement by the company in September 2026 had been retrieved. Existing announcements and third-party announcement summaries show that the company's recent key matters are the interim dividend, restricted stock incentive, and related self-inspection, rather than share repurchases; the relevant conclusions are subject to the completeness of the announcement retrieval pages and should still be based on announcements on Cninfo and the Shenzhen Stock Exchange.

4.11 No New Regulatory Penalties or Major Litigation Announcements Found as of September 12

As of September 12, 2026, no announcements by the company in September 2026 regarding administrative penalties, regulatory measures, inquiry letters, major litigation, or other obvious regulatory risk had been retrieved.

4.12 No New Major M&A or Asset Transaction Announcements Found as of September 12

As of September 12, 2026, no newly disclosed major M&A, asset acquisition, asset sale, or major related-party transaction announcements by the company in September 2026 had been retrieved. The 2026 restricted stock incentive plan is an equity incentive matter and does not constitute M&A; as of the date of this retrieval, no new major overseas M&A or major asset transaction announcements in September had been found.

5. Share Price Trend and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

As of September 11, 2026, TFC Optical closed at RMB 261.96, down 2.62% from the previous trading day, still within the high-volatility range since September 7. Closing prices from September 7 to September 11 were RMB 267.00, RMB 258.50, RMB 258.03, RMB 269.00, and RMB 261.96, respectively, indicating relatively obvious short-term chip exchange. The share price is in a dense area of multiple moving averages, and the comprehensive moving-average signal is neutral; MACD alone is still Buy, but the overall technical indicator summary is Strong Sell, RSI is in the neutral range, and other oscillators are weak. Combined with the main fund net outflow on September 11 and the pullback after a large inflow the previous day, it is currently more appropriate to observe key support, resistance, and price-volume coordination, and it is not appropriate to extrapolate a single technical indicator or single-day fund flow into a certain trend. The dynamic PE is approximately 118.46x, and PE-TTM ranges from approximately 96.16x to 126x across different platforms, indicating differences in valuation methodology, and the share price and valuation are significantly affected by optical communications, AI computing power, and CPO themes.

5.3 Short-Term Outlook (Next Week, Scenario Projection, for Reference Only)

⚠️ Risk Warning: The following content is only a subjective scenario projection based on the closing data of September 11, 2026, historical prices, and technical indicators, and does not constitute investment advice or a buy/sell instruction; scenario weights are subjective heuristic weights based on the current technical picture and fund flows, not statistical probabilities.

① Key Technical Levels

② Next Week's Scenarios (Subjective Weights, Not Statistical Probabilities)

• Consolidation (relatively high weight, approximately 50%–60%; subjective heuristic weight, not statistical probability): reference price band RMB 257–271. Trigger conditions include the share price holding the RMB 257–261 support zone, narrowing main fund outflow, turnover falling back to the recent normal range of approximately RMB 8–12 billion, and the communications and optical module sectors remaining relatively active but without sustained volume-driven upward attacks. If the RMB 266–271 area repeatedly encounters resistance, observe the release of trapped positions and profit-taking positions.
• Weaker downside (medium weight, approximately 30%; subjective heuristic weight, not statistical probability): reference price band RMB 239–257. Trigger conditions include an effective close below RMB 257, single-day main fund net outflow continuing to exceed RMB 500 million, turnover expanding but the share price closing at the intraday low, or an obvious catch-down decline in the optical communications sector and a rapid decline in market risk appetite. If RMB 257 is lost, first observe RMB 248–251; if that area is also lost, technically it may approach the Bollinger lower band of approximately RMB 239.
• Rebound strengthening (low-to-medium weight, approximately 20%; subjective heuristic weight, not statistical probability): reference price band RMB 266–288. Trigger conditions include regaining the RMB 266–271 resistance area, turnover continuously expanding to approximately RMB 13 billion or more, main funds turning from net outflow to obvious net inflow, and sustained gains in the optical communications or CPO sector. If RMB 271 is broken with volume and the close holds above it, observe the RMB 276–288 area; approximately RMB 288 is near the approximate Bollinger upper band, and further upside requires stronger sector and fund confirmation.

③ Fund and Liquidity Background

From September 7 to September 11, 2026, turnover rates were approximately 4.77%, 3.78%, 2.76%, 4.68%, and 4.18%, respectively, averaging approximately 4.0% over the past 5 days; turnover during the same period was approximately RMB 13.607 billion, RMB 10.888 billion, RMB 7.907 billion, RMB 13.800 billion, and RMB 11.968 billion, averaging approximately RMB 11.63 billion over the past 5 days, with the recent turnover range at approximately RMB 8–13.8 billion. Overall, the stock is actively traded and is not a typical small-cap low-liquidity name under normal trading, but relatively large intraday amplitude means fund inflows and outflows may still bring obvious price fluctuations. In terms of shareholder structure, as of June 30, 2026, the total number of common shareholders was 300,811, and the top ten shareholders collectively held approximately 565 million shares, accounting for approximately 51.74% of total share capital; the top ten circulating shareholders held approximately 51.86%. Tonghuashun data showed that during the same period institutions collectively held approximately 608 million shares, accounting for approximately 55.82% of the float, of which fund holdings were approximately 13.09%, insurance company holdings approximately 0.45%, and QFII holdings approximately 0.45%. Among the top ten shareholders were the controlling shareholder, natural person shareholders, and institutions or institutionalized funds such as Hong Kong Securities Clearing Company Limited, communications equipment ETFs, and public funds. The above concentration and institutional holdings data are as of June 30, 2026, more than two months before September 11, 2026, and the number of shareholders fluctuated considerably from July to August, so the actual chip structure may already have changed and cannot be regarded as a real-time holding structure.

A checkable price-volume confirmation signal is: if on a future trading day turnover reaches approximately RMB 13 billion or more while the share price closes above the RMB 266–271 resistance area and main funds simultaneously turn to net inflow, this can be regarded as a confirmation signal that short-term funds have strengthened again; if turnover expands but the close falls below RMB 257, it is closer to a signal of volume-driven distribution or continuation of adjustment.

④ Points to Watch (Observation Ideas Only, Not Operational Instructions)

• Observe whether the first support zone of RMB 257–261 receives support, and the performance of the RMB 248–251 area after RMB 257 is lost; the above are observation ideas, not operational instructions.
• Observe whether the RMB 266–271 resistance zone can be effectively broken and held on close with expanded turnover; the above are observation ideas, not operational instructions.
• Observe whether main funds turn from the net outflow on September 11, 2026 to sustained net inflow, and judge fund behavior in conjunction with changes in turnover; the above are observation ideas, not operational instructions.
• Observe whether turnover reaches approximately RMB 13 billion or more and is synchronized with upward price movement and sustained sector strength, while also paying attention to whether the shareholder concentration data disclosed as of June 30, 2026 changes significantly thereafter; the above are observation ideas, not operational instructions.

The above scenario projection is based on the closing data of September 11, 2026 and calculations from historical prices and technical indicators. Short-term share prices will also be disturbed by multiple factors such as news, fund flows, and the broader market environment. Technical indicators themselves have lag and limitations, do not guarantee actual future trends, and do not constitute buy or sell recommendations. Please make independent judgments based on the latest market information and bear investment risks yourself.

6. Industry Landscape and Competitor Analysis

6.1 Industry Status

Demand in the optical communication component industry is mainly driven by capital expenditure in data centers, telecommunications networks, and AI computing power infrastructure. Product technology is evolving from 100G, 400G, and 800G to 1.6T, accompanied by changes in technology routes such as silicon photonics, CPO, and NPO. The industry has relatively high barriers in technology, manufacturing processes, and customer certification, but mature products still face price reduction pressure. TFC Optical mainly focuses on optical components, passive optical components, active optical components, optical engines, and advanced packaging, and is not at exactly the same product level as companies mainly engaged in complete optical modules.

6.2 Competitive Landscape

• Demand drivers include AI large model training and inference, data center expansion, increased capital expenditure by cloud vendors and large internet companies, upgrades of high-speed networks from 400G to 800G and 1.6T, and applications of new technologies such as CPO and silicon photonics.
• Domestic computing power networks, the "East Data West Computing" initiative, data center construction, 5G and backbone/metro network investment, as well as automotive LiDAR and autonomous driving applications, also constitute sources of industry demand.
• The industry undergoes rapid technological iteration. Component companies need continuous R&D, customer sampling, and reliability validation, and must meet customer requirements in insertion loss, return loss, isolation, coupling precision, temperature stability, reliability, and yield.
• Competition in low-end products is relatively intense, while high-end products place more emphasis on processes, yield, delivery capability, and customer certification; mature products still face price decline pressure.
• TFC Optical completed mass production of 1.6T optical engines at scale in 2025 and is conducting R&D on CPO-supporting optical components, but subsequent volume ramp-up of CPO and emerging applications depends on customer validation, technology routes, and downstream capital expenditure.
• The company's 2025 annual report cited a LightCounting forecast that the market size of high-speed optical modules and CPO for AI clusters was approximately USD 16.5 billion in 2025 and is expected to increase to USD 26 billion in 2026; this data is a third-party industry forecast cited in the company's annual report, not statistics from the company or regulatory authorities, and may be subject to forecast bias.
• In 2025, the company's optical communication component capacity was 636.5 million units, output was 473.8 million units, and sales volume was 254.2 million units. Based on output/capacity, capacity utilization was approximately 74.4%; however, output includes internal transfers between different product lines and cannot be directly used as a basis for external market sales or market share.

6.3 Main Competitors

Compared with complete optical module manufacturers such as Zhongji Innolight and Eoptolink, TFC Optical is in the more upstream optical component, optical engine, and advanced packaging segment, benefiting from increased device value per module and customer share gains; compared with Accelink Technologies, its chip capabilities and industry chain coverage are weaker, but it is more prominent in precision passive components, collaborative customer development, and optical packaging manufacturing. The company overlaps with T&S Communications and optical component/laser device peers in some passive components and optical fiber devices. Because comparable companies operate at different business levels, simple horizontal comparisons based only on revenue scale, gross margin, or net margin are not appropriate.

7. Risk Warnings

• Customer concentration risk: In 2025, sales to the top five customers accounted for 89.73%, with the largest customer Fabrinet accounting for 63.31%. If Fabrinet or other major customers adjust procurement scale, product roadmaps, certification progress, or prices, the company's revenue and gross margin may be significantly affected.
• Supplier concentration and core material supply risk: In 2025, purchases from the top five suppliers accounted for 61.51%, with the largest supplier accounting for 34.81%; the company still depends on external supply for optical chips, lasers, detectors, imported equipment, and some key precision materials. In the first half of 2026, revenue from active optical components decreased 19.57% year-on-year, already reflecting the impact of tight supply of some core materials.
• Gross margin downside risk: The comprehensive gross margin fell from 57.22% in 2024 to 53.96% in 2025. The increased revenue proportion of active optical components, higher raw material costs, the Thailand base being in the capacity ramp-up stage, and price pressure on mature products may all cause product price reductions to outpace improvements in materials, yield, and manufacturing efficiency.
• New product and technology route volume ramp-up risk: Although 1.6T optical engines have achieved mass production at scale, subsequent volume ramp-up of CPO, NPO, ELS, LiDAR, biophotonics, and other businesses still depends on customer validation, technology route selection, order scale, and downstream capital expenditure; as of the disclosure of the 2025 annual report, some emerging applications have had relatively short mass production timelines, and customer numbers and order scale remain smaller than the main optical interconnect business.
• Overseas operating risk: In 2025, overseas revenue accounted for 74.35%, and the company has production or operating layouts in Singapore and Thailand, with some raw materials and equipment imported from abroad. International trade disputes, tariffs, changes in import and export conditions, or overseas base construction and ramp-up falling short of expectations may affect supply, costs, and delivery.
• Accounts receivable and operating cash flow risk: As of the end of 2025, accounts receivable were RMB 1.122 billion, approximately equivalent to 21.7% of full-year operating revenue, and the absolute scale was significantly higher than accounts payable of RMB 403 million. If the collection cycle of major customers lengthens or their credit conditions change, the company may face increased capital occupation and cash flow volatility.
• High valuation and performance realization risk: As of September 11, 2026, the company's total market capitalization was approximately RMB 285.75 billion, and the dynamic price-to-earnings ratio was approximately 81.1x for 2026, 51.0x for 2027, and 34.3x for 2028. If revenue growth slows, product prices decline, supply chain bottlenecks persist, or the volume ramp-up of 1.6T/CPO falls below expectations, the current valuation may face relatively large adjustment pressure.
• Share price volatility risk: As of September 11, 2026, the share price closed at RMB 261.96, in a dense area of multiple moving averages, with the overall technical indicator summary relatively weak, single-day main fund net outflow of approximately RMB 735 million, and relatively high recent turnover and intraday amplitude. If the support zone near RMB 257 is broken, the technical picture may further observe the RMB 248–251 or lower range; the relevant technical projections do not constitute a certain trend judgment.

8. Conclusion and Outlook

The company's growth logic mainly comes from high-speed optical interconnect demand, volume growth in passive components, mass production of 1.6T optical engines at scale, and the potential contribution of new technology routes such as CPO/NPO. In the first half of 2026, passive optical components maintained rapid growth, and cash flow and R&D investment also improved; if core material supply improves, active components resume growth, and capacity utilization and yield at the Thailand base increase, product mix upgrades and overseas capacity layout are expected to continue supporting profit expansion. Institutional forecasts show that revenue and net profit attributable to shareholders of the parent company will still maintain relatively rapid growth in 2026–2028, but the relevant data are institutional forecasts, not company performance commitments.

It should be noted that the decline in revenue from active optical components in the first half of 2026 indicates that supply chain constraints have already had a real impact on the business structure; at the same time, the company's comprehensive gross margin has declined compared with 2024, and price reductions on mature products, raw material costs, and capacity ramp-up may still suppress profit margin. The company's subsequent performance also depends on customer validation and order ramp-up for 1.6T, CPO, and emerging applications, as well as downstream data center capital expenditure. The current valuation is at a relatively high level. If the pace of earnings realization is lower than market expectations, or if there are changes in customers, supply chain, or technology routes, valuation and share price volatility may be amplified.

Data Sources

• https://static.cninfo.com.cn/finalpage/2026-04-08/1225082705.PDF
• https://disc.static.szse.cn/disc/disk03/finalpage/2026-04-08/2cd516ce-3609-4450-ac59-47054561fc21.PDF
• TFC Optical (300394)_Company Announcements_TFC Optical: 2023 Annual Report Sina Finance_Sina.com
• Company Announcements_TFC Optical: 2024 Annual Report Sina Finance_Sina.com
• 〖Industry Insight〗Insight 2022: Competitive Landscape and Market Share of China's Optical Communication Component Industry (with market concentration, enterprise competitiveness evaluation, etc.)_Industry Research Report - Qianzhan
• TFC Optical (300394) Latest Developments_F10_Tonghuashun Financial Services Network
• https://disc.static.szse.cn/disc/disk03/finalpage/2026-08-19/788b066c-b687-4f11-8ae4-c6197f019370.PDF
• TFC Optical (300394) Earnings Forecast_F10_Tonghuashun Financial Services Network
• [[Soochow Securities]: 2026 Semi-Annual Earnings Forecast Review: Results Exceed Market Expectations, Capacity Flexibility Continues to Be Released as Materials Ease - Shuidi Research](https://www.sdyanbao.com/detail/976541)
• TFC Optical (300394) Company Dynamics Research: Passive High Growth + Improving Active Outlook, Positioned for CPO Elasticity__Sina Finance_Sina.com
• TFC Optical (300394) 2025 Annual Report Review: Solid Business Growth, Awaiting 1.6T Volume Ramp__Sina Finance_Sina.com
• TFC Optical (300394) Stock Forecast and Analyst Ratings - Futu NiuNiu
• TFC Optical (300394) Latest Stock Price Quotes, Real-Time Chart, Stock Price Analysis Forecast_Investing.com
• TFC Optical (300394) Historical Stock Data: Historical Quotes, Prices, Trend Charts_Investing.com
• TFC Optical (300394)_Stock Quotes, Quotes Homepage_CFI.cn
• TFC Optical (300394)_Company Announcements_TFC Optical: 2024 Semi-Annual Report Sina Finance_Sina.com
• Multiple A-share Companies Release Earnings Pre-Increase Announcements
• TFC Optical: 2026 First-Half Net Profit RMB 1.204 Billion, Up 33.92% Year-on-Year, Plans 10-for-5 Dividend _ East Money
• TFC Optical (300394)_Company Announcements_TFC Optical: September 1, 2026 TFC Optical Investor Relations Activity Record Sina Finance_Sina.com
• TFC Optical (300394)_Company Announcements_TFC Optical: 2026 Semi-Annual Equity Distribution Implementation Announcement Sina Finance_Sina.com
• https://static.cninfo.com.cn/finalpage/2026-08-13/1225470830.PDF
• TFC Optical Investor Relations
• TFC Optical (300394)_Company Announcements_TFC Optical: Self-Inspection Report on Trading of Company Shares by Insider Information Persons and Incentive Recipients Under the 2026 Restricted Stock Incentive Plan Sina Finance_Sina.com
• TFC Optical Had One Block Trade on September 10, Transaction Amount RMB 196 Million Hong Kong and US Stock News | HSTONG
• TFC Optical (300394)_News Updates_Stockstar
• TFC Optical (300394) Announcements (All) - Lixinger
• TFC Optical (300394.SZ), Stock Price, Real-Time Quotes, News, Financial Report Data | HSTONG
• TFC Optical sz300394 Stock Price, Quotes, Live, News, Financial Reports, Data - Aigupiao
• TFC Optical (300394) Stock Price Trend Technical Analysis_Future Forecast_Buy/Sell Operation Suggestions_Investing.com
• TFC Optical September 11 Block Trade Turnover RMB 3.1697 Million
• TFC Optical (300394) - Historical Trading Data | Dabanke
• Suzhou TFC Optical Communication Co., Ltd. 2026 Semi-Annual Report Summary
• TFC Optical (300394) Latest Developments_F10_Tonghuashun Financial Services Network

This report was automatically retrieved, compiled, and generated by AI based on public channel information. Information is as of the close on September 11, 2026; some technical indicator data are intraday/near-close data, and Bollinger Bands are self-approximated based on historical closing prices from August 17 to September 11, 2026. There may be timeliness differences, and specific data should be based on the company's official announcements and authoritative data terminals. This report is only for information compilation and research reference, does not constitute any investment advice, and investors should make independent judgments and bear investment risks themselves.