Zhongji Xuchuang’s 2025 net profit doubles to break 10 billion yuan; its leading position is solid, but concerns still remain.

Ask AI · Inventory Surges by Nearly 80%: How Should the Company Respond to Potential Impairment Pressure?

On the evening of March 30, leading global optical module company Jlqizhixuhao (300308.SZ) disclosed its 2025 annual report. During the explosive period of AI compute infrastructure buildout, the company’s full-year performance delivered a leap forward, with revenue of RMB 38.240 billion, up 60.25% year over year; net profit attributable to shareholders of RMB 10.797 billion, up 108.78% year over year. However, behind the high growth, concerns have also emerged in areas such as inventory management, customer concentration, supply-chain security, and geopolitical risk—factors that may become key variables constraining long-term development.

Gross Margin Up 7.96%, Profitability and Cash Flow Perform Strongly

In 2025, iterations of global AI large models accelerated, and overseas and domestic cloud providers and tech giants continued to increase investments in compute infrastructure. With demand booming for high-speed optical modules—core components for data center transmission—during the reporting period, Jlqizhixuhao achieved full-year operating revenue of RMB 38.240 billion, up 60.25%; net profit attributable to shareholders of RMB 10.797 billion, up 108.78%. Performance more than doubled, and the company officially stepped into the “billion-yuan-plus” net profit cohort.

Judging from its business structure, Jlqizhixuhao is highly focused, with its optical communication transceiver module business generating revenue of RMB 37.457 billion, up 63.67% year over year, accounting for as much as 97.95% of total revenue. Core business growth is strong, becoming the absolute main driver behind the company’s overall performance growth.

At the same time, the company’s profitability improved significantly. Overall gross margin reached 42.04%, including 42.61% for the core optical module business, up 7.96% year over year; net profit margin rose to 30.28%, with profitability remaining No. 1 globally in the optical module industry.

In terms of cash flow, performance was particularly impressive. The company generated net cash flow from operating activities of RMB 10.896 billion for the full year, up 244.31% year over year. The scale of operating cash flow essentially matched net profit, and its cash conversion capability improved markedly, fully confirming the authenticity of the company’s performance and the quality of its earnings.

However, currency fluctuations clearly eroded Jlqizhixuhao’s profits. Driven by fluctuations in the RMB-to-USD exchange rate, the company recorded foreign exchange losses of RMB 318 million in 2025. This represented a significant reversal from the RMB 123 million foreign exchange gains in 2024. Financial expenses also shifted from negative to positive, reaching RMB 183 million, which to some extent weighed on the final profitability.

Global Market Share Leads the Way, Overseas Revenue Exceeds 90%

The core driver behind Jlqizhixuhao’s rapid earnings growth lies in the quick ramp-up of high-end products and the continuing increase in global market share. High-margin products such as 800G and 1.6T have become the key engines for performance growth.

In 2025, the company produced 23.76 million optical modules and sold 21.09 million. Capacity utilization was maintained at a high level. Among them, the global market share for 800G optical modules exceeded 40%, ranking first in the industry for three consecutive years; the global market share for 1.6T optical modules was 50%-70%. As one of the few manufacturers globally capable of delivering 1.6T optical modules in volume, its technological leadership and scale advantages are particularly prominent.

In terms of market layout, Jlqizhixuhao is deeply integrated into global core supply chains. Overseas revenue was RMB 34.637 billion, accounting for 90.58%, up 67.20% year over year. It has established long-term and stable cooperation with North American leading cloud providers and AI giants such as Google, Microsoft, and NVIDIA. The top five customers contributed 75.98% of revenue.

R&D investment continues to be stepped up, providing solid support for Jlqizhixuhao’s rapid performance growth and technological leadership. During the reporting period, the company’s R&D expenses were RMB 1.615 billion, up 29.84%.

In its annual report, Jlqizhixuhao stated that in 2026, it will focus on advancing the delivery of 1.6T and 800G high-end products to consolidate its advantages in overseas markets; it will continue to increase R&D investment and advance next-generation technologies such as 3.2T and above high-speed optical modules, silicon photonics, coherent optics, and CPO. At the same time, it will further deepen its industrial-chain layout, expand new business growth drivers, and enhance overall competitiveness.

Jlqizhixuhao also forecasts that in 2026 the global datacom optical module market size will reach USD 22.8 billion. 800G and 1.6T products will dominate the market, and the industry’s high-level demand/market conditions are expected to remain strong. As the only company globally that simultaneously possesses large-scale mass production and delivery capability for both 800G and 1.6T optical modules, it will fully benefit from industry tailwinds, with sufficient momentum for earnings growth.

In its global capacity buildout, Jlqizhixuhao continues to advance the construction of international production bases. Through multi-region capacity layout and coordination across both domestic and overseas locations, it continuously enhances global supply capability and delivery efficiency, effectively strengthening supply-chain resilience. The annual report shows that the third phase of the high-end industrial park in Tongling, China, was completed smoothly. The production base in Thailand has formed scalable manufacturing capacity, with monthly production capacity for 800G optical modules reaching 500,000 units. This further optimizes global capacity allocation, better meets the needs of international customers, and responds to changes in the international trade environment.

High Inventory Raises Impairment Pressure; Customers and the Supply Chain****Rely Highly

Behind the stellar performance, potential risks in Jlqizhixuhao’s financial structure and business layout have gradually emerged. By the end of 2025, the company’s inventory size reached RMB 12.681 billion, up 79.8%. Inventory as a share of total assets rose to 28%. Inventory turnover was 2.25 times, down 19.31% year over year, and turnover efficiency clearly slowed.

Market observers point out that the optical module industry has rapid technological iteration and short product life cycles. If, in the future, the pace of AI compute investment slows, downstream demand fluctuates, or product updates accelerate, the elevated inventory could face the risk of large impairments. Meanwhile, it ties up a large amount of working capital and affects the efficiency of capital turnover.

In addition, the high concentration of Jlqizhixuhao’s customers and supply chain further increases operating uncertainty. During the reporting period, revenue from the company’s top five customers accounted for 75.98%, with the first-largest customer accounting for 24.06%. Revenue relies heavily on North American leading cloud providers. If a customer reduces capital expenditures, adjusts procurement strategies, or switches suppliers, it would directly impact the company’s revenue and profits.

On the supply-chain side, key components such as core optical chips and battery chips still mainly depend on imports. The top five suppliers accounted for 51.5% of procurement amount, and the top supplier accounted for 35.76%. Supply-chain concentration is relatively high. If supply disruptions or price fluctuations occur, it may have an adverse impact on the company’s production and operations.

It is worth noting that in its annual report, Jlqizhixuhao also mentioned risks such as possible supply-chain stability issues, trade barriers, declines in market demand, and tariffs.

In response, Jlqizhixuhao said that the company has a mature supplier selection mechanism. It has established long-term and stable cooperation relationships with its main suppliers, and adjusts dynamically based on collaboration conditions to ensure that core raw materials are available from multiple stable and qualified suppliers.

Jlqizhixuhao stated that, on the one hand, it closely tracks the development trends of the optical module industry. While consolidating its existing industry position, it actively moves into new areas to continuously enhance its revenue level. On the other hand, it adheres to a diversified strategy, deepening its focus on the optoelectronics industry and related fields, and actively expanding new directions for business.

Byline: Nandu Bay Finance & Society Finance · Reporter Qiu Moshang