With a quarterly net profit of 5.7 billion yuan and orders booked through 2027: How long can Innolight continue to capitalize on this AI-driven boom in optical modules?

As of June 30th, Zhongji Xuchuang is an unavoidable name among the most profitable AI companies in the A-share market.

Its latest disclosed financial report shows that in the first quarter of 2026, the net profit attributable to the parent company reached 5.735 billion yuan, a year-on-year increase of 262.28%. The single-quarter profit has already exceeded the full-year level of 2024.

This is a company that manufactures optical modules, hidden at the very upstream of the AI boom. After making a net profit of 5.7 billion yuan in a quarter, the only question the market really cares about is: How long can it continue to make this kind of money?

What does 5.7 billion yuan mean?

Let's first look at the hard data in this first-quarter report. In the first quarter of 2026, Zhongji Xuchuang's revenue was 19.496 billion yuan, a year-on-year increase of 192.12%; the net profit attributable to the parent company was 5.735 billion yuan, a year-on-year increase of 262.28%; the non-recurring profit after deduction was 5.718 billion yuan; the single-quarter gross sales margin was 46.06%, reaching a record high (Source: Sina Finance, Flush, April 16, 2026).

A horizontal comparison shows just how impressive this is: The single-quarter net profit of 5.735 billion yuan has already exceeded the company's full-year net profit in 2024; compared with 3.665 billion yuan in the fourth quarter of 2025, it also increased by about 56%. Looking further back, in 2025, Zhongji Xuchuang's revenue was 38.24 billion yuan, and the net profit attributable to the parent company was 10.797 billion yuan, a year-on-year increase of 108.78%, officially entering the "10-billion net profit club" (Source: Shanghai Securities News, March 30, 2026).

Here, we need to correct a common statement: The "11.8 billion" circulating in the market is the upper limit of the profit range given in the company's 2025 annual performance forecast. The net profit attributable to the parent company in the official annual report is 10.797 billion yuan, which is for the whole year of 2025, not the semi-annual report data. The semi-annual report forecasts for 2026 usually won't be disclosed until July. This article is based on the officially disclosed first-quarter report and annual report data.

Where does the money come from?

Zhongji Xuchuang makes money as the "shovel seller" in the AI computing power field.

Its main business is high-speed optical modules. Simply put, they are the key components in data centers that convert electrical signals into optical signals and enable massive data to run at high speed between servers. The more computing power AI large models consume, the more optical modules are needed in data centers and the higher the speed requirements. The company's global market share of 800G optical modules exceeds 40%, and the market share of 1.6T optical modules is about 50% - 70%. It is one of the very few manufacturers in the world that can mass-produce and deliver on a large scale (Source: OFweek, 21st Century Business Herald).

In a nutshell, while NVIDIA and others sell GPUs, Zhongji Xuchuang sells the "optical fiber blood vessels" that connect GPUs. The money from AI infrastructure construction can't bypass it.

There is a hidden thorn in the profit

The numbers look good, but there is an easily overlooked thorn in the financial report: exchange rate fluctuations.

In the first quarter of 2026, Zhongji Xuchuang's financial expenses soared by 1550.01% year-on-year to 251 million yuan. This figure was still -144 million yuan at the end of 2024. The company explained that it was due to an increase in exchange losses (Source: OFweek, Sina Finance). The optical module business is highly export-oriented, with a high proportion of overseas revenue. Fluctuations in the exchange rate between the RMB and the US dollar will directly leave traces in the financial expenses.

This reminds investors that even high-growth companies have "invisible costs". A single exchange loss can make a dent in the impressive profit.

The cost of the mad dash

In order to handle the continuous stream of orders, Zhongji Xuchuang is expanding production at full speed, and expanding production requires spending and advancing funds.

As of the end of March 2026, the company's prepayments soared to 1.488 billion yuan, a nearly tenfold increase from 134 million yuan at the end of 2025, mainly due to a significant increase in prepayments for materials; during the same period, the net cash flow from investing activities was -1.948 billion yuan, reflecting large-scale investment in production capacity and equipment; the accounts receivable balance was 9.536 billion yuan, a year-on-year increase of about 52% (Source: Sina Finance, OFweek).

These numbers together show that the company is betting on future demand with real money. The good side is that production expansion corresponds to strong orders. The side that needs to be vigilant is that once there are changes in the upstream and downstream demand for prepayments and accounts receivable, the pressure on payment collection and inventory will increase simultaneously.

Three aspects to evaluate the performance's quality

Facing such a financial report with high growth but hidden concerns, ordinary readers can remember a three-aspect evaluation framework, which can be used in every subsequent earnings season.

First, look at the absolute amount or the growth rate: No matter how high the growth rate is, it is necessary to return to the absolute profit and its sustainability. Second, look at the main business or non-recurring items: Does the profit come from the main business of selling optical modules, or from one-time asset disposals, subsidies, or exchange rate fluctuations? Third, look at the cash flow or the book profit: Even if the book net profit looks good, it is necessary to check whether the operating cash flow keeps up synchronously. Using these three yardsticks to measure Zhongji Xuchuang, its main business is solid and the cash flow is strong, but exchange rate fluctuations and accounts receivable are variables that need to be continuously monitored.

Orders are lined up until 2027. Then what?

Looking forward, Zhongji Xuchuang indeed has a long line of visibility.

The company said that key customers have given demand guidance from 2026 to 2027, and some customers have started planning for 2028; at the industry level, 800G and 1.6T high-speed optical modules will still be the main demand in the next few years (Source: 21st Century Business Herald, OFweek). Institutions have given high expectations for its subsequent profitability, and many securities firms have raised their target prices (Source: Securities Times).

The following is for readers' reference as an inference. It is necessary to clearly see that the high prosperity of such "shovel sellers in the computing power field" highly depends on the capital expenditure rhythm of overseas cloud providers. Once there are changes in the upstream chip supply, downstream AI demand, or exchange rates, the performance elasticity will be amplified in both directions. The target prices given by institutions are their opinions and do not constitute personal operation guidance.

Earning a net profit of 5.7 billion yuan in a quarter is a reward from the AI wave to the leader in the optical module industry. But how long this wave of dividends can last ultimately depends not on how bright the past financial reports are, but on how many more years the engine of global computing power investment can keep running. What do you think about this? Welcome to share your views in the comment section.

This article is from the WeChat official account "BT Finance" (ID: btcjv1), author: BT Finance. Republished by 36Kr with permission.