Tianfu Communications' net profit is expected to grow by over 50% in 2025, but the amount falls short of institutional expectations.
The 1.6 trillion optical engine has achieved mass production, but the gross profit margin of optical communication components has decreased by 3.67 percentage points.

Tianfu Communication (SZ300394, stock price 317.36 yuan, market value 246.7 billion yuan) released its 2025 annual report on the evening of April 7. In 2025, the company achieved revenue of approximately 5.163 billion yuan, up 58.79%; it achieved net profit attributable to shareholders of the listed company of approximately 2.017 billion yuan, up 50.15%; and it achieved non-GAAP net profit of approximately 1.976 billion yuan, up 50.42%. The company plans to use 777 million shares as the base to distribute cash dividends of 7 yuan for every 10 shares to all shareholders (including tax), and to transfer 4 shares for every 10 shares to all shareholders from capital reserve funds; no bonus shares will be distributed.

According to the 2025 performance forecast disclosed by Tianfu Communication in late January, the company had expected 2025 net profit attributable to the parent of 1.881 billion yuan—2.15 billion yuan, representing growth of 40%—60%. Therefore, the actual disclosed figures fall at the middle point of the expected range.

Gross profit margin of optical communication components declines by 3.67 percentage points

Vertically, this is the first time Tianfu Communication’s revenue has surpassed the 5 billion yuan threshold in a single accounting year. Net profit attributable to the parent has also surpassed the 2 billion yuan threshold for the first time. By quarter, in Q4 2025 Tianfu Communication achieved revenue of approximately 1.245 billion yuan, up 45.28% year-on-year, with a 14.87% quarter-on-quarter decline; it achieved net profit attributable to the parent of approximately 552 million yuan, up 50.35% year-on-year, with a 2.51% quarter-on-quarter decline.

In addition to growth in performance, the annual report shows that in the reporting period, Tianfu Communication’s net cash flow from operating activities increased 47.97% year-on-year to 1.868 billion yuan.

According to data compiled by the Wind Financial Terminal, 21 institutions’ consensus forecasts for Tianfu Communication’s 2025 revenue and net profit attributable to the parent are approximately 5.591 billion yuan and 2.105 billion yuan, respectively. Therefore, based on the data disclosed by Tianfu Communication, the figures are all below expectations; the disclosed values are 7.65% and 4.16% lower than the consensus forecasts, respectively.

Image source: Wind

In terms of R&D, Tianfu Communication’s annual R&D investment grew by nearly 15%, the R&D team expanded by more than 40%, and there are nearly 200 patents at home and abroad.

In the optical module and core device business, the market’s biggest focus is the pace of technological iteration. The annual report of Tianfu Communication clearly discloses that the company successfully completed mass production of the 1.6T optical engine scale and the R&D of CPO (optical-electrical co-packaged) supporting optical devices, laying the foundation for applications in next-generation supercomputing centers and AI (artificial intelligence) clusters. At the same time, the company is actively deploying next-generation technology routes such as silicon photonics integration to build long-term core competitiveness for its products.

The annual report shows that during the period, the output of the company’s core “optical communication components” increased by 42.58%, mainly due to the impact of a year-on-year increase in production volume of optical component products. Sales volume increased by 21.78% compared with the prior period. Revenue was approximately 5.082 billion yuan, up 57.27% year-on-year from approximately 3.232 billion yuan in the same period last year. However, the gross profit margin for this business declined from 57.29% in the same period last year to 53.62%, a cumulative decline of 3.67 percentage points.

By product, during the period, Tianfu Communication’s revenue from passive optical devices increased by 32.23% year-on-year to approximately 2.084 billion yuan, and its share of revenue fell from 48.47% in 2024 to 40.37%. Revenue from active optical devices increased by 81.11% year-on-year to approximately 2.998 billion yuan, and its share of revenue rose from 50.91% to 58.06%.

Among them, the gross profit margin of passive optical devices fell by 4.74 percentage points to 63.67%, while the gross profit margin of active optical devices declined by 0.06 percentage points to 46.63%.

At the same time, Tianfu Communication also disclosed in its annual report that there is a risk of declines in product gross profit margins. The company stated: “The high-speed optical engine project funded through a targeted issuance of shares has a relatively low gross margin. As the proceeds-invested projects gradually increase sales revenue, it may reduce the company’s overall gross margin.” In addition, issues related to skill level and capacity utilization during the initial production phase of the Thailand factory lead to overseas production costs being higher than those in China, further compressing profit margins.

Customer concentration rises further

Although the company’s revenue scale is large, a reporter from the Economic Daily News noticed that the company’s customer structure during the reporting period was relatively concentrated. During the period, the combined sales amount from the company’s top five customers accounted for 89.73% of the company’s total annual sales, up further from 86.8% in 2024. Among them, the company’s largest customer (Fabrinet) recorded sales of 3.268 billion yuan, accounting for 63.31% of the company’s total annual sales, also up from 61.69% in 2024.

Image source: Tianfu Communication annual report

The annual report also shows that Tianfu Communication’s share of export revenue in 2025 fell from 76.06% last year to 74.35%. However, affected by exchange rate fluctuations, the company still generated a foreign exchange loss of 47.52 million yuan in this period, which led to a sharp year-on-year increase of 66.24% in financial expenses, directly eroding part of the profits.

Meanwhile, the company also mentioned in the annual report that “due to factors such as the pace of upstream capacity release and yield ramp-up, some key materials in the supply chain face stage-by-stage supply tightness, longer delivery lead times, and price fluctuation risks, which may adversely affect the company’s order delivery, costs and gross margins, and the speed of ramping production of new products.” This reveals that, in the face of the pace of upstream capacity release, the company’s order delivery and cost control are facing substantive tests.

Looking ahead to 2026, Tianfu Communication states that this year it will continue to focus on core businesses, deepen technological breakthroughs and product iteration and upgrade, and, around strategic customers, achieve agile and high-quality demand response. At the same time, it will take a forward-looking layout of next-generation technology directions, striving to achieve steady growth with both quality and scale. Meanwhile, the company will accelerate the layout of global production capacity and supply chain, promote digital and intelligent enablement, strengthen compliance and security governance, and drive high-quality, sustainable development.

Economic Daily News