Huagong Technology (000988): Deep V Oscillation After Six Consecutive Days Rally Up 40% - Capital Divergence Plays Out Over Optical Module Demand

On March 12, Huagong Technology (000988), a core player in optical modules, experienced an extreme V-shaped reversal during trading. The stock, which had fallen more than 8% in the morning along with the computing power sector, quickly rebounded in the afternoon, turning positive. As of 14:12, it was trading at 137.27 yuan, with an intraday fluctuation of over 12%. Both bullish and bearish funds engaged in intense competition around the long-term logic of AI optical modules and the smart economy.

Previously, this stock had shown a six-day winning streak starting March 4, with a total increase of 40.75%. From February 13 to March 11, over 13 trading days, it gained 75.99%. Benefiting from the explosive demand for AI computing power optical modules and the government work report’s first mention of “building a new form of smart economy,” the stock’s gains have been significant, but short-term profit-taking pressure has become apparent. After the market opened, the stock price quickly declined, reaching a low of 130.03 yuan at 10:15, down 3.60%. Trading volume surged to 189 million yuan, reflecting profit-taking from earlier gains and some funds’ concerns that high valuations might overextend short-term performance, with worries about intensified industry competition causing profit volatility.

In the afternoon, market sentiment improved. Funds optimistic about the long-term prospects of AI optical modules and the smart economy bought on dips, causing the stock to rise sharply from its lows, turning positive again and briefly increasing by over 4%. Behind this deep V-shaped movement are clear disagreements among investors regarding the optical module sector: some believe the short-term rally is excessive, with intensified price competition requiring profit realization; others remain confident that demand for AI computing power will continue to explode, supported by policies promoting the smart economy. Huagong Technology, as a leading domestic optical module manufacturer, has strong long-term growth certainty.

Guohai Securities’ latest research report (March 12, 2026) states that Huagong Technology has full-series mass delivery capabilities for 200G/400G/800G AI optical modules. The 1.6T optical modules are already in mass production readiness. Orders for connection services are scheduled into Q4 2026. The high-speed AI optical module production line operates 24/7 at full capacity, with Wuhan and Thailand production bases fully supporting delivery. In Q1-Q3 2025, the company achieved revenue of 11.038 billion yuan and net profit attributable to shareholders of 1.321 billion yuan, representing year-on-year increases of 22.62% and 40.92%, respectively. Revenue from connection services (mainly optical modules) reached 5.089 billion yuan, up 52% year-over-year, with rapid growth in data communication product revenue and profits.

Guohai Securities forecasts that from 2025 to 2027, the company’s net profit attributable to shareholders will be 1.781 billion, 2.467 billion, and 3.39 billion yuan, respectively. The current stock price corresponds to P/E ratios of 69.72, 50.34, and 36.63 times. The firm has initiated coverage with a “Buy” rating, believing that under the support of smart economy policies, demand for AI optical modules will continue to grow. The company’s long-term growth logic remains unchanged. The current high-level fluctuations are part of chip rotation, and valuations will gradually be absorbed as performance is realized.

Investors should pay close attention to authoritative official announcements from the company, carefully discern various market information, and rationally evaluate market changes based on their own risk tolerance. Do not blindly chase high prices. The stock market carries risks; investment should be cautious! This article is solely a compilation and objective analysis of public information and does not constitute any investment advice. Investors should make independent judgments, act prudently, and bear their own investment risks.