On the evening of October 29, Innolight and Eoptolink released their 2026 third-quarter reports in quick succession. Together with T&S Communications, which reported on October 28, the full set of results from the top three optical module makers is now out. Adding up the three filings, combined net profit attributable to shareholders for the first three quarters came to 35.694 billion yuan, against net operating cash flow of 10.934 billion yuan — less than a third of net profit.

800G and 1.6T Lift Revenue Across All Three

Innolight posted revenue of 69.547 billion yuan for the first three quarters, up 178.13% year on year, and attributable net profit of 22.238 billion yuan, up 211.81%. Eoptolink's revenue reached 31.850 billion yuan, up 92.97%, with attributable net profit of 11.372 billion yuan, up 79.74%. T&S Communications reported revenue of 4.751 billion yuan, up 21.25%, and attributable net profit of 2.084 billion yuan, up 42.18%.

Innolight's own wording: "Benefiting from the deepening build-out of global AI computing power infrastructure, demand in the high-speed optical module market has remained strong, and sales of high-end modules such as 800G and 1.6T have continued to rise."

Profit Booked, Cash Not Collected

Across the three companies, 35.7 billion yuan of net profit converted into just 10.9 billion yuan of operating cash flow, a cash-to-profit ratio of 0.31 (operating cash flow divided by net profit, our own calculation). Broken out, the gaps are wider: Innolight at 8.008 billion yuan, a ratio of 0.36; T&S Communications at 1.462 billion yuan, 0.70; and Eoptolink at 1.464 billion yuan against 11.372 billion yuan of net profit, just 0.13.

As for where the cash went, all three filings point to one thing: stockpiling materials.

  • Innolight's inventories stood at 23.878 billion yuan, up 88.30% from the end of last year, because "orders on hand kept increasing and material stocking rose accordingly to meet order deliveries." Prepayments reached 1.567 billion yuan, up 1,068.43%, as the company "locked in upstream raw materials with suppliers in advance."
  • Eoptolink's inventories came to 17.413 billion yuan, up 140.70%, because "in view of growth in orders on hand and expected orders as well as stocking cycles, inventory build-up increased during the reporting period." Prepayments hit 1.322 billion yuan, up 7,695.01%. Operating cash flow fell 68.42%, which the company attributed to "increased payments for materials and for various taxes and fees."
  • T&S Communications reported inventories of 1.274 billion yuan, up 178.65%, which it described as "strategic stockpiling."

Combined prepayments at the three companies rose from 172 million yuan at the end of 2025 to 2.981 billion yuan, 17 times the year-end level. This is not finished goods piling up; it is cash moving upstream to lock in supply. Inventories now account for 39.0% of Eoptolink's total assets and 18.4% of Innolight's.

Innolight Up Just 8% Quarter on Quarter, Ex-Items Profit Up 20%

Innolight's third-quarter revenue was 27.769 billion yuan, up 24.63% from the previous quarter, while attributable net profit rose only 8.47% to 8.587 billion yuan. Revenue up roughly a quarter and profit up less than a tenth looks, at first glance, like a gross margin problem.

But net profit excluding non-recurring items for the quarter was 9.018 billion yuan, 431 million yuan higher than attributable net profit. The report lists two main causes: about 678 million yuan in foreign exchange losses in the third quarter, and recognized fair value losses on equity investments that cut attributable net profit by roughly 440 million yuan. What held profit back was not the optical module business but exchange rates and a paper loss on an equity stake.

Financial expenses for the first three quarters came to 1.136 billion yuan, against just 43 million yuan a year earlier, a 2,516.09% increase the company attributed to "the weakening of the US dollar and Hong Kong dollar against the yuan." Innolight completed its Hong Kong listing on July 30, raising about HK$60.9 billion — money that carries currency exposure of its own.

Eoptolink moved in the opposite direction. Non-recurring gains in the third quarter totaled 213 million yuan, mainly 235 million yuan of fair value gains on financial assets, which padded attributable net profit. That is why attributable net profit rose 61.15% year on year while the ex-items figure gained only 53.32%. One company's profit was dragged down by investments, the other's was propped up.

Eoptolink Turns Down for the Quarter, Gross Margin Slips 1.68 Points

Eoptolink was the only one of the three to turn down in the third quarter. Revenue fell 12.98% from the previous quarter to 10.940 billion yuan, and attributable net profit dropped 19.07% to 3.843 billion yuan. Backing the figures out of cumulative data, gross margin for the quarter was about 46.28%, 1.68 percentage points below the roughly 47.96% of the second quarter.

Innolight's gross margin for the same quarter was about 46.61%, a slight gain on the 46.41% of the second quarter, while T&S Communications came in at about 65.05%, up again from 64.62%. Within the same demand cycle, the three companies' margins are diverging.

Eoptolink's report offers no explanation for the sequential decline, giving only the cumulative line that "sales revenue increased from the same period last year." Its two previous quarters had both risen sequentially: up 0.01% in the first quarter and 50.78% in the second.