LandMark (3081.TWO): CW laser in strong demand with capacity expansion; 3Q26 revenues +183% YoY; Buy

Sep revenues up 190% YoY to NT$540m, or 7% / 1% ahead of our / Bloomberg consensus, reaffirming our positive view on Landmark's growth on SiPh optical networking, along with the better supply of InP substrate, and the company's capacity expansion. As we highlighted in Global Optical Module TAM, we expect 1.6T and above to grow at 188% / 30% YoY in 2027 / 28E, with SiPh penetration rate at 73% / 74% in 800G and above in 2027 / 28E. Looking ahead, we expect revenues in 4Q26E to continue sequential increase, driven by new AI server racks ramp up, optical modules specification upgrade (toward 1.6T), and Landmark's ongoing capacity expansion to capture the market demand. In mid-Sep, Landmark announced the company has obtained a batch of new equipment valued at NT$535m, supporting company's shipment ramp up ahead. We factor in Landmark 3Q26 revenues and revise up earnings by 5%/1%/1%/1% in 2026-29E mainly on higher revenues of CW laser epi-wafer and diodes for 1.6T products, supported by ris