Key points of investment
Deeply involved in the field of laser fine microprocessing, the technology-driven laser manufacturer company for scarce solid-state lasers was founded in 2005. It specializes in precision laser processing equipment, lasers, laser equipment leasing and processing services. It is one of the few manufacturers in China that also covers lasers and precision laser processing equipment. The compound growth rate of operating income in 2019-2021 reached 25%, and the compound growth rate of Guimu's net profit reached 107%. According to the performance report, in 2022, the company achieved revenue of 570 million yuan, an increase of 3% over the previous year, and Guimu's net profit was 0.7 billion yuan, a decrease of 23% over the previous year.
The transformation and upgrading of the manufacturing industry is driving high growth in the laser equipment industry. The company's market share in market segmentation is leading the international market segment. The transformation and upgrading of traditional manufacturing industries in China has accelerated. The advantages of intelligent, standardized and continuous laser processing equipment are prominent, and the laser equipment market is rapidly expanding. The “2022 China Laser Industry Development Report” predicts that China's laser equipment market will reach 87.6 billion yuan in 2022, and CAGR will reach 15.5% in 2015-2021. According to CinnoResearch, the company accounted for 15% of the pan-semiconductor laser equipment market in mainland China in 2020 (third place), and in 2016-2020, major panel manufacturers in mainland China accounted for 12% of the laser cutting equipment market (third place).
Pan-semiconductor: Laser precision processing meets the needs of next-generation technology iteration, and the company has a first-mover advantage 1) MicroLED: Seen as disruptive and revolutionary next-generation display technology, “massive transfer technology” and “massive inspection and repair technology” are key technologies for microLED industrialization. The company cooperates with customers such as BOE, Huacan Optoelectronics and other customers to conduct small-batch engineering tests. Micro LED laser peeling and laser repair equipment has been delivered to customers and realized revenue. MicroLED laser mass transfer equipment has received orders from leading customers.
2) Silicon carbide: It is a third-generation semiconductor star with superior performance in high voltage and high power application scenarios. According to the China Business Industry Research Institute, the CAGR of the global silicon carbide power semiconductor market is expected to reach 21% in 2022-2024, benefiting from the rapid growth in demand in the fields of new energy vehicles and photovoltaics. The company's silicon carbide ingot laser cutting technology has completed process development, testing and verification, and is actively developing the market.
New energy: Entering the large photovoltaic and lithium battery markets, binding core customers of perovskite and lithium batteries 1) Perovskite: Perovskite is considered a new next-generation photovoltaic technology, and laser equipment is necessary equipment for perovskite single-junction battery production lines. We estimate that China's perovskite battery laser equipment market space is expected to reach 12.5 billion yuan in 2030, and CAGR will reach 80% in eight years. The company has launched complete perovskite thin-film solar cell production equipment, and the first set of perovskite solar cell production line equipment (100 MW grade) has been successfully delivered to customers and achieved revenue.
2) Lithium batteries: Driven by strong demand for new energy vehicles, energy storage, etc., the lithium battery industry is growing rapidly. According to the China Business Industry Research Institute, China's lithium battery shipments are expected to reach 489 GWh in 2022, and the five-year CAGR is 43%. The company's lithium battery division has deployed fiber pulsed laser film removal equipment and ultra-fast laser metal high-quality marking equipment. The self-developed laser cell blue film removal equipment has passed customer testing and verification and received the first order from a leading customer.
Profit forecasting and valuation
The company's net profit for 2022-2024 is expected to be 0.7, 1.0, and 150 million yuan respectively, up -24%, 42%, and 57% year-on-year. The corresponding PE is 75, 53, and 34 times. The first coverage gave an “increase in holdings” rating.
Risk warning: downstream demand falls short of expectations; R&D progress falls short of expectations; introduction of new customers falls short of expectations, etc.