Description of the event

The company released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved revenue of 198 million yuan, a net ratio of 2.41%; achieved net profit of 39 million yuan, a decrease of 25.95% over the previous year; and achieved net profit of 37 million yuan after deduction of the mother, a decrease of 27.99% over the previous year. Looking at a single quarter, the company's 22Q4 revenue was 504 million yuan, down 1.54% year on year; Guimu's net profit was 0.08 million yuan, down 38.78% year on year; the company's 23Q1 revenue was 48 million yuan, down 5.44% year on year; Guimu's net profit was 102 million yuan, up 13.63% year on year.

Incident comments

Personnel remuneration & market development investment influence profit performance. The company's net interest rate in 2022 was 19.63%, down 6.32 pct from the previous year. The main reason was that the company increased investment in technology research and development and market development, which led to an increase of 7.8, 2.4, and 1.1 pct respectively in R&D, management, and sales expenses. As the company's expansion is completed and scale effects gradually become apparent, the company's profitability is expected to recover.

The leading position of galvanometer control systems has been consolidated, and high-end domestic substitution continues to be promoted. In 2022, the laser processing control system contributed 73.79% of the company's revenue, totaling 146 million yuan for the whole year, down 0.85% from the previous year. The total number of shipments of the company's galvanometer control system products accounted for about one-third of the total market, and its market share remained number one in domestic application segments. At present, medium- and low-end galvanometer control systems have been basically localized, but the high-end sector is still dominated by foreign investors. The company is actively developing into high-end fields such as photovoltaics, power batteries, semiconductors, and automobile manufacturing. Related products have been approved by customers or included in customer terminals. The underlying core technology continues to break through, laying the foundation for the company's development. The company has always insisted on independent research and innovation in technology related to laser processing control systems, and made important progress in many core technologies in 2022. Among them: 1) Initial breakthroughs in large-format galvanometer processing and flight welding technology. Through the flexible manufacturing platform project, the company has introduced large-format galvanometer processing control solutions for applications in some industries, and continuously optimizes robot and galvanometer linkage control algorithms. Currently, it has controlled single-object, unidirectional robot laser flight welding technology. The basic performance can be benchmarked against corresponding foreign products, suitable for scenarios such as automobile body welding and laser cleaning and welding of new energy batteries; 2) Technology and process accumulation advantages in the field of microprocessing continue to accumulate. The company's battery electrode cutting system can achieve rapid cutting path design and operation through free visualization, further improving equipment production and processing efficiency and cutting process quality. At the same time, the company's photovoltaic silicon wafer laser processing system can meet the application requirements of solar silicon wafers laser ablation and laser doping processes. The galvanometer scanning speed is as high as 72 m/s, and the processing accuracy can reach the level of 10um.

Extend to servo control and build a diversified software and hardware product system. Based on galvanometer control systems, the company actively lays out fields such as servo control systems and high-precision galvanometer. 1) The performance of the servo control system is gradually improved, and the product lineage is gradually improved.

At present, the company has launched control system products in different fields such as C2000, P2000, etc., which are mainly used for lighting cutting processing in the medium to medium power segment. At the same time, it is also developing bus system products for the high power segment. The company's servo control system went into the market in the second half of '21 until 22Q3 achieved sales of about 150,000 yuan, and achieved revenue of 1,0511,000 yuan throughout the year 22. It is expected that future market development progress will accelerate. 2) High-precision digital galvanometer is poised to become a new growth pole. At present, in terms of the development of galvanometer motors, the company has developed automatic correction technology for high-precision motor encoders to achieve 20-bit position detection accuracy of the galvanometer motor. The company has launched the Invinscan. G3 series oscillator products have been launched. Some performance indicators can benchmark the level of similar products abroad. It is expected that in 2023-2025, the company will achieve net profit of 0.61, 0.85, 119 million yuan. The corresponding PE is 53, 38, 27 times, maintaining the “buy” rating.

Risk warning

1. The risk that market development for new products falls short of expectations; 2. The risk that market competition affects prices.