Incidents: Guangku Technology released its 2022 annual report and quarterly report for '23, achieving revenue of 642 million yuan (-3.80%) in '22; net profit of the mother was 118 million yuan (-9.94%); gross profit margin was 37.02% (-4.97PCT).
22Q4 revenue was 149 million yuan (-17.77%), net profit of 28 million yuan (-16.37%), gross profit margin of 38.42% (+3.71 PCT); 23Q1 revenue was 155 million yuan (+9.94%), net profit of 15 million yuan (-32.46%), gross profit margin of 33.64% (-5.58PCT).
Affected by the overseas situation and demand in the laser industry, the company's performance is under pressure in the short term. By business, fiber laser device revenue was 343 million yuan (-6.34%), gross profit margin was 34.41% (-8.31PCT); optical communication revenue was 218 million yuan (+29.57%), gross profit margin was 38.69% (+1.82PCT); lithium niobate modulator revenue was 49 million yuan (-51.76%). By region, domestic revenue was 383 million yuan (-8.40%), gross profit margin 27.59% (-8.34PCT); foreign revenue was 260 million yuan (+3.90%), and gross profit margin was 50.92% (-1.20PCT).
Jiahua Weijie performed brilliantly, and Milan Optical Bank's profit declined. In 2022, Guangku Communications had revenue of 361 million yuan (+0.54%), net profit of 14 million yuan (+6.59%); Jiahua Weijie's revenue was 103 million yuan (+19.79%), net profit was 0.15 million yuan (-0.34%); Milan Optical Library's revenue was 87 million yuan (-11.34%), and net profit - 4,3946 million yuan (-151.40%). The main products of the Milan Optical Library are lithium niobate high-speed modulator chips and devices. Affected by the Russian-Ukrainian war in '22, the sharp rise in raw material prices led to an increase in the operating costs of the Milan Optical Library.
Thin-film lithium niobate is poised to start, and lidar is expected to open a second growth curve. The company increased its investment in thin-film lithium niobate modulator chips and devices and autonomous lidar light source modules. In '22, R&D expenses reached 100 million yuan, +29.22% over the same period last year. In the field of lithium niobate modulators, the company is focusing on developing thin-film lithium niobate coherent and non-coherent modulator products of 800 Gbps and above. In the next few years, the company will launch a series of thin-film lithium niobate high-speed modulator and module products, with transmission rates of 800 Gbps or more to 1.6 Tbps. In the field of lidar, the company has provided a full range of optical fiber components for 1550nm lidar companies at home and abroad, and has independently developed 1550nm light source modules based on erbium-doped fiber amplifiers. We believe that the continued expansion of the lidar business is expected to bring a second growth curve to the company.
Profit forecasts. We estimate that the company's revenue from 2023 to 2025 will be 936 million yuan, 1,318 million yuan and 1,721 million yuan respectively; the net profit of the parent mother will be 160 million yuan, 212 million yuan and 268 million yuan respectively; EPS will be 0.98 yuan, 1.29 yuan and 1.64 yuan respectively. We believe that Optical Library Technology has broad prospects for development as a leader in thin-film lithium niobate. Considering that the company's thin-film lithium niobate technology is in a leading position in the world, there is broad scope for future applications; the lidar business layout is accelerated, and the company's performance is expected to start next year, and the company's performance is expected to enter a period of accelerated growth. Referring to the average valuation level of comparable companies, the company was given a dynamic PE range of 58-63X in 2023, corresponding to a reasonable value range of 56.84-61.74 yuan, a “superior to the market” rating.
Risk warning. The boom in the laser industry fell short of expectations, price competition for optical communication devices exceeded expectations, and the progress of lithium niobate business fell short of expectations.