Incident Overview: On June 8, the company issued the “2023 Stock Issuance Plan to Specific Targets with Simple Procedures”, which plans to issue no more than 12 million shares and raise no more than 280 million yuan for the “Thailand Optical Library Production Base Project” and “Supplemental Liquidity”.
Set up an optical library production base in Thailand to strengthen overseas production capacity for optical communication devices and laser light source module products:
The “Thailand Optical Bank Technology Production Base Project” has a total investment of 206.979 million yuan, and plans to raise a capital of 199 million yuan. It is implemented by the company's wholly-owned subsidiary, Thailand Optics Bank, located in Pathum Thani Province, Thailand. It is proposed to add production capacity for optical communication devices and laser light source modules by purchasing land and a new production line to achieve 2.84 million optical communication devices and laser light source modules per year after delivery. Specific products in the field of laser light source modules mainly include laser fiber components and emission light source integration, which can be used in the field of lidar. The laser light source module is one of the important development directions of the company in the future. The company is positioned as an integrated solution expert with one-stop component combination delivery capabilities and 1550nm emission light source. It will use the 1550nm emission light source module and related components as entry points to accelerate the company's strategic layout in the field of laser light source modules.
Optimizing the layout of overseas production capacity is of significant strategic significance to better meet the needs of the company's customers: the overseas market is an important source of revenue for the company, and the share of the company's overseas revenue has continued to increase in recent years (the share of overseas revenue in the three years of 20/21/22 was 34.7%/37.4%/40.4%, respectively). The Thai government encourages foreign investment. It can give foreign enterprises that set up factories locally with larger tax benefits such as income tax and equipment import and export tariffs, which can effectively reduce the cost of the company's production line layout. It is an ideal location for the company's overseas production capacity layout. At the same time, considering that some of the company's important overseas customers have set up production plants in Thailand, in order to further optimize the company's production capacity layout and better serve the supporting needs of strategic customers, the company's fund-raising project chose to build a factory in Thailand, which can be more deeply integrated into the global supply chain system of core customers, thus meeting the differentiated needs of customers in different regions of the world.
The lithium niobate fund-raising project is advancing at an accelerated pace: the company's lithium niobate modulator chips and devices are mainly used in long-range backbone network coherent communication of 100 Gbps or more and in single-wave 100/200 Gbps ultra-high speed data centers. The next-generation thin-film lithium niobate photonic integration technology developed by the company can be used both in coherent transmission forms and in non-coherent transmission modes. According to the company announcement, at present, the company's lithium niobate high-speed modulator chip R&D and industrialization fund-raising project has basically completed the renovation project and R&D center, package testing center equipment commissioning and acceptance. New product development and chip production center equipment procurement, personnel recruitment, and process platform construction are currently being carried out. Overall progress can be expected.
Investment advice: We expect the company's net profit to the mother in 2023-2025 to be 1040/200/260 million yuan respectively, and the corresponding PE multiplier is 94/66/51x. As a scarce supplier of lithium niobate chips and devices in China, the company will fully benefit from the large market space brought about by thin-film lithium niobate, the expansion of emerging application scenarios such as digital communication, and the improved competitive pattern opportunities brought about by domestic substitution. Meanwhile, the lidar business can be expected to continue to advance in the future. Maintain a “Recommended” rating.
Risk warning: Demand in the downstream fiber laser and optical communication fields fell short of expectations, and the lithium niobate business fell short of expectations.