Market sentiment declined in '22, and 23Q1 performance was under short-term pressure

In 2022, the company achieved revenue of 568 million yuan, an increase of 3.48% over the previous year; it achieved net profit of 67 million yuan, a decrease of 23.16% over the previous year, mainly due to the decline in the prosperity of the industrial laser industry in '22 and the acceptance of new products falling short of expectations. The gross margin of the company's main business in 2022 was 49.72%, down 1.07pct from the same period in '21, mainly due to the decline in laser market prices. The company's laser gross profit margin of 40.44% fell 11.33 pct from the same period in '21. The company's laser processing equipment still maintained a high gross margin level. The gross margin in '22 was 49.09%, up 0.26pct from the same period in '21, mainly due to the company's laser processing equipment positioning high-end, and most of it was equipped with self-produced lasers. The company's performance in 23Q1 was under short-term pressure, achieving revenue of 98 million yuan, a year-on-year decrease of 28.40%; achieving net profit of 0.05 billion yuan, a year-on-year decrease of 79.79%, mainly due to the impact of product inspection falling short of expectations. The gross margin for 23Q1 was 51.35%, which remained stable. The net interest rate was 4.90%, down 12.45 pct from the same period in '21. This was mainly due to the company's continuous investment in new product research and development, and R&D expenses increased 31.22% over the same period in '21.

Lay out high-end application fields and achieve continuous breakthroughs in new products

(1) Semiconductor field: The company's silicon carbide ingot laser slicing technology has completed process development and testing and verification, and has obtained batch orders from leading customers; (2) MicroLED display field: Micro LED laser peeling and laser repair equipment has been delivered to customers and achieved revenue, and the micro LED laser massive transfer equipment has received orders from leading customers; (3) New energy sector: the first complete perovskite thin-film solar cell production equipment (100 megawatts) has been successfully delivered to customers and achieved business revenue. Currently, the company is developing perovskite film solar cell production stage equipment (100 megawatts). The next-generation production equipment for energy batteries has iteratively upgraded the processing range and production efficiency of the equipment; the laser cell blue film removal equipment developed independently by the company has passed customer testing and verification and received the first order from a leading customer, and the relevant technology companies have applied for an authorized patent; (4) In the field of high-power ultrafast lasers: In addition to the solid-state laser product line, the company has also completed the development of various fiber lasers, including all-fiber femtosecond lasers, QCW fiber lasers, MOPA fiber lasers, etc., which will be gradually installed in the company's new energy and other fields of equipment in 23 (5); light Module field: The company began laying out laser application equipment in the optical module market in 2019. Through years of technological accumulation, the company has developed various products including optical module tungsten copper plate double-sided laser grid processing equipment, COC chip surface 100 micron QR code & digital code processing equipment, and curved QR code & digital code processing equipment on TO surface. Some of the equipment has new processes in the industry and is exclusively supplied by Delong Laser. The main customers include leading companies in the industry such as Finisar, Zhongji Xuchuang, Tianfu Communications, etc.

Profit forecasting

Affected by declining market sentiment, the company's annual report and quarterly report performance are under pressure, and revenue is slowing down. Therefore, we forecast that the company's 2023-2025 revenue will be 749, 996, and 1,280 yuan respectively, and EPS will be 0.96, 1.35, and 1.76 yuan respectively. The current stock price corresponding to PE is 49.3, 34.9, 26.8 times, respectively, and the rating was downgraded to the “increase holdings” investment rating.

Risk warning

Risk of declining industry sentiment, risk of new product releases falling short of expectations, risk of increased competition in the industry, etc.