Performance is growing steadily, and the scale of R&D continues to expand

The company achieved revenue of 439 million yuan in 2022, an increase of 32.36% over the previous year; net profit from the parent company of 0.59 million yuan, an increase of 25.07%; and gross margin of 49.52%, a year-on-year -3.35 pct, mainly due to the combined impact of rising raw material prices and changes in product structure.

Currently, the company's gross profit mainly comes from optical device products, accounting for more than half of the contribution. Among them, domestic sales revenue was 93.7905 million yuan, accounting for 21.38%, or 21.86% year-on-year; overseas sales revenue was 344.934,848 million yuan, accounting for 78.62%, +35.54% year-on-year. The overseas market was the company's main battleground, and the company set up production & sales subsidiaries overseas. The company achieved revenue of 125 million yuan in Q1 23, +12% year-on-year, +24% month-on-month, net profit of 13.97 million yuan, +1% yoy, +115% month-on-month, non-deductions of 13.98 million yuan, +3% yoy, +127% month-on-month. The gross profit margin was 51.68%, +1pct, net profit margin 11.17%, -1pct yoy, +5pct month-on-month. On the business side, optical devices, optical lenses, and optical systems contribute the vast majority of the company's revenue. The trend in the past 3 years shows that the share of revenue from optical devices has declined, while the share of revenue from technologically more complex optical systems has increased significantly, from 14% in 2019 to 27% in the first half of 2022. On the cost side, the company's sales expense rate/management expense rate/R&D expense rate/financial expense ratio in 2022 were 4.51%/17.69%/12.53%/-1.53%, respectively. The company attaches great importance to R&D and actively invests in high-growth fields such as semiconductors, life sciences, and AR/VR. As of the first half of 2023, R&D personnel accounted for more than 20% of the company's total number, and the R&D fee rate was significantly higher than that of companies in the same industry.

Maolai Optics will generate 55 million yuan in R&D expenses in 2022 to promote the localization of optical equipment. After years of accumulation, Maolai has five major technologies, including coating/polishing/gluing, and some processes have reached nanoscale accuracy. By combining process control technology, the company can achieve high-quality production of optical components with coating machines, SSI splicing interferometers, and magnetorheic polishing machines.

Global semiconductor equipment shipments reached US$107.6 billion in 2022, a record high, and demand is huge. The light source system, optical lens, and dual workbench system are the three core elements of lithography machines. Among semiconductor components, optical components are technically difficult. The company provides products such as lenses, flat sheets, prisms, etc. Mulai covers international companies such as KLA and Camtek, and also enters the supply chain of Shanghai Microelectronics, a domestic lithography machine manufacturer. Driven by the policy of accelerating localization and substitution, the localization of semiconductor optical equipment continues to accelerate, and demand for optical components from domestic equipment companies is increasing, which is expected to help Maolai's semiconductor business expand at an accelerated pace.

Industrial-grade precision optics multi-dimensional layout, steady market expansion. The company is a leading provider of integrated precision optics solutions, focusing on R&D, design, manufacturing and sales of precision optical devices, optical lenses and optical systems. Among them, optical components account for more than half of revenue. The company serves global semiconductor (including lithography machines and semiconductor testing equipment), life sciences (including gene sequencing and oral scanning), aerospace, driverless driving, biometrics, and AR/VR testing applications. The company's multi-dimensional layout of industrial-grade precision optics can achieve synergies in many downstream fields. It is optimistic that the company will continue to grow on this long slope and thick snow track.

Profit forecasting

The company is a scarce target for industrial-grade precision optics in mainland China. We are optimistic that, driven by the accelerated trend of domestic substitution in the industry, the company's IPO investment capacity construction will promote deep expansion in high-growth fields such as semiconductors, life sciences, and AR/VR, so as to achieve long-term steady growth in performance and increase in market share. We forecast that the company's revenue for 2023-2025 will be 552, 688, and 880 million yuan respectively, and the EPS will be 1.41, 1.92, and 2.66 yuan respectively. The current stock price corresponds to PE of 136, 100, and 72 times, respectively. For the first time, we have given an investment rating of “increase holdings”.

Risk warning

Downstream demand falls short of expectations, new production capacity falls short of expectations; industry competition intensifies