Brief performance review
On August 30, the company released its 23 annual report. 23H1 achieved revenue of 566 million yuan (+1.70% year on year) and net profit of 49 million yuan (YoY +32.01%); of these, Q2 achieved revenue of 269 million yuan (-3.36% year on year) in a single quarter and achieved net profit of 19 million yuan (+46.40% year on year), in line with market expectations.
Management analysis
The year-on-year decline in revenue in the 23Q2 quarter was mainly due to weak demand in the passive components industry and a contraction in the company's strategy. According to the announcement, 23Q2 achieved revenue of 269 million yuan, -3.36% year-on-year, mainly due to: 1) overall weakening demand in the passive components industry, and the company's revenue in this sector was affected by industry demand; 2) strategic contraction of the poor profitability sector: According to the announcement, the company strategically shrank the continuous fiber laser sector with a low gross margin level.
The product structure continued to be optimized, and gross margin increased month-on-month. With the company's continuous fiber laser strategy shrinking, the proportion of the company's laser/optical intelligent equipment business with high gross margin continued to rise (the gross margin of laser/optical intelligent equipment exceeded 40% in '22), the company's related equipment in the lithium battery and photovoltaics fields was gradually delivered, and the overall profitability continued to increase. According to the announcement, 23Q2's gross margin reached 39.59%, +5.00pcts, +3.11pcts. We are optimistic that the company's overall gross margin level will continue to rise. We expect the company's gross margin level to continue to rise in 23-25. 38.9%
The MR field binds leading customers, and is optimistic about long-term MR equipment volume to bring flexibility to the company's performance. The company has been deeply tied to leading customers in the consumer electronics field for a long time, and delivered optical calibration and inspection equipment to them in '22. Currently, the customer's second-generation MR product plans to add more optical inspection projects, which is expected to bring greater flexibility in demand for the company's testing equipment.
The laser marking equipment for the 100MW perovskite photovoltaic cell mass production line was successfully delivered and gradually entered the release period. According to the announcement, the company provides a series of laser intelligent equipment for high-precision marking of thin-film batteries, which can cover P1 to P4 laser die-cutting and laser edge cleaning processes in perovskite battery production. The equipment can greatly improve processing efficiency. The company has now laid out GW level mass production lines. As the industry cycle gradually matures, the company's perovskite technical and optical processing equipment is expected to enter the release period.
Profit Forecasts, Valuations, and Ratings
We expect the company's operating income to be 1,484/21.42/2,705 billion yuan in 2023-2025, net profit at the parent level of 1.61/2.64/347 million yuan, and the corresponding PE of 44/27/20X, maintaining the “buy” rating.
Risk warning
The risk of new energy business expansion falling short of expectations, the risk of downstream demand falling short of expectations, the risk of raw material prices rising, the risk of restricted stocks being lifted, and the risk of large fluctuations in the RMB exchange rate.