H1 is under slight pressure overall, and Q2's month-on-month improvement trend is clear: the company's 23H1 achieved operating income of 390 million yuan, a year-on-year decrease of 5%; net profit for the return of 120 million yuan, a decrease of 15% from the previous year. The decline in net profit compared to revenue was mainly due to factors such as the decline in exchange earnings compared to the same period. Among them, Q2's quarterly revenue was 200 million yuan, which was basically the same as the previous year, with a year-on-year increase of 8%. The decline in bar scanning revenue for major downstream applications of optical components narrowed; net profit for Ki-mu was 70 million yuan, down 17% from the previous year, and increased 45% from the previous year. 23H1's gross profit margin was 40.3%, down 0.8 pct year on year. Among them, Q2's gross profit margin for a single quarter was 41.8%, down slightly from the previous year, and up 3.1 pct from month to month. The company's Q2 revenue and profitability improved in both directions, and the bottom recovery trend was clear.

The optical microscope business continued to grow rapidly, and profitability increased: 23H1's optical microscope business achieved sales revenue of 190 million yuan, a year-on-year increase of 16%, a gross profit margin of 40.9%, and a year-on-year increase of 2.0pct. Benefiting from the continuous development of the company's high-end optical microscope brand NEXCOPE series products and the continuous expansion of customers in the life science, industrial testing and medical fields, our own high-end brand achieved revenue of nearly 60 million yuan, accounting for nearly 30%. Furthermore, as the proportion of high-end microscopes continues to increase, the overall gross margin of microscopes is expected to continue to increase in the future. According to Grand View Research, the global optical microscope market space will reach 6.1 billion US dollars in '26, and the company's optical microscope business will continue to benefit from the huge space for domestic substitution in the high-end market.

Differentiated advances in high-precision medical optics, waiting for trends in the lidar industry: Market demand for medical optical products is growing rapidly, but high-end medical optical products such as surgical microscopes and endoscopes are heavily dependent on imports. The company's medical optics business is mainly divided into medical imaging and in vitro diagnostic products. In terms of medical imaging, medical optical components and core optical components of surgical microscopes supplied by the company have maintained a high increase. Endoscopic lenses have been shipped in batches to several listed companies in the medical segment in China; in vitro diagnosis, various high-end medical biomicroscopes have cooperated with dozens of hospitals to achieve mass sales of high-end embedded microscopy systems used in blood morphology analysis. In the field of lidar, the company maintains in-depth cooperation with well-known domestic and foreign companies such as Hesai, Innoviz, Innovusion, Beisheng Photonics, and Magna, continuously increasing its market share, and the long-term trend of intelligent card cars.

We forecast the company's earnings per share for 23-25 to be 2.77/3.43/4.30 yuan respectively (the original 23-24 forecast was 3.19/4.23 yuan respectively, mainly lowering revenue and gross margin forecasts). According to a comparable company's 23-year PE valuation level, the corresponding target price was 124.65 yuan, maintaining the buying rating.

Risk warning

The progress of production expansion and product sales fell short of expectations; the increase in product unit prices and gross margin fell short of expectations.