Opto Optoelectronics as the leader of optoelectronic integration enterprises, in recent years, through endogenous extension, the business layout has gradually expanded, military-civilian integration, product diversification and coordinated development. The parent company's optoelectronic measurement and control business is expected to fully benefit from the steady increase in the number of spacecraft launched in China. In terms of grating sensing, Yuheng Optics, as a leading enterprise, breaks through the monopoly of foreign enterprises and benefits from the trend of self-controllable and domestic replacement of high-end encoders, and the grating sensing business is expected to achieve volume expansion. In terms of aerospace composite materials, Changguang Aerospace has established solid cooperation with military customers. With the booming development of missile recovery and commercial aerospace, the company has upgraded its production capacity and is expected to achieve rapid growth. The participating subsidiary Changguang Chen Core is mainly engaged in CMOS image sensors, and IPO has been accepted by the Shanghai Stock Exchange.

We forecast that the company's annual return net profit in 2023-24-25 will be 1.19 PE 1.86 / 272 million yuan, and the current share price will correspond to 66max 43 / 29 times RMB. The total valuation of each segment is expected to correspond to a market value of 9.7 billion yuan and a target price of 40 yuan in 2023, giving a "buy" rating for the first time.

Started in Changchun Institute of Optics and Machinery, diversified and coordinated development of products, the parent company focused on optoelectronic measurement and control and other instruments. Optoelectronics, as the only listed company under Changchun Institute of Optics and Machinery, Chinese Academy of Sciences, after years of operation and development, has formed a strong comprehensive advantage in the field of optoelectronic measurement and control, and has gradually grown into an enterprise with the development of military and civilian and the integration of optics and mechatronics. In recent years, through endogenous epitaxy, the company's business territory has gradually expanded, including optoelectronic measurement and control instruments, optical materials, grating encoders, high-performance carbon fiber composite products, etc., showing a trend of diversified and coordinated development. The company's participation in holding a number of businesses can form a linkage, and there is a certain overlap of customer resources, which greatly improves the efficiency of resource utilization within the company. In the future, as the company continues to lay out the industries with collaborative foundation in the optoelectronic field, its business scale is expected to continue to expand and profitability is expected to be further improved through the interaction of technology and market resources. Opto Optoelectronics parent Company is mainly engaged in optoelectronic measurement and control instruments, optical glass and military medical instruments, in which photoelectric measurement and control instruments are expected to fully benefit from the steady improvement of China's space launch.

Holding Yuheng Optics, the leading enterprise of domestic grating encoder. The company controls Yuheng Optics, the leader of domestic raster encoders, with a shareholding ratio of 65%. Raster encoders are high-precision displacement sensors and are widely used in CNC machine tools, servos, robots and other industries. At present, the global encoder market is dominated by foreign investment, including Heidehan in Germany, Tomocheon in Japan and so on. Only Yuheng Optics has a high market share and can compete with overseas manufacturers in scale and products. Through independent innovation, Yuheng Optics has successfully broken the foreign sensor monopoly pattern in high-end CNC machine tools, industrial and service robots and other industries. Some high-end products have no technical difference with similar foreign products, and can achieve domestic substitution, such as JFT series absolute raster ruler, JZN/JKN series raster angle encoder, etc., and the overall price is 70% of similar foreign products. In the future, thanks to the autonomous controllability of high-end equipment, the trend of domestic substitution, as well as the development of downstream applications such as machine tools and robots, the company's grating sensing business is expected to grow rapidly.

Increase capital holding Changguang Aerospace, create aerospace compound material growth curve. In August 2022, Optoelectronics increased its stake in Changguang Aerospace by 40% and currently holds a stake of 51.1%. Changguang Aerospace is mainly engaged in carbon fiber composite products, and has established a solid cooperative relationship with major military industrial groups and institutes in the aerospace field. The main customers include Aerospace Science and Industry Group, Aerospace Science and Technology Group, Chinese Academy of Sciences and so on. In recent years, benefiting from the strong demand in the downstream aerospace and military industries, Changguang Aerospace's income and home net profit have increased rapidly, with a three-year compound growth rate of 108.89%. According to the announcement of Optoelectronics, Changguang Aerospace has upgraded its production capacity from 345 sets / year to 800 sets / year. With the booming development of missile economic recovery and commercial aerospace, the company's performance is expected to improve rapidly.

With the participation of Changguang core, domestic high-end CMOS chips are booming. Benefiting from the increase in localization rate and driven by new application scenarios, the CMOS image sensor market continues to grow. According to Frost Sullivan (transferred from the head Leopard Research Institute), the domestic market is expected to reach 124.7 billion yuan in 2026 and 8.0% CAGR in 2022-2026. As the most important part of the company's equity investment, Changguang Chen Core is mainly engaged in CMOS image sensors. at this stage, downstream applications include machine vision, scientific instruments and other high-tech fields, with a high gross profit margin. At present, there is still a big gap between most machine vision enterprises in China and foreign-funded enterprises, and most of the core devices still need to be imported from leading foreign manufacturers. The market share of Changguang Chenxin ranks first in China in this field, and its market recognition is high. In recent years, due to the breakthrough of the company's core technology and the expansion of downstream applications, the company's performance has grown rapidly, with a compound growth rate of 148.4% from 2020 to 2022. At present, Changguang Chenxin IPO has been accepted by the Shanghai Stock Exchange, which is expected to bring a higher return on investment for Optoelectronics.

Risk factors: the risk of fluctuation in the macro environment; the risk of intensified competition in the industry; the risk that the price advantage of military products is low and the growth is not as expected; the risk that technological research and development is not as expected; the risk of loss of core technical personnel; the progress of domestic substitution of high-end CNC machine tools is not as expected; M & An integration is not as expected; raw material price fluctuation risk; major customers rely on risk.

Earnings forecast, valuation and rating: generally speaking, all business sectors of the company have a good momentum of development in recent years, and the internal multi-business has formed a synergy effect. The raster encoder industry is leading, and the high-end products break through the foreign monopoly situation; master the core technology of composite materials, and have obvious advantages in the aerospace field; the industry has broad prospects, and the net profit continues to grow steadily; the participating subsidiary Changguangchen core is expected to be listed on the market, bringing higher investment returns. We forecast that the company's annual return net profit in 2023-24-25 will be 1.19x6x272 million yuan, and the corresponding basic EPS will be 0.50pm 0.78x1.14 yuan, and the current share price corresponding to PE will be times as much as 66-43-29. Due to the great differences among different business sectors of the company, the segment valuation method is adopted (for the specific valuation logic, see the valuation rating section of the text). Under the 2023 forecast of optoelectronic measurement and control instruments / raster sensors / composite materials / equity investment, respectively, the contribution to the market capitalization of 8.4 picks / raster sensors / composite materials / equity investment is 8.4 trillion yuan, and the total valuation of each segment is estimated to be 9.7 billion yuan in 2023 and 40 yuan in corresponding target price. For the first time, coverage gives a "buy" rating.