Golden Orange is one of the leading laser processing control system enterprises in China: since its establishment in 2004, the company has been ploughing laser processing control technology, mainly based on laser galvanometer processing control system. it is mainly used in laser marking, precision cutting, welding and other micro-machining fields. In 2022, the total shipments of the company's galvanometer control system products accounted for about 1/3 of the total market, keeping the first market share in the domestic application segment. From 2014 to 2022, the revenue CAGR was 26.87%, showing a trend of rapid growth.

Low-power laser equipment is widely used downstream, and domestic replacement of high-end operation and control systems is going on: with the development of China's economy and the in-depth implementation of the national strategy, the demand for automatic and intelligent production in the manufacturing industry is increasing day by day. China's laser industry is in a period of rapid development, the market demand of the laser industry has gradually shifted to China, and the domestic laser processing equipment market has maintained rapid growth. According to the survey data of China Laser Industry Development report 2021, the domestic laser processing equipment market was 16.9 billion yuan in 2012, accounting for 23.41% of the global laser processing equipment market. By 2020, the domestic laser processing equipment market scale is 69.2 billion yuan, with an annual compound growth rate of 19.27%. The sales income of domestic laser processing equipment is expected to reach 82 billion yuan in 2021. In the overall control system market, the middle and low-end control system field has basically achieved localization, and the localization rate of high-end galvanometer control system is only 15%. With the accelerated pace of domestic substitution, the company as the leading enterprise of high-end precision galvanometer control system will benefit deeply.

Layout of high-precision galvanometer products, co-development of software and hardware: in terms of new products, the company develops high-precision galvanometer products, which are developed in coordination with the galvanometer control system software. The core performance index of the company's galvanometer products is similar to that of the same type of products of German Scanlab GmbH in the same industry, and has the level and strength to compete with international manufacturers. From the product point of view, the company has the ability to carry out domestic substitution. In terms of capacity expansion, the company raises funds through IPO and invests in three projects to further enhance the company's production capacity, make up for technical deficiencies, open up sales outlets, and further open up the company's growth space. In addition, the company through equity incentives to stabilize the core team, to achieve a deep binding between the interests of employees and shareholders.

Profit forecast and investment suggestions: the company's net profit from 2023 to 2025 is expected to be 60 million yuan, 85 million yuan and 115 million yuan, corresponding to 58.4,41.6,30.7 times of PE. With reference to the average valuation of comparable companies, the "buy" rating is covered for the first time.

Risk tips: the risk of continuous piracy and infringement of legitimate rights and interests; downstream demand is lower than expected; new product development is not as expected.