1. The product matrix of laser cutting control system is gradually improved, and the company's share continues to improve. The CNC control system of laser cutting covers plane cutting, pipe cutting and integrated processing of plate and tube.

After continuous product development, a relatively perfect product matrix has been formed in the cutting field, including control system, CAD/CAM nesting software, supporting intelligent identification control hardware, servo system and industrial Internet of things. The company makes use of the advantage of software secondary development to cut into the market from the customized needs of customers at the head.

At present, the procurement share of new customers has increased, and the gradual embodiment of the benchmarking effect of head customers is expected to promote medium-and long-tail customers to choose the company's products. We believe that with the company's continuous investment in the field of laser processing, new products and customer ecology are expected to continue to improve, laser processing products are expected to continue to achieve a breakthrough in market share and maintain a high growth rate of this business line.

2. The CNC system is moving towards the high end, and the FE series of high-end CNC products are expected to become the next core growth point. The company will take Nanjing KaiTong as the fulcrum to jointly develop competitive products and expand the lathe market share.

The company continues to invest in new product research and development, and is expected to achieve independent control of the CNC system in the field of high-end CNC machine tools. According to the company announcement, the company has created a series of FE machining center CNC systems to help domestic replacement of high-end machine tool CNC systems. FE series is based on the research and development of Phoenix, the basic software platform of self-developed CNC system, including lathe system, milling machine system and turn-milling composite series products. The project period is about 4 years, and the first product FE30M has been released.

The localization rate of high-end CNC machine tools is low. High-end CNC machine tools need to achieve high precision, high complexity, high efficiency and high dynamic machining, which are mainly used in aerospace, precision moulds, military, electronics, shipbuilding and other high-end industrial fields. The transformation and upgrading of China's manufacturing industry has increased the demand for domestic high-end data machine tools. At present, China's CNC machine tool enterprises are mainly located in the middle and low end, while the localization rate of high-end CNC machine tools is reduced (only about 6% in 18 years), which has broad room for improvement. We believe that high-end CNC machine tools are essentially industrial software, especially CNC systems, and the localization of CNC systems is the key to the localization of high-end CNC machine tools. We believe that under the background of the recovery of downstream demand, the company is expected to achieve a breakthrough in product capacity in the field of high-end CNC systems through forward-looking layout research and development, and take the FE series as the starting point to form the driving force for the company's sustained growth in the future.

Profit forecast and investment advice: we are optimistic about the continuous increase in the market share of the company's laser product line and the growth of domestic high-end CNC machine tools. Due to the lower-than-expected downstream demand in 22 years, the growth rate of the company slowed down in 22 years. We revised the company's 23-year profit forecast to reduce its revenue from 676 million yuan to 449 million yuan and its net profit from 100 million yuan to 90 million yuan. We estimate that the company's 2024 revenue will be 531 million yuan in 2025. The net profit from homing in 2025 is 127 million yuan, and the net profit from 2023 to 2025 is 21.16 times the current share price PE, respectively, maintaining the "buy" rating.

Risk hint: the industry boom is not as good as expected; the laser cutting product research and development and customer expansion are not as expected; the competition in the industry is intensified; the subsidiary Nanjing opening development is not as expected.