Continuously optimize the business structure and gradually improve the profitability: in the first three quarters of 2023, the Company realized operating income of RMB 2.47 billion yuan, with a year-on-year decrease of 17%; net profit attributable to parent enterprises was RMB 320 million yuan, with a year-on-year growth of 19%; net profit deducted from non-parent enterprises was RMB 290 million yuan, with a year-on-year growth of 18%. Q3 realized revenue of 810 million yuan in a single quarter, with a year-on-year growth of 5%; net profit attributable to parent was 100 million yuan, with a year-on-year growth of 18%. At the same time, the Company is accelerating the optimization of intelligent controller business structure, reducing the proportion of household appliances with low gross profit and increasing the proportion of downstream applications with high gross profit such as automobile industrial control. The adjustment of business structure has achieved results step by step. The overall gross profit margin of the Company increased by 5.3 percentage points year-on-year to 18.7% in the first three quarters of 2023.

The company is currently based on the world's leading production capacity of high-temperature superconducting magnets, multi-field layout downstream applications, long-term growth of power storage: 1) high-temperature superconducting induction heating equipment started mass production delivery this year, the company currently has more than 60 orders in hand, the company has successfully delivered 8 units in the first three quarters of 2023, and it is expected to deliver more than 10 units this year. 2) Accelerate the research and development of superconducting magnets for photovoltaic crystalline silicon growth furnace. The company plans to launch the principle prototype in Q1 of 2024. At present, it has received the purchase order from downstream customers in advance. It is expected that the first batch of high-temperature superconducting magnets will be delivered in 2024. No less than 50 units. 3) At the same time, the company arranges the application of high-temperature superconducting magnets in the field of controllable nuclear fusion devices, which is expected to continuously open up the downstream application space of high-temperature superconducting technology and build long-term growth momentum!

Steady development of laser industry, acceleration of intelligent controller business, optimization of product structure and improvement of profitability:

In the laser industry segment, the company is currently the core supplier of upstream device pump source and complete machine of domestic laser system. In the first three quarters of 2023, the company's pump source and laser production capacity will operate at full capacity, and at the same time, it plans to accelerate the expansion of production capacity, which is expected to fully benefit from the development of domestic and foreign laser systems. At present, the company has the production capacity of laser system complete machine, and the export license qualification is being accelerated, which is expected to open up the sales space of complete machine at home and abroad and further increase revenue. In the intelligent controller business segment, the Company continued to optimize the product structure, focusing on the application of automotive electronics and industrial control fields, while continuously improving the production capacity of high-end optocoupler products, and the optimization of product structure achieved results one by one.

Profit forecast and investment rating: The company focuses on laser, superconducting and intelligent controller main businesses, and accelerates product volume. Based on this, we maintain the profit forecast for the company. It is estimated that the net profit of the company in 23-25 years will be 4.5/6.2/7.7 billion yuan respectively, corresponding to 33/24/19 times PE in 23-25 years, maintaining the "Buy" rating.

Risk hints: the production capacity expansion of high temperature superconducting business is not as expected; the research and development of superconducting magnets applied by high temperature superconducting business in new fields is not as expected; the divestiture of backlight and cable business is not as expected.