Event: On October 30, the company released the third quarterly report of 23 years, realizing revenue of 328 million yuan in the first three quarters,-8.21% year-on-year; net profit attributable to parent company of-0.07 billion yuan,-120.81% year-on-year.

Short-term performance pressure. Quarterly, 23Q3 realized revenue of 122 million yuan, year-on-year +5.74%, month-on-month +12.16%; net profit attributable to parent-11 million yuan, year-on-year-214.98%; net profit deducted from non-profit-13 million yuan, year-on-year-302.98%, month-on-month loss expanded. The sharp decline in the Company's 23Q3 performance was mainly due to the fact that the acceptance progress of some new products and customized equipment of the Company was less than expected.

Gross profit margin decreased year-on-year, and investment in research and development continued to increase. 1) Gross profit margin: Gross profit margin in the first three quarters was 47.13%,-2.33pct year-on-year; among them, gross profit margin in 23Q3 was 42.93%,-6.17pct year-on-year and-5.09pct month-on-month.

2) Period expense rate: The expense rate during the first three quarters was 51.52%,+9.98pct year-on-year. Among them, the sales, management, R & D and financial expense ratios were 19.56%, 11.63%, 22.79% and-2.47%, respectively, with year-on-year +2.27,+1.61,+6.65, and-0.55pct. Adhering to independent innovation, the Company continued to increase R & D investment in new energy and semiconductors, launched a number of new products and technologies, and R & D expenses continued to increase.

R & D expenses in the first three quarters were 74.74 million yuan,+29.59% year-on-year.

A number of technological research and development breakthroughs have been made, and we are optimistic about the development potential in the future. 1) Semiconductor: in MicroLED, the first customer order for laser mass transfer equipment was obtained in 22 years, and the new customer order has been successfully landed; in SiC, silicon carbide ingot laser slicing technology has completed process development and test verification, and has won batch orders from leading customers in 23 years. 2) New energy: in terms of perovskite, 23-year perovskite thin film solar cell laser processing equipment (100 MW class) has had new customers and new orders breakthrough; in terms of laser core blue film removal process, the independently developed laser core blue film removal equipment has passed the customer test verification and won the first order of the head customer. 3) Laser: in 2023, the company officially launched a series of fiber lasers, including all-fiber femtosecond laser, QCW fiber laser, MOPA fiber laser and so on.

Profit forecast: Based on the slowdown in demand recovery in the industrial laser field, the net profit of the parent company for 23-25 years will be lowered to-0.16,0.32 and 0.77 billion yuan, and will be lowered to the rating of "overweight".

Risk tips: the expansion of new areas is not as expected, the recovery of downstream demand is not as expected, industry competition is intensified, and so on.