Optoelectronics announced the results announcement for the third quarter of 2023: revenue for the first three quarters of 2023 was about 515 million yuan, up 32.56% year on year; net profit attributable to shareholders of listed companies was about 78.78 million yuan, up 13.41% year on year.

Performance grew steadily. Due to large investment income in the same period last year, Q3's single-quarter results declined, and revenue for the first three quarters of 2023 was about 515 million yuan, up 32.56% year on year; net profit was about 78.78 million yuan, up 13.41% year on year; net profit after deducting non-return net profit of 70.91 million yuan, up 10.21% year on year.

Among them, the third quarter achieved operating income of 160 million yuan in a single quarter, an increase of 15.35% over the previous year, net profit of 25.8 million yuan, a year-on-year decrease of 21.75%, and a year-on-year decrease of 26.55% after deducting non-net profit of 23.07 million.

The company reported steady growth in its performance for the third quarter, and the growth rate of net profit for the third quarter declined. The main reason for this was a large investment income of 31.2 million in the third quarter of last year, an increase of 21.87 million over the third quarter of this year. Excluding the impact of investment income, the company still achieved a significant increase in net profit in the third quarter.

Changguang Aerospace also showed changes in product structure, and net gross margin steadily increased. The company's gross profit margin for the third quarter of 2023 was 41.28%, up 9.6 pct from the previous year. The main reason for the increase in gross margin was the change in the company's product structure. Changguang Aerospace merged the list in September 2022, and all of them were consolidated this year. The gross margin of aviation composites, which is Changguang Aerospace's main business, was high, and the company's gross margin increased dramatically due to changes in product structure.

The company's net profit margin for the third quarter of 2023 was 22.9%, an increase of 3.33 pct over the same period last year. The main reason is the change in product structure and the increase in gross margin. At the same time, investment income for the third quarter of last year was higher. Due to the high net interest rate base, the increase in net interest rate this year was significantly lower than the increase in gross margin.

The company's weighted ROE for the third quarter of 2023 was 6.7%, down 0.3 percentage points from the previous year.

The optoelectronic measurement and control asset platform owned by the Changchun Institute of Optoelectronics of the Chinese Academy of Sciences has obvious advantages in the fields of optoelectronic measurement and control and optoelectronic encoders

The company belongs to the Changchun Institute of Optoelectronics of the Chinese Academy of Sciences and is an important enterprise in the domestic optoelectronic measurement and control instrument manufacturing industry.

During the reporting period, the company's main business was the R&D, production and sales of products such as optoelectronic measurement and control instruments and equipment, new medical instruments, optical materials, grating encoders, and high-performance carbon fiber composite products.

The main body of the company is engaged in optoelectronic measurement and control instruments and equipment, mainly used in the military and medical equipment industries. The products include photoelectric latitude and longitude meter optomechanical subsystems, aerospace/aerospace camera optomechanical subsystems, new radar antenna holders, precision turntables, and medical testing instruments for both military and civilian use. The company has complete military standards. It has led the upgrading and upgrading of domestic defense optoelectronic measurement and control instruments and equipment in terms of technology implementation and product production, and is in a leading position in the same industry in the field of national defense optoelectronic measurement and control.

The holding subsidiary Changguang Aerospace mainly engages in high-performance carbon fiber composite products, mainly used in commercial aerospace, space cameras, weapons and equipment. Through the processing and molding of carbon fibers, structural parts and functional parts are provided for aerospace payloads, missile rockets, etc. The 2023 Mid-Year Report achieved operating income of 138 million yuan, net profit of 37.97 million yuan, product gross profit margin of 46.87%, net profit margin of 27.48%, strong profitability, and increased demand for aerospace, missiles, etc.

Yuheng Optics, a holding subsidiary, is a leading domestic optoelectronic encoder enterprise and the only pilot base for the national encoder project. Grating encoders are widely used in the field of automation and are key measurement sensor devices used in a large number of fields such as CNC machine tools, servo motors, and major scientific research instruments. Domestic grating encoders have long relied on imports, and foreign-funded companies such as Germany's Heidenhain, Japan's Tamagawa, Spain's Fage, and Britain's Renishaw occupy major markets. Yuheng Optical's high-end grating encoders have reached advanced international and leading domestic levels in terms of product performance, filling a gap in this field in China. According to MIR Rui industrial statistics, Yuheng optical encoders accounted for 8% of the market share in 2022, ranking third after foreign giants Tamagawa and Heidenhain, ranking third, and are leading domestic high-end optical encoders. The future will benefit from domestic replacement of core components for high-end equipment such as industrial mother machines, servo motors, and robots, etc., and there is plenty of room for market penetration. The company's grating encoders are also an important component on the cost side of humanoid robots, fully benefiting from the development process of domestically produced humanoid robots.

Profit forecasting and valuation

The company is a leading optoelectronic measurement and control instrument enterprise under the Changchun Institute of Optoelectronics of the Chinese Academy of Sciences. It also has core assets such as aeronautical composites and grating encoders, benefiting from the development of demand in industries such as military industry, localization of high-end equipment, and humanoid robots. The company is a typical specialized new enterprise. The various businesses are small but beautiful, and have strong technical barriers. We forecast that the company's revenue forecasts for 2023-2025 are 822 million, 1,093 million, and 1,442 million, respectively; the 2023-2025 net profit forecasts are 112 million, 176 million, and 255 million respectively; the corresponding PE is 83.14X, 52.97X, and 36.51X respectively. The company's valuation is reasonable, growth sustainability is strong, and coverage for the first time, giving the company a rating of “increased holding”.

Risk warning: 1: demand in the military industry falls short of expectations; 2: industrial mother machines, humanoid robots and other industries are developing less than expected; 3: the company's production capacity expansion falls short of expectations; 4: industry competition has intensified and gross margin has declined.