The laser equipment industry is leading, and the three major business scenarios are clear. The company has formed three major business patterns: intelligent manufacturing business, connectivity business, and sensing business. The intelligent manufacturing business has the advantages of leading domestic laser equipment R&D, manufacturing technology and the entire industrial chain in the field of industrial lasers; the connectivity business has vertical integration capabilities for a full range of products from chips to devices, modules, and subsystems; in the sensing business, the sensor business maintains a leading position in the new energy vehicle and smart home industries, and products such as temperature sensors, PTC heaters, and pressure sensors are being introduced rapidly in the upstream and downstream industries of new energy sources such as photovoltaic energy storage, power batteries, motor systems, and charging guns/seats.
Intelligent manufacturing business: fully benefit from the expansion of downstream application scenarios. 23 In the first three quarters, the laser equipment and intelligent manufacturing business achieved revenue of 2.26 billion yuan and net profit of 260 million yuan, an increase of 46% over the previous year. Expansion of laser equipment application scenarios: In the field of new energy vehicles, the company has developed a number of “domestic alternatives, industry-leading, specialized and new” products such as automatic welding of electronic trays, high-frequency welding and laser cleaning; in the semiconductor field, the company has developed new products such as medium power intelligent welding, automatic bipolar plate welding production lines, and semiconductor wafer cutting equipment to solve technical problems; in the field of intelligent manufacturing, the “laser+intelligent manufacturing” overall solution has been sold at leading enterprises.
Connectivity business: In-depth layout of optical modules, domestic substitution boosts development. According to LightCounting data, the global optical module market CAGR is expected to be 10% from 2022 to 2027, and the global optical module market will exceed 20 billion US dollars in 2027. The company launched 800G high-speed optical module products and the world's first 400GZR+Pro coherent optical module product, which is currently progressing smoothly; the 25G laser chip for 5G produced by the participating subsidiary Yunling Optoelectronics passed verification by international giants in June 2021 and achieved mass production in March 2022, achieving nationwide production in the industrial chain.
Perception business: leading the smart home field and expanding the application of new energy vehicles. The company develops overseas customers such as Daikin and Whirlpool, and maintains a leading position in the market share of temperature sensors in the white electronics market. The new energy PTC thermal management system business covers nearly 80% of domestic NEV brands. In 2023, shipments of various products such as NEV thermal management systems, pressure sensors, and integrated sensing sensors for vehicles reached a record high, and the market share continued to increase, making it a Chinese brand capable of competing on the same stage with German, Japanese, and Korean companies. In terms of laser anti-counterfeiting business, the company independently develops plastic-based bronzing paper and common IMR core technology, and product performance indicators surpass international competitors.
We predict that the company's earnings per share for 2023-2025 will be 1.00, 1.37, and 1.72 yuan, respectively. Based on the 24-year average PE valuation level of comparable companies, the corresponding target price is 34.25 yuan, which is the first purchase rating.
Risk warning
Downstream demand growth falls short of expectations; market competition intensifies; optical module business progress falls short of expectations; laser business circuit expansion falls short of expectations; PTC's thermal management penetration rate falls short of expectations; changes in assumptions affect measurement results.