The company is a leading domestic supplier of 3D printing equipment and materials. The company has an upstream and downstream layout around the 3D printing industry chain. It is one of the few additive manufacturing enterprises in the world that also has independent R&D and production capabilities for 3D printing equipment, materials and software. It is committed to providing customers around the world with metal (SLM) additive manufacturing equipment and polymer (SLS) additive manufacturing equipment, and providing 3D printing materials, processes and services. According to data from 3D Science Valley and China Business Industry Research Institute, the company's market share of additive manufacturing equipment in China in '21 was 7%, ranking sixth (first in domestic investment).

3D printing is leading new process innovation, and downstream applications are flourishing. According to Honor's official website, the MagicVS2 titanium alloy hinge back plate of the Honor folding phone uses metal 3D printing processing technology; according to the company's WeChat account, Hangyue Technology cooperated with the company to combine 3D printing technology with precious metal (silver, etc.) cultural and creative crafts, and production efficiency can be increased by more than 80% compared to traditional methods; Nanjing University of Science and Technology independently developed the SLS preparation process for carbon fiber-reinforced PEEK composites based on the company's equipment to solve the problem of forming materials with high melting point. According to data from the Huajing Industry Research Institute, the global additive market reached US$15.2 billion in '21 and is expected to grow to US$29.8 billion in 25 years. We believe that with the iteration and cost reduction of 3D printing technology, this type of process has gradually spilled over from the military industry to the consumer industry, and has great potential for application in 3C, automotive, robotics and other industries.

Raising capital to expand production broke through capacity bottlenecks, and the forward-looking layout maintained a competitive advantage. According to the company's first round of inquiries and responses, the company's capacity utilization rate in 21 reached 112.6%, and the current production capacity can no longer meet the needs of the rapid development of the company's business scale. The company's 23-year IPO raised capital for projects such as expanding production of additive manufacturing equipment. The construction period for the expansion project was 2 years, and production reached 3 years after completion. It is expected that 381 additional 3D printing equipment will be added after delivery, continuing to enhance the company's competitive advantage.

Profit forecast and investment advice: The company is expected to achieve net profit of 1.51, 2.15, and 316 million yuan in 2023-2025, and EPS of 0.37, 0.52, and 0.76 yuan/share, respectively. The company was given 70xPE in 2024, corresponding to a reasonable value of 36.31 yuan/share, maintaining an “gain” rating.

Risk warning: product quality, market development, batch production progress, patent risk, etc.