Incident: On February 23, 2024, the company released its 2023 performance report. It is expected to achieve annual revenue of 454 million yuan, +3.45% year over year; net profit to mother of 486.205 million yuan, -17.61% year over year; deducted non-net profit of 35.7562 million yuan, or -32.06% year over year.

Full year results are in line with expectations. The overall results of the company in 2023 were in line with expectations. Among them, the slowdown in revenue growth is mainly due to the short-term impact of product iterations from major customers in the life sciences sector. In addition, major customer products in the AR field are in the R&D stage, and demand fluctuates. The year-on-year decline in net profit due to the company's continuous increase in R&D and market development investment and the introduction of high-end talents in the industry, leading to a significant increase in R&D/management expenses. On a quarterly basis, 23Q4 achieved operating income of 904.1 billion yuan, -6.78% YoY, -22.02%; net profit to mother of 0.12 billion yuan, +89.34% YoY, +59.84% month-on-month; deducted non-net profit of 0.06 billion yuan, +1.62% YoY and +31.80% month-on-month.

We continue to increase investment in R&D and have comprehensive optical solution capabilities. Precision optics are demanding on the manufacturing process, and the accuracy can reach the nm level. The company has now mastered the optical manufacturing process of the entire process of polishing, edging, coating, molding, gluing, assembly, and testing, as well as five core technologies: precision optical coating technology, high-surface ultra-smooth polishing technology, high-precision optical bonding technology, optical lens and system design technology, and low-stress high-precision assembly technology. The technical level is leading in the country. In addition to this, the company is also one of the few domestic manufacturers with the core optical lens preparation capability in the lighting, imaging and measurement systems of lithography machines.

Actively promote the global layout and promote the company's continued growth. The company is actively expanding overseas. It has not only set up a production base in Thailand to process optical components, assemble and test optical lenses and modules; it has also set up an R&D center in the US to provide American and European customers with optical calibration technical services and diagnosis of technical problems. In addition, the company's sales network covers Europe, North America, the Middle East and other countries and regions, supporting the continuous growth of the company with a perfect operation management system and marketing service system.

Profit forecast: The company's revenue for 2024-25 is estimated to be 545 million yuan and 663 million yuan, respectively; net profit to mother is 0.74 billion yuan and 93 million yuan, respectively, maintaining the “increase in holdings” rating.

Risk warning: High-end product launch progress falls short of expectations; there is a risk of declining terminal demand.