Description of the event

The company released its 2023 annual report and 2024 quarterly report. Revenue for the full year of 2023 was 220 million yuan, +11.00% year over year; net profit to mother was 42 million, +8.05% year over year; net profit after deducting non-return to mother was 28 million yuan, -23.97% year over year. According to this estimate, 23Q4 revenue was 66 million, +20.69% year over year; net profit to mother was 0.09 million yuan, +23.32% year over year; net profit after deducting non-return to mother was 10 million yuan, +44.49% year over year.

2024Q1 revenue was $49 million, +3.10% YoY; net profit attributable to mother was $0.07 million, or -43.59% YoY; net profit without return to mother was $0.05 billion, or -40.21% YoY.

Incident comments

Continuing to advance research and development, initial market development performance is under pressure. 2024Q1's gross margin was 58.89%, +0.59pct year over year.

On the cost side, the cost ratio increased by 7.86 pct year on year during the 2024Q1 period. Among them, the R&D/management/sales expenses ratio was 25.85%/15.62%/12.57%, respectively, an increase of 2.95pct/4.11pct/0.34pct. The main reason was that the company increased investment in personnel and market development, and related expenses increased. The company's 24Q1 net margin was 13.76%, -11.71pct year-on-year. Overall, at present, the company's R&D share is still high, and the scale effect in the early stages of market development has yet to be seen.

The expansion of new categories and new scenarios is expected to gradually open up market space.

In terms of new products: 1) Revenue from high-end galvanometer control systems increased 8.84% year-on-year in mid-23. Although the sales revenue of servo control systems is still low, the company adjusted its strategy in a timely manner, focused on product function development, and joint marketing with partners, and is expected to achieve a breakthrough in 24 years. 2) The company continues to carry out key technology research and development of high-precision galvanometer motors and galvanometer products. Product production capacity, performance and production yield have been gradually improved. G3 series products have been recognized by customers, and Japan-related technology introduced by Suzhou Jientai has also been gradually introduced into production. Most of the performance indicators of the newly launched FalconScan series and high-power welding galvanometer products have reached international standards. At the same time, the company cooperated with universities to develop and commercialize high-end five-axis galvanometers. The company's sales revenue for galvanometer products increased by 42.46% year-on-year in '23. 3) Self-developed laser precision resistance adjustment equipment has achieved great technological progress. Among them, precision resistance control equipment used in MEMS device production has been recognized by customers in the aerospace field, and alloy ultra-low resistance repair equipment has been ordered and delivered.

In terms of new fields: While maintaining product market share in 23 years, the company actively expanded into higher-end application fields such as new energy power batteries, aerospace, and photovoltaics. It provided high-performance laser processing solutions in various application fields such as silicon wafer marking, disc flight cleaning, disc flight welding, glass cutting and drilling, and large format linkage splicing, and reached many collaborations.

The layout of the infinite field of view is linked to the intelligent control system+laser 3D printing control system, which is expected to build the company's core competitiveness and contribute to increased performance in the long term. 1) The company's current infinite field of vision linked intelligent control platform can be maturely applied to the fields of laser marking, welding and cutting. 2) The company can provide high-precision and high-reliability 3D printing software and hardware solutions for laser 3D printing application scenarios. Furthermore, the company has now completed the development of SLA and SLM 3D printing software and has entered the batch application stage.

Maintain a “buy” rating. The company continues to improve and optimize the existing technology system, expand new products+new application scenarios, and is expected to continue to contribute growth points in the future. In 2024-2026, the company is expected to achieve net profit of 0.49, 0.58, and 76 million yuan, corresponding to PE of 41, 35, and 27 times, maintaining a “buy” rating.

Risk warning

1. Risk of new product market development falling short of expectations; 2. Risk of market competition affecting prices.