In 2023, revenue increased by 3.02% year-on-year, and net profit declined. The company's revenue for 2023 was 854 million yuan (YoY 3.02%), net profit after deduction of 235 million yuan (YoY -15.64%), net profit of not returned to mother of 162 million yuan (YoY -25.23%); of these, 4Q23 revenue was 243 million yuan (YoY 10.03%, QoQ 10.73%), net profit attributable to mother 62 million yuan (YoY -23.10%, QoQ 6.43%), net profit not attributable to mother was 45 million yuan (YoY -19.42%, QoQ) 36.42%); The decline in profit was mainly affected by a sharp decrease in exchange earnings compared to 2022 and a sharp increase in R&D and market investment. 2023 gross profit margin 38.41% (YoY-3.68pct), of which 4Q23 gross profit margin is 35.51% (YoY -7.55pct, QoQ -2.75pct).

The growth rate of revenue and net profit after deducting non-net profit was significant in the first quarter of 2024. The company's 1Q24 revenue was 216 million yuan (YoY 14.74%, QoQ -11.32%), net profit to mother of 0.46 million yuan (YoY -3.85%, QoQ -26.03%), net profit after deducting non-attributable net profit of 40 million yuan (YoY 27.09%, QoQ -11.79%); gross profit margin 37.71% (YOY-0.98pct, QoQ 2.20pct); 1Q24 R&D expenses increased by 3.00pct to 13.22%.

High-end microscopes are growing rapidly, and the first set of super-resolution microscopes has been sold. In 2023, the microscope business revenue was 414 million yuan (YoY 15.76%), with a gross profit margin of 39.29% (YoY -0.90pct). Mainly affected by the rapid growth in high-end microscope sales, the high-end optical microscope brand NEXCOPE's revenue has grown from 4 million yuan in 2018 to nearly 140 million yuan. The self-developed confocal microscope fully covers the unit price of 800,000 to 1.5 million. The NSR950 superresolution microscope was sold as the first set, and the technology has reached the world's top level.

Revenue from optical components is under pressure, and the bar code scanning business is recovering at an accelerated pace. In 2023, the optical component business revenue was 419 million yuan (YoY -6.59%), with a gross profit margin of 35.34% (YoY -6.03pct), mainly affected by inventory removal by customers related to the bar code scanning business; as inventory was gradually digested, the bar code scanning business has been growing positively quarterly since the third quarter of 2023. The company's complex barcode scanning component and module business progressed smoothly. Orders for modules from Zebra and Honeywell were received, and gradual batch shipments began in the second half of 2024.

Lidars have gone from being shipped in small batches to officially large-scale production. The company continues to maintain deep cooperative relationships with well-known domestic and foreign companies such as Hesai, Tudatong, Valeo, Innoviz, and Magna. In 2023, the automotive and lidar business achieved revenue exceeding 90 million, an increase of more than 50% over the previous year. In the first quarter of 2024, the company received new fixed points for Hesai standard lidar and fixed points for Tudatong 905 nm lidar components.

Medical optics is creating a new growth point as an emerging strategic business. The medical optics business revenue in 2023 was 63 million yuan, and it has grown by more than 50% in the past 2 years. The company's supply of medical optical components to ZEISS and BD Medical Devices of the United States has maintained steady growth. Endoscope lenses and optical components have established in-depth cooperation with several leading domestic companies in the medical segment and well-known European and Japanese companies, and achieved batch shipments.

Investment advice: We are optimistic that the company's high-end microscope upgrades and barcode scanning business will pick up new growth points, and basically maintain performance expectations. The company's net profit to mother in 2024-2026 is expected to increase by 31.9%/29.5%/24.8% year-on-year, respectively, to 3.11/4.02/502 million yuan (previous value: 308/400 million yuan), corresponding to PE 26.4/16.3 times, maintaining the “buy” rating.

Risk warning: Demand falls short of expectations, raw material price risk, exchange rate fluctuation risk, and increased market competition.