Matters:
The company released its 2024 quarterly report: the company achieved revenue of 78 million yuan in the first quarter, an increase of 35.74% year on year; realized net profit due to mother - 014 million yuan, a year-on-year decrease of 189.78%; realized deduction of non-net profit - 0.17 billion yuan, a year-on-year decrease of 124.97%.
Commentary:
24Q1 revenue increased significantly year-on-year, and net profit attributable to mother was briefly under pressure. The large year-on-year increase in the company's 24Q1 revenue was mainly due to the company's business strategy of “open source” and “exploration”; the decline in net profit was mainly due to the company's continuous increase in key investment in R&D and sales in order to accelerate the development of new business and increase market opportunities. R&D expenses and sales expenses increased significantly year-on-year, etc. 24Q1 sales expenses were 9.053 million yuan, +66.54% year over year.
The company continues to increase investment in R&D, focusing on emerging fields. The company continues to increase investment in R&D and actively lays out emerging application fields such as photovoltaics, biomedicine, and semiconductors. 1) Biomedicine: The company has carried out pioneering work in the field of high-value medical devices and photoacoustic imaging. The equipment and manufacturing capacity in the field of high-value medical implant/interventional devices have filled the domestic gap, and its imaging accuracy and speed in the field of photoacoustic microscopy have reached the world's leading level. 2) Photovoltaics: The company's photovoltaic products are positioned as key equipment to provide customers with benefits to meet the core needs of customers to improve quality, increase efficiency and reduce costs. From TopCon Laser SE direct mixing equipment to LSP equipment, the performance has reached industry-leading levels. In '23, the company's photovoltaic business added two mass-produced products, including LSP, and three products under development, including LSO, which were recognized by leading photovoltaic cell customers. 3) Semiconductors: The company's semiconductor products are mainly lasers with silicon carbide annealing processes. Our customers are well-known foreign semiconductor equipment companies, and we are also continuing to develop the laser market for silicon-based semiconductors. 4) Next-generation display: Micro LED display technology is regarded as a new generation of display technology; the company launched a new microLED business in 2023 to develop a large-scale transfer process demonstration line.
Collaborative expansion of domestic and overseas markets to broaden the company's future growth boundaries. Relying on the American subsidiary AOC, the company has established R&D centers at home and abroad. The US R&D center focuses on cutting-edge and fundamental laser technology research; the domestic R&D center uses the advantages of localization to meet the needs of the domestic application market and transform basic research into products.
Investment advice: Considering that the manufacturing boom falls short of expectations, we will lower the company's revenue and profit expectations as appropriate. We expect the company to achieve revenue of 4.57 (previous value 4.57), 5.65 (previous value 6.16), and 698 million yuan respectively, and realized net profit to mother of 0.25 (previous value 0.54), 0.47 (previous value 0.91), and 85 million yuan, respectively. The corresponding EPS is 0.16 yuan, 0.31 yuan, and 0.57 yuan respectively. Referring to the valuation level of comparable companies, based on the fact that China's industrial development is at a critical stage of transformation and upgrading, demand for cutting-edge technology represented by micro-nano manufacturing and ultra-precision manufacturing is increasing. Considering that the company is a scarce technology-driven company that can manufacture nanosecond and ultrafast lasers, emerging application scenarios are gradually opening up and maintaining a “recommended rating”.
Risk warning: Consumer electronics industry boom falls short of expectations; development of new application scenarios falls short of expectations, overseas business expansion falls short of expectations; new product development falls short of expectations, accounts receivable repayment falls short of expectations, inventory calculation risks, etc.