Report highlights

The core supplier of global fluorescent hard lens giants. The launch of new models is driving upstream demand. Currently, Haitai Xinguang fluorescence endoscopy instruments mainly supply core components such as light source modules, fluorescence endoscopes, and adaptable lenses for the American device giant Stryker's complete hard endoscope platform. The company began cooperating with Stryker in 2008 and has become a design and manufacturer supplier for the core components of the company's new equipment. Stryker is currently the world's leading fluorescence endoscope company. Endoscope revenue has increased by more than 25% in the past three years. Stryker released 1788 ultra-high definition fluorescent hard mirror products in the second half of 2023, further expanding its global market share, and demand for core components increased significantly. Haitai Xinguang has been deeply tied to the business over the years. With the good sales performance of Stryker's fluorescent hard lenses around the world, new orders are expected to gradually land, speeding up the continuous release of the company's core products.

There is broad replacement space for hard fluorescent endoscopes. Hard endoscopes with independent brands entering the domestic market can be distinguished between white light endoscopes and fluorescence endoscopes. Due to the remarkable academic value and treatment value advantages of complete fluorescence systems in abdominal surgery treatment plans, the market size and share of fluorescence products are increasing year by year. From 2015 to 2019, the global white light hard mirror market decreased slightly from US$4.64 billion to US$4.38 billion, with a compound annual growth rate of -1.4%; the fluorescent hard mirror market is expected to grow rapidly in the future, growing at a compound annual growth rate of 24.3% to US$3.87 billion in 2024, and its share gradually increased from 22.9% in 2019 to 53.5%. The company has been deeply involved in the optical industry for many years, and has a first-mover advantage. It has actively developed a complete machine system and successfully registered its own complete machine brand at the end of 2023. Currently, it is expected to lead the domestic fluoroscopy market through three channels: China's Stryker, Sinopharm Xinguang, a joint venture with Sinopharm Group, and the company's own channels.

Supported by core technology, rich optical product line

Based on optical technology capabilities, the company provides optical products and optical components for various fields such as biomedicine, industrial lasers, and biometrics. According to the application, the company's optical products can be divided into three categories: medical optical products, industrial and laser optical products, and biometric products, which are used in terminal products such as diagnostic equipment/instruments, beauty machine equipment, industrial laser equipment, and fingerprint and palm print recognition systems. The optical product line is rich and the application scenarios are broad, and it is expected to continue to drive the company's performance.

Investment advice and profit forecasting

With the rapid development of fluorescent hard lenses in the global market and the introduction of the company's complete system, the company will benefit significantly and enter a period of rapid development. It is estimated that in 2024-2026, the company's revenue will be 6.07, 7.19, and 881 million yuan, respectively, up 28.91%, 18.57% and 22.41%; net profit attributable to the company's parent company shareholders will be 1.96, 2.39, and 295 million yuan, respectively, up 34.72%, 21.62% and 23.56% year-on-year; corresponding basic earnings per share will be 1.61, 1.96 and 2.43 yuan/share, respectively. Based on the latest stock price estimates, the corresponding PE valuations are 29, 24 and 19 times, respectively. First coverage, giving the company a “buy” investment rating.

Risk warning

The company's R&D falls short of the expected risk, the product volume falls short of the expected risk, and the risk of relying on a single overseas customer is too high.