Incidents. The company issued the “Notice on the Company's Major Breakthroughs in Mid-IR Femtosecond Laser Technology and Key Technologies in the Field of Medical Applications”: Recently, the company has made major breakthroughs in the key technology of mid-infrared femtosecond lasers and their application in the medical field.
The R&D results are the first in the world and have passed multi-party technical review and verification. 1) The long-wave infrared continuously tunable femtosecond laser developed by the company has a tuning range of 5-11 μm, an output power of more than 1 W, and a pulse width within 300 fs. The company has not only overcome the problems of power improvement and multi-wavelength tuning, but has also achieved original technical results in core optical path design, nonlinear crystal material growth, and control system design. 2) The laser's research and development results have passed technical review and certification by many authoritative review agencies, including the Sichuan Science and Technology Collaborative Innovation Promotion Association, the Southwest Information Center of the Ministry of Science and Technology, and the China National Accreditation Committee for Conformity Assessment (CNAS). The review results showed that the company's laser system has reached the international advanced level in terms of technical indicators.
Mid-infrared femtosecond laser technology has broad application prospects in the medical field. First, in ophthalmology surgery, this laser is used for minimally invasive corneal cutting and transplantation. The incision edge is smooth and recovery is rapid after surgery. Second, lasers with specific wavelengths can selectively abort pancreatic tumors, with high efficiency and little damage to normal tissue.
Furthermore, the technology also shows great potential in minimally invasive atherosclerosis ablation, exfoliative and non-exfoliative minimally invasive skin, and hair regeneration. In addition, long-wave infrared lasers also have application prospects in fields such as solid material processing, high-efficiency terahertz excitation, and time-resolved imaging of molecular structures.
With emphasis on talent and R&D, a new growth curve is expected to open up. 1) Continuous optimization of the talent structure. In 2023, of the 9 new board members of the company, 6 were PhDs, including 1 academician and 3 postdocs; among R&D personnel, the number of doctoral students and master's degree students reached 14 and 157, respectively (6 and 101 in 2022). 2) Maintain a high level of investment in R&D. In 2023, the company's R&D expenditure rate reached 11.24%, compared with +1.2pct, and further increased to 12.11% in 24Q1. 3) We believe that the company's latest breakthroughs in mid-infrared femtosecond laser technology and its medical applications have demonstrated the company's strong technical strength and innovation ability, laying a solid foundation for subsequent growth.
Profit forecasting and valuation. We expect the company's net profit for 2024/2025/2026 to be 386/4.61/556 million yuan, up 19.8%/19.5%/20.8% year over year; EPS will be 1.89/2.26/2.73 yuan. Considering the company's accelerated layout in the fields of medical lasers, healthcare, and medical beauty, we are expected to open up new growth space. We will give the company a PE valuation of 18-22 times in 2024, with a reasonable value range of 34.02-41.58 yuan/share (the company's EPS is expected to be 1.89 yuan in 2024), corresponding to a reasonable market value of 69.85 billion yuan, a “superior to the market” rating.
Risk warning. Clinical trial progress of related medical device products falls short of expectations, certification progress of related products falls short of expectations, progress in the industrialization of new technology falls short of expectations, etc.