Event: The company announced a major breakthrough in mid-infrared femtosecond laser technology and its key technologies in medical applications. As of May 21, 2024, the company has successfully developed a long-wave infrared continuously tunable desktop femtosecond laser (LWIRFS). The laser has a tuning range of 5-11 μm, maximum output power > 1 W, maximum pulse energy > 2 μJ, pulse width <300 fs, and a repetition rate of 500 kHz. This research and development result is a pioneering product in the world. Currently, there is no benchmark product in the world, demonstrating strong technical strength. In terms of company orders, in the first quarter of 2024, the company signed new orders of about 850 million yuan (tax included), and the total number of orders in hand was about 7.1 billion yuan (tax included). Using laser technology as a starting point, the company successfully entered various scenarios such as medical care, photovoltaics, lithium batteries, consumer electronics, new displays, and sheet metal processing, and crossed the industry cycle.
Medical lasers: The company has made major breakthroughs in the key technology of mid-infrared femtosecond lasers (domestically, mid-infrared with a wavelength of more than 5 μm is called long-wave infrared) and its application in the medical field. The main application prospects are minimally invasive corneal cutting and transplantation, minimally invasive ablation of atherosclerosis, selective ablation of pancreatic tumors, exfoliative and non-exfoliative minimally invasive treatment, collagen regeneration and rejuvenation medical and aesthetic applications, and hair regeneration treatment. As the company obtains Class II and Class III medical licenses for related medical products, it is expected to achieve industrialized layout and large-scale production of the medical-related industry within 3-5 years, which in turn will have a positive impact on the company's future performance.
PV business: Orders for photovoltaic laser equipment have increased 100 times, and the market share has increased rapidly. The company successfully entered the photovoltaic industry through the industry's first Topcon Laser SE doping device. The market order has exceeded 300 GW, and its market share has increased rapidly, making it one of the two oligopolies of photovoltaic laser equipment. In 2023, lasers and automation equipment in the photovoltaic industry formed large-scale inspections for the first time, with revenue of 149 million yuan and a gross profit margin of 35.4%. Currently, laser sintering (LAS) can be shipped in batches, and BC battery laser models have been verified in batches by clients.
Lithium battery business: The company achieved revenue of 3.68 billion yuan in 2023, +10.6% year over year, gross margin of 31.2%, -1.2pct year on year. The company successfully developed a high-speed laser marking/drilling machine and plans to market it in the second half of 2024; launched a high-speed turret assembly line, which is expected to be released in the second half of 2024.
3C business: The company achieved revenue of 610 million yuan in 2023, +38.9% year-on-year, and gross margin of 12%, which is basically the same as the previous year. The company launched a variety of industry-pioneering equipment such as microcrystalline glass laser cutting equipment and SMA high-speed wire hanging machines.
New display: The company achieved revenue of 190 million yuan in 2023, -17.65% year on year, gross margin of 11.5%, and -5.67 pct year on year. The company launched a huge amount of transfer equipment, and the transfer yield reached 99.99%. The transfer accuracy and transfer substrate size are at the leading level in China.
Investment advice: Based on the company's performance and industry conditions in 2023, we expect the company to achieve net profit of 3.7, 4.9 billion yuan, and 610 million yuan in 2024-2026, corresponding to PE of 23, 17, and 14X, maintaining a “buy” rating.
Risk warning: Competition in the industry intensifies, and the promotion of new products falls short of expectations.