Chinese laser and laser/optical intelligent equipment giant enterprise. The company's main business is R&D, production and sale of lasers and intelligent equipment mainly used for precision inspection and microprocessing of integrated circuits and semiconductor optoelectronic devices. The company is the first manufacturer of commercial “MOPA pulsed fiber lasers” in China and a leading provider of intelligent equipment for optoelectronic precision inspection and laser processing. The various core lasers and laser/optical intelligent equipment products produced by the company have been recognized by leading global manufacturers of consumer electronics, semiconductors, optoelectronic components and power batteries such as North American companies, M, Intel, Guoge, Housheng Electronics, ST Semiconductors, Shunluo Electronics, and Ningde Times, BYD, and FAW Fudi. In 2023, the company achieved revenue of 1,226 billion yuan, an increase of 4.46% over the previous year, and achieved net profit of 107 million yuan, an increase of 39.87% over the previous year; with 2024Q1, the company achieved revenue of 256 million yuan and net profit of 26.29 million yuan.

The company values shareholders' rights and rewards shareholders with repurchases and dividends. In June 2024, the company issued an annual equity distribution implementation notice. The company plans to distribute a cash dividend of 3.50 yuan (tax included) to all shareholders for every 10 shares based on the total share capital registered on the share registration date for the share repurchase of shares in the company's special securities account. The total actual profit distribution is RMB 33.168 million. In February 2024, the company approved the repurchase plan. The repurchase of shares will be used in employee stock ownership plans or share incentive plans, and to protect the company's value and shareholders' rights. The repurchase price is not more than RMB 100.00 per share, and the total repurchase capital is not less than RMB 20 million and not more than RMB 30 million.

Profitability continues to increase, and the XR inspection equipment business is expected to grow at an accelerated pace. The company's gross margin in 2023 was 41.11%, a significant increase of +5.48pct over the same period. It is mainly due to the company's continuous expansion in the field of new energy. The sales share of medium- and high-power pulsed lasers increased compared to 2022, and continuous light lasers also switched from cutting applications to new energy related laser welding applications. The JPT intelligent spectral detector entered the North American customer supply chain in 2014, and orders grew rapidly. A number of XR testing devices received orders from leading customers in the consumer electronics industry in 2022 and completed delivery and acceptance of most products. At present, the company has communicated with customers about the testing needs of next-generation testing equipment, and the company is also continuing to approach new customers. We expect that as XR products continue to become popular, XR inspection equipment will have more market space.

Investment advice: Due to the recovery in demand for downstream consumer electronics and new energy sources falling short of expectations, we lowered net profit to mother from 24-25 to 175/278 million yuan (down by 32.2% and 28.0%), and added net profit to mother for 26 years to 343 million yuan. The current market value corresponds to PE of 25X/ 15X/ 13X. As a leading laser manufacturer, the company is expected to benefit deeply from North American customer hardware innovation and maintain a “buy” rating.

Risk warning: risk of unstable international trade environment, risk of iterative technological upgrading, risk of R&D failure.