Incidents:

The company released its 2024 semi-annual report. 2024H1 achieved revenue of 0.428 billion yuan, a year-on-year increase of 9.62%; the company achieved net profit of 99.59 million yuan to mother, a year-on-year decrease of 14.07%.

Among them, in the 24Q2 single quarter, the company achieved operating income of 0.212 billion yuan, up 4.86% year on year, down 1.62% month on month; net profit to mother was 54.03 million yuan, down 21.13% year on year, up 18.58% month on month. The company achieved a gross sales margin of 40.17% in a single quarter in 24Q2, an increase of 2.46 pcts over the previous quarter.

The 24H1 optical microscope business is temporarily under pressure, and the policy can be expected to drive repairs in the second half of the year:

2024H1's optical microscope business achieved revenue of 0.163 billion yuan, a year-on-year decrease of 12.78%.

On July 24, 2024, the National Development and Reform Commission and the Ministry of Finance issued “Certain Measures to Strengthen Support for Large-scale Equipment Renewal and Consumer Goods Trade-In”, which will coordinate the arrangement of ultra-long-term special treasury bond funds of around 300 billion yuan to increase support large-scale equipment upgrades and consumer goods trade-in. The plan is to release all capital of about 300 billion yuan by the end of August, and the industry support policy can be expected to strengthen. The company is one of the few domestic enterprises with independent R&D and manufacturing capabilities for high-end microscopes. Currently, it can meet most of the needs of high-end optical microscopes in life science, scientific research and medical treatment, industrial testing, teaching, etc. Based on historical data, industry rules, and the accelerated implementation of equipment renewal policies, the company's optical microscope business is expected to resume rapidly in the second half of the year.

With the development of modular barcode scanning, the deep accumulation of the lidar business has reached the harvest period 2024H1. Affected by the rapid recovery of bar code scanning business and large-scale mass production of lidar products, the company's optical component business achieved sales revenue of 0.254 billion yuan, an increase of 30.95% over the previous year. It is expected to maintain a good growth trend in the second half of the year. The company is the world's leading supplier of optical components for barcode scanning machine vision equipment. Based on this, the company has established a chip packaging production line and developed a variety of barcode scanning module products to achieve an upgrade path from OEM to modular and complex. In terms of lidar, the company has nearly 10 years of R&D and manufacturing experience in emerging lidar markets. It has become an important partner for leading global lidar companies such as Hesai, Tudatong, and Valeo, and is expected to develop rapidly with the industry.

Actively develop the medical optics business to help domestic replacement companies for high-end products list the medical optics business as the company's emerging strategic business, which has achieved growth of more than 50% in the past 2 years. With deep accumulation in precision processing, precision machinery, and precision assembly, the company is actively entering the medical device market and developing a variety of extreme precision medical component products such as endoscopic lenses, modules, surgical scopes, and inspection objectives. Furthermore, based on the technical accumulation of high-end microscope products, the company entered the medical device field, developed medical instruments such as embedded microscopy systems, pathological section scanners, dental surgical microscopes, etc., and gradually entered the ophthalmology, neurosurgical microscope, and high-end fundus camera markets. In the future, the company will continue to target high-end products in the industry, help replace domestic products, and strive to become a world-class supplier of medical optical instruments and core components.

Investment advice:

We expect the company's revenue growth rates from 2024 to 2026 to be 20.32%, 36.66%, and 28.56%, respectively, and net profit growth rates of 13.30%, 34.92%, and 28.93%, respectively. We maintain the company's buy-A investment rating, with a 6-month target price of $60.00, which is equivalent to a dynamic price-earnings ratio of 25.00x in 2024.

Risk warning: Industry policy implementation falls short of expectations, smart driving penetration rate growth falls short of expectations, exchange rate risk, market competition intensifies risk