incident. On August 30, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 0.212 billion yuan, an increase of 26.77% year on year; realized net profit of 32.8242 million yuan, an increase of 60.98% year on year; realized net profit after deduction of 31.0048 million yuan, an increase of 88.85% year on year.

Increased demand for high-speed optical communication devices, combined with the optimization of the company's product structure, helped the company's 24H1 performance grow steadily. As AI computing power drives demand for high-speed optical communication components, the company further expanded the scale of its optical communication business while actively developing businesses in emerging fields such as biomedicine and semiconductor equipment, helping the company's performance grow steadily. In the first half of 2024, the company achieved revenue of 0.212 billion yuan, an increase of 26.77% year on year; realized net profit of 32.8242 million yuan, an increase of 60.98% year on year; realized net profit after deduction of 31.0048 million yuan, an increase of 88.85% year on year. 2024Q2 achieved revenue of 0.118 billion yuan in a single quarter, up 32.12% year on year and 25.28% month on month; realized net profit of 21.5696 million yuan, up 55.74% year on year and 91.65% month on month; realized net profit after deduction of 21.3714 million yuan, up 76.91% year on year and 121.84% month on month. Benefiting from the optimization of the company's product structure and continuous improvement in operating efficiency, the company's gross margin level has grown. 2024H1 achieved a gross profit margin of 36.90%, a year-on-year increase of 10.24pct. By business, in the first half of the year, the company's main optical communication and fiber laser business achieved revenue of 0.211 billion yuan, an increase of 26.74% over the previous year, accounting for 99.89% of total revenue; other businesses achieved revenue of 0.228 million yuan, an increase of 52.63% over the previous year. The company focuses on its main business, and is steadily promoting business development in various application fields, continuously optimizing the product structure and improving the company's operational efficiency. The company's performance is expected to grow steadily in the future.

Continue to increase investment in R&D, promote business layout in key areas, and improve operational efficiency. The company continues to increase investment in R&D, keep up with industry technology trends and the localization process of high-end components, continue to develop and apply new technology products, continuously enrich the product matrix, broaden the main business application areas, and achieve more sound optical solution capabilities. 2024H1 invested 22.2683 million yuan in R&D, a year-on-year increase of 45.29%, and the R&D expenditure rate was 10.53%. In addition to focusing on the main business of optical communications and fiber lasers, the company has actively expanded emerging business fields such as scientific research, biomedicine, consumer optics, semiconductor equipment, etc., and has continuously improved its global business and production capacity layout. In the first half of the year, batch production of some products of the functional crystal materials and device construction project of the subsidiary of Hefei Holdings began; nano-imprinted diffraction waveguide products in the AR field carried out by the Nanjing branch entered the sample verification process, and the AR near-eye display optomodel initially completed product development and iteration; completed the acquisition and capital increase of the US company GouMax, included in the scope of the consolidated statement, and promoted the establishment and production line construction of Gaomai Optical Communication Technology (Fujian) Co., Ltd., a joint venture in China. On the other hand, the company purchased land in Thailand and plans to build its own factory to improve overseas order delivery capabilities in the fields of optical communications and biomedicine. In terms of financial management, in order to better adapt to the new development stage of cross-country and regional operations, the company vertically manages the finances of branches/subsidiaries in the United States, Thailand, Hefei, Nanjing, etc., and is empowered through informatization and other means to continuously improve overall operational efficiency. We believe that the company has continuously improved its business layout in key areas, and the relevant holding subsidiary's business made new progress in the first half of the year.

Furthermore, the company continues to improve the product structure and improve overall operating efficiency, and the company's performance is expected to grow steadily in the future

Profit forecasting and investment ratings. We expect the company's 2024-2026 net profit to be 0.071/0.103/0.132 billion yuan, and the 2024-2026 EPS will be 0.55/0.80/1.02 yuan, respectively. The current stock price corresponds to PE 40/27/22 times, respectively. As a high-quality domestic manufacturer of optical components and optical fiber devices, we continue to improve the product matrix and optimize production capacity, we continue to be optimistic about the company's future performance development and maintain a “buy” rating.

Risk warning: risk of declining gross margin; risk of differentiated competition; risk of product certification; risk of major customer changes.