occurrences

Mulai Optics released its 2024 semi-annual report: in the first half of 2024, the company achieved operating income of 0.241 billion yuan, an increase of 0.83%; realized net profit attributable to shareholders of listed companies was 0.016 billion yuan, a year-on-year decrease of 45.55%; and realized net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 0.011 billion yuan, a year-on-year decrease of 54.01%.

Key points of investment

Revenue in the semiconductor and driverless sectors increased year-on-year, and downstream demand for life sciences and AR/VR was sluggish in the first half of 2024. The company's various businesses progressed steadily. Affected by many uncertainties and challenges in the macroeconomic environment, the profit side was under pressure in the short term. The company's revenue in the semiconductor sector increased by 46.12% year on year, mainly benefiting from the wave of localization and substitution in the semiconductor sector, where demand for domestic products continues to increase. In addition, the driverless sector received more US driverless car promotion orders, and revenue increased 85.78% year over year. The life sciences sector and AR/VR testing sector saw a year-on-year decline in revenue due to poor downstream demand.

Deep-dive lithography machine DUV optical lens+inspection optical module

The precision optical devices developed, designed and manufactured by the company have been used in domestic lithography machines. They can cover deep UV DUV, and are mainly supplied to Shanghai Microelectronics. The company's semiconductor DUV optical lens is used in the lighting and exposure module of the lithography machine's optical system. It is a key component to ensure the high imaging quality of the lithography machine and provides important support for the localization of the lithography machine. At the same time, the company also developed semiconductor inspection optical modules for world-renowned semiconductor inspection equipment companies such as Camtek and KLA, which can be used for chip inspection, providing support for speeding up the performance optimization and integrated configuration of chip inspection equipment.

The fund-raising project has been postponed. It is expected to be put into operation one after another at the end of the year and the beginning of next year. The company postponed both fund-raising projects. The plant and office building related to the “High-End Precision Optical Product Production Project”, one of the fund-raising projects, have been renovated and put into use. Some of the equipment has been basically installed, commissioned, and put into trial production. It is expected to be delivered and put into production one after another in the first half of next year. The “High-end Precision Optical Product Research and Development Project” involves some testing equipment that has already been put into use and is expected to be put into use in the fourth quarter of this year and the first half of next year. New production capacity is expected to increase after the fund-raising project reaches the intended state of use.

Profit forecasting

The company's revenue for 2024-2026 is 0.532, 0.622, and 0.718 billion yuan, respectively, and EPS is 0.99, 1.18, and 1.43 yuan, respectively. The current stock price corresponds to PE of 72, 60, and 50 times, respectively. Affected by macroeconomics and poor downstream demand, the company's performance is under pressure in the short term. Currently, the market size of industrial precision optical products is relatively small. The revenue breakthrough of precision optical companies is limited by the increase in the overall capacity and volume of the entire optical industry chain. With the subsequent development and breakthrough of the domestic semiconductor industry in 2025-2026, it is expected to give the company endogenous growth opportunities and maintain an “increase” investment rating.

Risk warning

Macroeconomic risks, risk of product development falling short of expectations, risk of increased industry competition, risk of downstream demand falling short of expectations.