The company is the global leader in nonlinear optical crystals, subdividing the track to build extremely high technical barriers. The company is the world's largest supplier of LBO and BBO crystals, as well as an important global supplier of Nd:YVO4 crystals. At present, it has also expanded its business into crystal components, precision optical components and laser devices. The company's LBO and BBO have a global market share of about 70% and 50% respectively, far ahead of the global market.
With the upgrading of the electronics industry and precision manufacturing driving the rapid development of the laser market, the laser industry has formed a complete and mature pyramid industrial chain distribution, and the company has taken the lead in the upstream link of laser materials and supporting optical components. establish a strong technology and customer system moat. We see that laser precision machining is being used in more and more fields, such as electronics, medical treatment, new energy, new materials and so on. With the continuous integration and intelligence of electronic products, precision manufacturing in the electronic industry has been in the upgrading stage. With 5G bringing new applications of the Internet of everything, we will see more products processed by laser. According to the forecast of Industry Perspective, the demand for laser cutting will continue to grow at a high speed. It is estimated that by 2023, the overall market size of laser cutting equipment in China will reach 40.37 billion yuan.
The company is expanding vertically according to the strategic path of "material-element-component-device". At present, it has developed into three major businesses: crystal components, precision optical components and laser devices. optical components and laser devices accounted for 30.06% and 15.87% of revenue in the first half of 2020, respectively. The company has mastered the upstream crystal core technology and extends downstream based on its own material advantages. the company will maintain the high added value of its products. In the first half of 2020, the gross profit margins of nonlinear optical crystals, laser crystal components and optical elements are 77.38%, 50.34% and 42.73%, respectively. The vertical extension of the company's products will bring new growth space and power to the company.
Earnings forecast, valuation and rating
We estimate that the operating income of the company from 2020 to 2022 is 5.43,6.24 and 677 million yuan respectively, the net profit is 1.55,1.75 and 201 million yuan respectively, and the corresponding EPS is 0.36,0.41,0.47 yuan per share respectively. The PE under the latest stock price is respectively times that of 42-37-32. Considering the strong technical barriers built by the company as the core technology company in the laser crystal field and the future growth of the laser industry, the company is given a "recommended" rating for the first time.
Risk hint: the progress of research and development is not as expected, the impact of the epidemic is higher than expected, and the demand of the laser industry is lower than expected.
