(1) Rayco Laser: The first domestic fiber laser manufacturer, creating a domestic fiber laser industry chain.

1) Rayco Laser is the first fiber laser manufacturer in China. Its main business includes providing various fiber laser products and application solutions for laser manufacturing equipment integrators, and providing customers with technical research and development services and customized products. The product line is rich and complete. Among them, the main products are pulsed fiber lasers and continuous fiber lasers, which are all independently developed. The overall design level, product quality and performance are at the advanced level of the industry.

2) Ruike Laser maintains a leading position in the domestic fiber laser market. The company is the first domestic high-tech enterprise specializing in the development of fiber lasers and core devices and achieving large-scale production. It is an influential fiber laser R&D and manufacturer in the world. By increasing investment in R&D, increasing the automation of smart factories, adopting active market strategies and effective cost reduction and efficiency measures, and taking more measures to continue to maintain the leading position in the domestic fiber laser market, the domestic market share in 2022 was about 26.8%. Radico Laser received many achievements and honors in 2022.

(2) Acquisition of Guoshen Optoelectronics to accelerate the deployment of ultrafast laser technology 1) The gross margin of ultrafast lasers ranks first in all of the company's main businesses. On July 10, 2019, Radical Laser completed the acquisition of Guoshen Optoelectronics Technology (Shanghai) Co., Ltd., thereby speeding up the industrial layout of ultrafast lasers. Despite intense price competition in the industry in 2022 and a decline in revenue and gross profit, the gross margin of the ultrafast laser business has always ranked first among all of the company's main businesses.

2) Advantages of ultrafast lasers: ultra-fine, cold processing, wide application. Ultra-fine: Ultrafast lasers concentrate light energy in a very short period of time and in a very small space, and release huge single pulse energy and extremely high peak power. The cutting surface is neat, there is no heat diffusion, and no microcracks during processing. Cold processing: The ultra-fast laser works with the material for a very short time. The processing process does not affect the surrounding materials in the space involved, avoids heat generation and heat diffusion, and actually achieves “cold processing”. Wide range of applications: Ultrafast lasers can process almost any material and have the characteristics of accurate target positioning. The downstream application fields include military industry, semiconductors, new energy, medicine, etc., and are very wide.

(3) Adhere to technological innovation and R&D system construction, and cost control have shown results.

The company uses the original technology strategy as a starting point to systematically research and develop top-level planning, new product technology path planning and pre-research work; systematic research on market requirements and product planning; and systematic research on emerging application areas. At the same time, the R&D center established a research department for product line and technology platform development focusing on market and product development, and implemented an IPD model organizational structure and management system to form a market-oriented R&D system combining production and research, further enhancing the company's core competitiveness. The company set up special incentives to reduce costs and increase efficiency, which promoted the implementation of cost reduction and efficiency work. By promoting the implementation of the industrial space layout, the company has initially formed an industrial development pattern involving the five regions of Wuhan, Wuxi, Shanghai, Huangshi and Jiaxing. With the layout and implementation of the company's many capacity building projects, the company's industrial layout has been improved, and R&D and production capacity has been further enhanced.

(4) Profit prediction and valuation model:

The company's 2023-2025 revenue is expected to be 38.33 billion yuan, 4.854 billion yuan and 6.162 billion yuan, up 20.21%, 26.62%, 26.96% year on year; 2023-2025 net profit of 249 million yuan, 445 million yuan, 730 million yuan, up 510.00%, 78.39%, 64.22% year on year; 2023-2025 net interest rate 6.50%, 9.16%, 11.85% year on year, up 5.22pct, 2.66pct 2.69pct It was given 33 times PE in 2024, with a corresponding target market value of 14.678 billion yuan and a corresponding target price of 25.99 yuan/share, giving it a “buy” rating for the first time.

Risk warning: risk of increased price competition; risk of fluctuation in raw material prices; risk of fluctuating demand in downstream industries; risk of core competitiveness; risk of brain drain; risk of profit budget being subjective