Incidents:
The company released its 2023 and 2024 quarterly reports: in 2023, the company achieved revenue of 340 million yuan (-1.29% YoY); realized net profit of 0.42 million yuan (YoY -28.72%); in the first quarter of 2024, the company achieved revenue of 94 million yuan (+20.64% YoY); and realized net profit of 0.11 million yuan (YoY +72.07%).
Downstream demand is improving, and the company's performance is recovering. In 2023, due to the combined effects of downstream optical communication customers removing inventory and slowing demand from overseas telecommunications and traditional data centers, the company achieved annual revenue of 122 million yuan, a year-on-year decrease of 28.25%; in 2023, downstream demand for industrial lasers continued to recover, and the company's fiber laser sector achieved annual revenue of 184 million yuan, an increase of 16.53%; scientific research, biomedicine, consumer optics, semiconductor equipment and other application fields achieved total revenue of 340.57 million yuan, an increase of 104.53% year on year. 2024Q1, with the continuous development of cloud computing, AI and other technologies, demand for high-speed optical modules rose rapidly, the impact of downstream inventory removal in the superposition industry was gradually eliminated, and the optical communications industry as a whole picked up. The 2024Q1 company achieved revenue of 94 million yuan, an increase of 20.64% over the previous year. As downstream demand in the optical communication industry and the fiber laser industry continues to improve, the company will fully benefit.
The company continues to optimize its existing business while actively laying out the upstream and downstream industrial chain. In 2023, the company set up a holding subsidiary in Hefei to carry out functional crystal materials and device construction projects; set up a branch in Nanjing to develop AR nanoimprint diffraction waveguide products and develop AR optoelectronic products to expand into the AR field; promote the acquisition of North American GouMax to expand and improve the company's business layout in the field of optoelectronic test modules and instruments/equipment. The above series of measures helped the company extend its product line and broaden the room for business growth.
The company issued a fixed increase plan to help achieve the three major strategic goals. On May 25, 2024, the company announced a fixed increase plan. The proposed increase is no more than 485 million yuan, no more than 30% of the company's total share capital before the issuance. The net capital raised after deducting the issuance fee will be used for the three projects “Optoelectronics Key and Core Components Construction Project (Phase III)”, “Thailand Production Base Construction Project”, and “R&D Center Construction Project (Phase II)”. Through the implementation of the above fund-raising projects, the company has achieved three strategic goals: 1) expand the production capacity of existing products and enhance overall competitiveness; 2) optimize the layout of domestic and foreign production resources and broaden sales channels in overseas markets; 3) promote R&D and innovation, and expand the product matrix.
Profit forecast and investment advice: The company's net profit for 2024-2026 is expected to be 0.69/ 0.92/116 million yuan, +64.5%/+34.74%/+25.86% year-on-year. The corresponding PE is 49x/ 37x/29x, respectively, adjusted to a “buy” rating.
Risk warning: Downstream demand falls short of expectations, and the pace of customer introduction and mass production in emerging fields falls short of expectations.