Juguang Technology (688167)
Key investment points
Event: on April 27, the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 476 million yuan, a year-on-year increase of 32.21%; The net profit attributable to the parent company was 677616 million yuan, a year-on-year increase of 94.33%; The net profit attributable to the parent company after non deduction was 485207 million yuan, a year-on-year increase of 148.35%. In the first quarter of 2022, the company achieved revenue of 111 million yuan, a year-on-year increase of 20.77%; The net profit attributable to the parent company was RMB 201524 million, with a year-on-year increase of 120.92%.
High performance growth and profitability improvement.
(1) the high-speed growth of the company’s performance is mainly due to the breakthrough of the upstream core component business and the rapid growth of the midstream photon Application module and system: ① the upstream core component business of the company continues to expand its market share in the application fields such as medical health and advanced manufacturing, while the new businesses such as optical field homogenizer and prefabricated gold tin film ceramic heat sink have made positive progress; ② The company’s photon application modules and systems for the midstream are progressing smoothly in key markets such as pan semiconductor process and automotive applications. The semiconductor integrated circuit wafer annealing system has achieved small batch delivery. At the same time, it has obtained a written fixed-point notice of the second automotive application emission module project, and is continuously delivering samples and product verification.
(2) improvement of profitability. In 2021, the company’s gross profit margin and net profit margin were 54.26% and 13.64% respectively, with a year-on-year increase of + 3.25pct and + 4.31pct respectively. The increase of the company’s gross profit margin is mainly due to the continuous promotion of the company’s strategic restructuring, the new back-end production line of laser optical components and the R & D and import production of optical coating in Dongguan Juguang, which has greatly improved the production efficiency of laser optical components, thus improving the company’s comprehensive gross profit margin.
(3) the overall cost rate decreased during the period. In 2021, the company’s sales expense rate / management expense rate / R & D expense rate / financial expense rate were 7.11% / 14.79% / 14.25% / 2.43% respectively, with a year-on-year increase of -0.97 / – 1.13 / – 5.17 / + 2.30pct respectively. The decrease in the rate of sales, management and R & D expenses is mainly due to the rapid growth of the company’s revenue and the strengthening of expense control; The increase of financial expense rate is mainly due to the increase of exchange loss caused by exchange rate fluctuation.
Deeply cultivate components, build a high barrier moat, expand midstream applications and open up growth space.
(1) the company deeply cultivates upstream components and constructs a high barrier technical moat. The laser industry is in a period of rapid development, and the upstream component market is growing steadily. The company has deeply cultivated the upper reaches of the industry and built a high barrier technical moat. The company has mastered nine core technologies such as eutectic bonding, thermal management, line spot shaping and beam conversion, and has reached the leading level in the industry. At the same time, the company continues to make positive progress in new businesses such as prefabricated gold tin film ceramic heat sink and optical field homogenizer.
(2) entering the blue ocean market of lidar is expected to achieve rapid growth. With the rapid development of automatic driving, the lidar market has exploded. According to iResearch consulting data, the on-board lidar market is expected to grow from 460 million yuan to 5.47 billion yuan from 2021 to 2025, with a compound annual growth rate of 85.8%. The company’s main products include laser light source, end light source and optical emission line. The company has reached cooperation intentions or established cooperation projects with a number of well-known enterprises and signed batch supply contracts with Continental Germany. Now it has entered the stage of mass production. Lidar is expected to become the first midstream application scenario for large-scale realization of the company.
(3) expand the field of medical aesthetics and create a new growth pole. Laser medical treatment is an emerging market based on the photothermal theory of biological tissue. Due to the characteristics of covering a wider wavelength, semiconductor laser has been gradually applied in many fields, such as hair removal, lipolysis, fluorescence imaging and so on. The company’s layout includes laser hair removal, laser fluorescence imaging, laser lipolysis and other fields. The company signed a long-term exclusive strategic cooperation agreement with cyden, a global well-known manufacturer of household medical and health equipment, with a total value of about 800 million yuan, to develop household laser medical related businesses. In January 2022, the company announced that it planned to invest 500 million yuan in Shaoguan City, Guangdong Province to build a medical and health industry base project. The company’s medical and beauty business is progressing smoothly and is expected to meet the rapid development.
(4) develop pan semiconductor business and help the company grow. Laser is widely used in the field of Pan semiconductor. Based on the technology accumulation in the field of components, the company arranges lithographic components, semiconductor wafer annealing, integrated circuit detection, laser stripping and annealing of display panel. At present, it has entered into a number of well-known large customers, including Shanghai microelectronics, Beijing Huazhuo Jingke, TSMC, Korean DIT, American Kelei and other well-known semiconductor enterprises. The pan semiconductor business is progressing smoothly and is expected to promote the rapid growth of the company.
Profit forecast: the company will go deep into the upper reaches of the laser industry, develop and build high-tech barriers for a long time, and expand to the three application fields in the middle reaches. It will usher in rapid growth in the next few years. It is estimated that the operating revenue of the company from 2022 to 2024 will be 706 million yuan, 1243 million yuan and 1540 million yuan respectively, and the net profit attributable to the parent company will be 121 million yuan, 197 million yuan and 247 million yuan respectively, corresponding to 63.4, 39.0 and 31.1 times of PE respectively. Maintain the “overweight” rating.
Risk tips: the development of lidar industry is less than expected, the performance growth is less than expected due to the non smooth implementation of the framework agreement, the risk of transnational operation and trade policy, and the risk that the information used in the research report is not updated in time.
