\u3000\u3 Guocheng Mining Co.Ltd(000688) 188 Shanghai Friendess Electronic Technology Corporation Limited(688188) )
Investment logic
China is a leader in laser cutting control system and technology drives long-term development. The company is a software enterprise engaged in laser cutting control system business. Over the past ten years, it has continuously maintained product competitiveness, accumulated a good brand reputation in the industry and has a significant first mover advantage. In terms of medium and low power, the company ranks first in China’s market share; In terms of high power, the company is accelerating the pace of import substitution and the market share in China continues to increase. With the development of China’s laser cutting industry, the company has achieved rapid growth. In 201621, the compound growth rate of the company’s revenue / net profit attributable to the parent company was 49.5% / 48.9%.
The laser cutting control system has high growth and high barriers. The company’s low-power system is in a stable position, and the high-power system is accelerated to be replaced by domestic products. With the continuous progress of domestic fiber laser technology, the cost of laser cutting equipment is greatly reduced, which drives the continuous penetration of laser cutting into the downstream industrial processing field; And the downstream demand for high-power and ultra-high-power models has increased significantly. We predict that the market space of China’s laser control system will be about 3.8 billion yuan in 2025, with a compound growth rate of about 20% in four years; Among them, the high-power system reached 2.7 billion yuan and the low-power system reached 110 million yuan. At present, domestic manufacturers in the field of low and medium power systems in China have basically realized import substitution; However, international manufacturers in the field of high power still occupy the mainstream position, mainly including German Beifu, German PA, Siemens and so on. The technical indicators and performance of the company’s high-power system have reached the international leading level, and the market recognition has been continuously improved, which is gradually breaking the foreign monopoly pattern. In 21 years, the company’s bus system (high-power business) revenue was 140 million yuan, a year-on-year increase of + 98.8%, and the proportion of revenue increased to 15%; We expect the company’s bus system revenue to grow by 54.6% / 50.0% / 33.3% from 2022 to 24.
Innovation and development in multiple fields to open up the company’s long-term growth space. The company has formed a technology chain that can cover the whole process of laser cutting, and the integrity of the technology system is the world’s leading. The underlying technology in the field of industrial control is universal, and the company is expected to continuously replicate the downstream industrial application scenarios with solid underlying technology. In April 22, the company issued 3.665 million additional shares and raised a net amount of 958 million yuan. It plans to invest in the production expansion project of intelligent cutting head, welding Siasun Robot&Automation Co.Ltd(300024) , high-end drive control integration and other fields. In terms of rhythm, the intelligent cutting head business takes the lead in contributing new increment. In the 21st year, the company introduced two intelligent cutting heads to the market, and the product combination strategy of control system + intelligent hardware was highly recognized by the market, realizing a revenue of 80 million yuan, a year-on-year increase of + 647%; We predict that the sales growth rate of the company’s intelligent cutting head from 2022 to 2024 will be 175% / 83% / 50% respectively. With the gradual improvement of the company’s technology and product system, in the future, the company’s new businesses such as welding Siasun Robot&Automation Co.Ltd(300024) , high-end drive control integration and ultrafast are expected to gradually expand, opening the ceiling of the company’s growth.
Investment suggestion and profit forecast: the net profit attributable to the parent company in 202224 is expected to be RMB 740 / 970 / 1.2 billion, corresponding to 40 / 31 / 25 times of PE respectively. With reference to the valuation of comparable companies, considering the continuous high growth of the laser industry and the high growth of the company’s multi industry extension, if the company is given 46 times PE in 2022, the reasonable valuation is 34.2 billion yuan and the corresponding share price is 32.901 yuan. The rating of “overweight” is given for the first time.
Risk tip: the risk of macroeconomic fluctuations; The risk of lifting the ban on restricted shares; Risk of excessive inventory growth.
