Investment Logic - The company focuses on the research and manufacturing of optical components and products, with laser optical products catering to various mainstream laser applications, and infrared thermal imaging optics primarily used for night vision, temperature measurement, and monitoring. The company achieved a revenue of 420 million yuan in 2024, representing a year-on-year growth of 14%, with a compound annual growth rate (CAGR) of 13% from 2019 to 2024. In Q1 2025, the company reported a revenue of 100 million yuan, reflecting a year-on-year increase of 21% [1]. Industry Expansion - The precision optics sector is diversifying, with the company's product layout gradually expanding. The semiconductor industry, represented by PCB and panel sectors, is deeply integrating with laser technology driven by technological iterations and AI. According to Chinese customs data, the number of semiconductor equipment imports in China from January to May 2025 was 22,000 units, down 11.5% year-on-year, indicating a decline in imported equipment. The urgency for domestic substitution of semiconductor equipment is increasing due to escalating overseas restrictions on China's semiconductor industry. The company reported a revenue of 51.09 million yuan in the semiconductor and related manufacturing sectors in 2024, up 82.3% year-on-year, and is expected to benefit from the growing demand for precision optical components in domestic semiconductor equipment. In contrast to smartphones, AR involves entirely new optical solutions, with optical display units accounting for 43% of the BOM in AR devices, representing a significant value portion. The company announced that its optical products for AR/VR have generated approximately 5.5 million yuan in revenue from major domestic manufacturers in 2024, and the consumer-grade optical business is expected to benefit positively as AR/VR devices penetrate the market [2]. Customer Orders and Performance Growth - Customer orders for laser and infrared products are steadily increasing, which is expected to drive the company's performance growth. The production of laser and infrared products involves multiple disciplines and complex processes, creating high technical barriers in the industry. Major clients such as Dazhu Laser and Hede Infrared have shown revenue growth rates of 10.8% and 45.5% respectively in Q1 2025, indicating that the recovery in revenue growth from downstream major clients is likely to boost demand for the company's laser and infrared optical products. In addition to domestic leading clients, the company is implementing a global strategy through its RONAR-SMITH and Op e x brands, serving international renowned laser and infrared companies such as IPG Photonics and FLIR. The company's overseas business revenue reached 130 million yuan in 2024, up 35% year-on-year, accounting for 31% of total revenue [3]. Profit Forecast and Valuation - The company is expected to achieve revenues of 510 million, 640 million, and 800 million yuan from 2025 to 2027, with corresponding net profits attributable to shareholders of 50 million, 70 million, and 90 million yuan. The projected price-to-sales (PS) ratios are 18, 14, and 12 times respectively. A valuation of 18 times PS for 2026 is assigned, leading to a target price of 100.08 yuan per share. The company is initially covered with a "buy" rating [4].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [4]. Core Views - The company focuses on the research and manufacturing of optical components and modules, with stable revenue growth projected to reach 420 million yuan in 2024, a year-on-year increase of 14%, and a compound annual growth rate (CAGR) of 13% from 2019 to 2024 [2]. - The company is expected to benefit from the increasing demand for precision optical components in the semiconductor and general semiconductor manufacturing sectors, with a reported revenue of 51.09 million yuan in 2024, a year-on-year increase of 82.3% [2]. - The company has also begun supplying optical products for AR/VR applications, generating approximately 5.5 million yuan in revenue in 2024 [2]. Summary by Sections Company Overview - The company operates in the midstream of the optical industry, producing optical components that cover a wavelength range from ultraviolet to far infrared [14]. Downstream Applications - The demand for precision optics is driven by various emerging fields, including semiconductors, smart manufacturing, infrared security, and consumer-level optical products like AR/VR [25]. Revenue Growth and Business Expansion - The company achieved a revenue of 99 million yuan in Q1 2025, reflecting a year-on-year growth of 20.9% [33]. - The company's overseas business revenue reached 130 million yuan in 2024, a year-on-year increase of 35%, accounting for 31% of total revenue [3]. Profit Forecast and Valuation - The company is projected to achieve revenues of 510 million yuan, 640 million yuan, and 800 million yuan in 2025, 2026, and 2027, respectively, with corresponding net profits of 50 million yuan, 70 million yuan, and 90 million yuan [4]. - The report assigns a target price of 100.08 yuan per share based on a 2026 price-to-sales (P/S) ratio of 18x [4].