JPT OPTO-ELECTRONICS(688025):INITIATION:LEADING MOPA LASER PRODUCER WITH DIVERSE DOWNSTREAM APPLICATIONS

类别:公司 机构:中信证券股份有限公司 研究员:CHEN Junyun/LI Yue 日期:2022-04-07

JPT is a leading manufacturer of master oscillator power amplifier (MOPA) laser in China. Through technology accumulation and continuous investment, the Company has formed two major business segments: 1) laser and 2) laser/optical intelligent equipment, with applications in the four downstream sectors of electronics, semiconductors, lithium batteries and photovoltaics. It is set to continuously benefit from industry development and the trend of import substitution and localization, and expand applications in tab cutting, welding, vertical-cavity surface emitting laser (VCSEL), VR/AR and other fields that will help it obtain more core customers and increase earnings elasticity. According to JPT’s preliminary results, it posted attributable net profit (ANP) of Rmb92mn in 2021, a YoY increase of 107.9%. We expect the figure to reach Rmb155mn/251mn in 2022/2023, an annualized growth of 67.8%/62.0% respectively. The stock is trading at 28x/17x 2022E/2023E PE. Considering the trend of rapid earnings growth and the valuation of comparable companies, we assign 45x 2022E PE to derive a target price of Rmb75 and initiate coverage with a "BUY" rating.

    JPT: A MOPA pulsed fiber laser leader with ANP doubled in 2021. Founded in 2006, JPT is the first domestic manufacturer of commercial MOPA pulsed fiber lasers with products covering MOPA, continuous wave (CW), solid-state, ultrafast and other categories. Building on its technology accumulation in light sources, JPT has ventured into the field of laser/optical equipment with products such as spectral detectors and laser resistor trimmers, becoming an integrated laser solution provider with capabilities in R&D, production and sales. In 2019/2020/2021, the Company achieved revenue of Rmb568mn/854mn/1,200mn (-14.8%/+50.4%/+40.5% YoY) and attributable net profit of Rmb64.65mn/44.30mn /92.08mn (-30.8%/-31.5%/ +107.9% YoY), respectively.

    Industry trends:

    1) Laser has become a basic technology for advanced manufacturing, and fiber lasers account for the biggest market share. According to Laser Focus World, the global laser market reached US$16bn in 2020. Among them, the three main markets of i) material processing and lithography, ii) communication and optical storage, and iii) instrumentation and sensors accounted for 39.28%/24.35%/ 12.84%, respectively. Among the many types of lasers, fiber lasers have taken increasing market share-52.68% in 2020-due to superior performance and high adaptability. 2) Industrial upgrading drives the growth of the laser industry. According to market researcher Forward Intelligence, the penetration rates of lasers in China, the US, Japan, and Germany are 30%, 42%, 44%, and 46%, respectively. There is still a gap between China and developed economies such as Europe and the US. With industrial upgrading, lasers will likely make more prominent contributions to China’s manufacturing industry going forward. 3) As the penetration of electric vehicles (EV) accelerates, power batteries will likely drive the development of the laser industry. According to Forward Intelligence, power battery demand in China will likely rise from 73GWh in 2021 to 360GWh in 2025, implying a 49.0% CAGR. MOPA pulsed laser is an ideal solution for lithium battery cutting, and related companies are likely to benefit from the rapid development of EVs. 4) The import substitution and localization of high-power lasers is ongoing, and industry leaders are capturing larger shares. According to the “Annual Report on Chinese Laser Industry”, the penetration rate of high-power (≥1.5KW) fiber lasers in China already increased from 0.80% in 2013 to 57.58% in 2020. Import substitution is accelerating and key competitors in the MOPA laser market include IPG, JPT, etc.

    JPT’s competitiveness:

    1) Strong R&D commitment, capacity investment and interest alignment with core teams via equity incentives. JPT’s R&D expenses in 2019/2020/1-3Q21 were Rmb67mn/101mn/108mn (26.4%/50.7%/58.8% YoY), indicating continued increases in R&D investment. The Huizhou JPT Fiber Laser Industrial Park has been put into operation to fully guarantee its production capacity. Through equity incentives, JPT has aligned interests with core team members to escort sustainable high-quality development. 2) Well-positioned to benefit from the localization of lithium-ion battery cutting equipment. Lithium battery processing has strict requirements on the accuracy and reliability of production equipment. MOPA laser is currently the core path of tab cutting. As the first domestic manufacturer to mass produce commercial MOPA pulsed lasers, JPT has first-mover advantage in technology and is relatively advanced in terms of single-mode maximum average power, tunable pulse width, and beam quality, and is poised to benefit from the localization process. 3) Customized intelligent equipment and development potential in multiple fields. JPT’s laser/optical intelligent equipment includes core self-developed modules such as optical modules, circuit measurement systems, motion control modules, and intelligent information management systems, all of which have good compatibility and technical synergy. The Company has extended to more niches including VR/AR, VCSEL, welding, passive components and other fields, well-positioned to acquire major downstream customers in the future and generate earnings elasticity in diverse fields.

    Potential risks:

    Product promotion falls short of expectations; market share or gross profit margin declines due to intensified market competition; attrition of major customers; the localization process of MOPA pulsed fiber lasers falls behind expectations; the demand from downstream industries such as lithium batteries, VR/AR falls short of expectations.

    Investment recommendation:

    JPT is a leading manufacturer of MOPA laser in China. Through technology accumulation and continuous investment, the Company has formed two major business segments: 1) laser and 2) laser/optical intelligent equipment, with applications in the four downstream sectors of electronics, semiconductors, lithium batteries and photovoltaics. It is set to continuously benefit from industry development and the trend of import substitution and localization, and expand applications in tab cutting, welding, VCSEL, VR/AR and other fields that will help it obtain more core customers and increase earnings elasticity. According to JPT’s preliminary results, it posted ANP of Rmb92mn in 2021, a YoY increase of 107.9%. We expect the figure to reach Rmb155mn/251mn in 2022/2023, an annualized growth of 67.8%/62.0% respectively. The stock is trading at 28x/17x 2022E/2023E PE. Considering the trend of rapid earnings growth and the valuation of comparable companies, we assign 45x 2022E PE to derive a target price of Rmb75 and initiate coverage with a "BUY" rating.