On November 4, Yongxin Optics (603297.SH) once again hit the daily limit, having already experienced three gains in four days.

In the first three quarters of 2024, Yongxin Optics achieved revenue of 651 million yuan, a year-on-year increase of 6.54%. The company continues to promote technological research and development and product updates, accelerating the realization of domestic substitution. At the same time, the policy on large-scale equipment upgrades is expected to help Yongxin Optics' microscope business grow rapidly.

Steady Growth in Revenue

It is understood that Yongxin Optics is a leading domestic manufacturer of optical microscopes and precision optical components. Its main business consists of four parts: optical microscopes, barcode machine vision, automotive lidar, and medical optics. Its products include optical microscopes, barcode scanner lenses, machine vision lenses, and core components for lidar optics.

After decades of accumulation, Yongxin Optics has cultivated a group of high-quality customers and established long-term cooperative relationships with leading enterprises in niche markets such as Zeiss, Zebra, Honeywell, Cognex, Hesai, and Valeo. Cooperation with these enterprises enables the company to maintain high-level R&D and manufacturing capabilities and to gain access to cutting-edge industry technologies.

According to the company's latest disclosure, in the first three quarters of 2024, Yongxin Optics achieved revenue of 651 million yuan, a year-on-year increase of 6.54%; net profit attributable to shareholders of the parent company was 140 million yuan, a year-on-year decrease of 19.28%; and net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses was 118 million yuan, a year-on-year increase of 1.36%. The decline in net profit attributable to shareholders of the parent company was mainly due to a year-on-year decline in government subsidies in non-recurring gains and losses. Overall, the company's performance met market expectations.

For a long time, Yongxin Optics has continuously focused on its main business, strengthened market development, and enhanced brand awareness. At the same time, it adheres to innovation-driven development and optimizes its product mix. Yongxin Optics adheres to the development concept of prudent operation and promotes steady growth in the company's revenue. From 2021 to 2023, the company achieved revenues of 795 million yuan, 829 million yuan, and 854 million yuan, respectively.

Accelerating Domestic Substitution

At the beginning of 2024, Yongxin Optics proposed implementing a "dual-engine" strategy for high-end microscopes and optical components, which has yielded good results. At the same time, the company has overcome several key "bottleneck" technologies in the field of high-end scientific instruments, promoting the localization of high-end scientific instruments in China.

In the field of optical microscopes, Yongxin Optics actively responds to the demand for "localization and high-end substitution of scientific instruments" by accelerating the research and development and commercialization of high-end microscopes, driving leapfrog development of this business.

It is reported that Yongxin Optics has successively launched multiple new microscope models such as the NSR950, NCF1000, and NIB1000, and has comprehensively covered high-end microscope products priced below 3 million yuan. It can now meet most needs in fields such as life sciences, scientific research and medical care, industrial inspection, and education.

Through unremitting efforts, Yongxin Optics has further narrowed the gap with the world's top optical microscope technology. Currently, the company is the only domestic manufacturer capable of independently developing and producing super-resolution and confocal optical microscopes.

Yongxin Optics revealed at the performance briefing that the company's high-end microscopes have maintained rapid growth and have now achieved over 4% domestic substitution, marking a breakthrough from 0 to 1.

In the barcode scanning field, Yongxin Optics is a global leader in optical components for barcode scanning machine vision equipment. Starting from the product characteristics of multiple varieties, small batches, and customization, the company has extended from basic processing and assembly to providing leading technological product solutions, enabling rapid response in process and inspection and the manufacture of ultra-precision optical components.

Yongxin Optics' module business for barcode scanning giants Zebra and Honeywell is progressing smoothly, with mass shipments gradually starting in the second half of this year. To date, Yongxin Optics has become the largest shipper of global barcode optical components and will achieve an upgrade path from OEM to modularization and complexity.

In the field of lidar, Yongxin Optics has nearly a decade of research and manufacturing experience and has become an important partner of global leading lidar enterprises such as Hesai, Innovusion, and Valeo. Yongxin Optics stated that the company's sales of automotive camera front lenses have been stable, and it has won multiple AR-HUD project designations, with end products to be used by leading foreign automotive companies. In the first half of 2024, the company's automotive and lidar business achieved sales revenue of nearly 70 million yuan, a year-on-year increase of 120%.

In the field of medical optics, Yongxin Optics continues to drive the development of medical imaging and in vitro diagnostic businesses. In medical imaging, the company's supply of medical optical components to leading global medical device companies has maintained steady growth. The company's endoscopes and optical components have covered more than 70% of important domestic endoscope manufacturers. In in vitro diagnostics, the company has established cooperative relationships with multiple leading medical testing enterprises, with sales gradually increasing and the potential for future incremental contributions.

Favorable Policies

It is worth mentioning that the policy on equipment upgrades is expected to drive the rapid growth of Yongxin Optics' microscope business.

In July of this year, the National Development and Reform Commission and the Ministry of Finance issued the "Several Measures on Strengthening Support for Large-Scale Equipment Upgrades and Trade-Ins of Consumer Goods," proposing to allocate approximately 300 billion yuan in ultra-long-term special treasury bonds to strengthen support for large-scale equipment upgrades and trade-ins of consumer goods.

The aforementioned policy is conducive to boosting procurement demand for educational, experimental, and medical equipment and instruments in domestic universities, hospitals, and other fields, promoting technical equipment in education, research and development and manufacturing of high-end scientific instruments, and domestic substitution of medical equipment.

Against this backdrop, equipment upgrades in education, health, culture, and tourism continue to advance, with updates to teaching and research instruments and equipment in universities and vocational colleges driving a 3% increase in education industry investment from January to August this year.

As the country places increasing emphasis on domestically produced high-end instruments and the effects of the policy on large-scale equipment upgrades continue to emerge, new demand is gradually being unleashed. It is expected that the optical microscope business will accelerate its recovery. As a national champion demonstration enterprise in optical microscopes, Yongxin Optics' microscope business is expected to usher in new development opportunities under the support of the equipment upgrade policy.