Han’s Laser Shrugs Off Smartphone Reliance With Diversified Industrial Exposure; Shares Attractive

We retain our CNY 49 fair value estimate on Han’s Laser, corresponding to 21 times 2022 P/E. This is a result of higher revenue forecasts (9% on average) from more upbeat projections in electric vehicle, or EV, battery and printed circuit board, or PCB, related equipment; offset by lower gross margins from 2024 onward amid escalating laser equipment competition, and higher minority interest estimates after the listing of its subsidiary Han’s CNC. We view Han’s Laser’s shares as undervalued amid fears of supply chain disruptions. We anticipate the company’s moves to address the competition by developing new equipment for EV batteries, displays and semiconductor wafer preparation can limit margin downside, while maintaining top-line growth of about 9% beyond 2026.