Han’s Laser Hit by China Lockdowns; CNY 49 FVE Retained on Unchanged Outlook Beyond 2022

We maintain our fair value estimate of CNY 49 after Han’s Laser posted underwhelming first-quarter 2022 results. We trim 2022 revenue and diluted EPS forecasts by 6% and 10%, respectively, mostly due to lockdown disruptions in Shanghai. However, our projections for 2023 and thereafter are largely unchanged due to long-term momentum in vehicle electrification and Internet of Things, which spurs demand for printed circuit boards and batteries. The stock is now trading at 15 times 2022 P/E, nearly its five-year low. The ticker appears oversold on lockdown fears and macroeconomic pressure, and we believe Shanghai officially exiting lockdown plus government fiscal support would improve sentiment in coming quarters.