并购短期影响利润，中游拓展进展较快

Investment Rating - The report maintains a "Buy-A" rating for Focuslight Technologies (688167 SH) [1] Core Views - The company's short-term profitability is impacted by the SMO acquisition, but midstream business expansion is progressing rapidly [1] - Focuslight's upstream product line shows promising new product introductions, while the midstream sector is expected to maintain high growth [4] - The company's 2024-2026 net profit is forecasted to grow at 49 8%, 42 5%, and 32 2% respectively, with EPS of 1 50, 2 14, and 2 83 yuan [4] Financial Performance - 2023 revenue reached 561 million yuan (+1 69% YoY), with net profit of 91 million yuan (-28 76% YoY) [1] - Q1 2024 revenue was 137 million yuan (+17 38% YoY), but net profit turned negative at -16 million yuan (-206 61% YoY) [1] - 2023 upstream business revenue declined 4 59% to 436 million yuan, while midstream business grew 30 18% to 121 million yuan [7] - Gross margin decreased to 47 96% in 2023 from 54 3% in 2022 [7] Business Segments - Upstream business accounted for 78% of total revenue in 2023, with semiconductor lasers growing 0 19% and laser optical components declining 9 37% [7] - Midstream business contributed 22% of revenue, with automotive applications growing 31 02% and semiconductor process applications increasing 16 02% [7] - The company's Vsilk series components saw 127% revenue growth in 2023 [4] - Focuslight secured a laser radar line spot module project from AG company in Q4 2023 [4] Future Outlook - New low thermal resistance preformed AuSn substrate materials are being rapidly introduced for laser chip iteration [4] - The completion of SMO acquisition is expected to reduce profit uncertainty and restore normal profitability [4] - The company is focusing on line spot technology, having secured two domestic laser radar emission module projects in 2023 [7] Valuation Metrics - 2024-2026 P/E ratios are projected at 49 0x, 34 4x, and 26 0x respectively [4] - Current P/B ratio stands at 2 8x [19] - ROE is expected to improve from 3 8% in 2023 to 8 6% by 2026 [19]