Deer Laser | 2025 Annual Report Review: Short-term performance under pressure, photovoltaic + general semiconductor layout promising

（Source: New Perspectives on Advanced Manufacturing）

【Soochow Machinery】Zhou Ershuang 13915521100/ Li Weny i 18867136239/ Wei Yijie/ Qian Yaotian/ Huang Rui/ Tan Yixin 17851090557/ Tao Ze

Investment rating: Buy (maintained)

1 Revenue slightly increased, net profit margin declined

In 2025, total operating revenue was RMB 2.03B, +0.93% year over year. Of this, revenue from photovoltaic cell and module laser equipment was RMB 2B, +0.45% year over year, accounting for 98.55%; revenue from technical services, maintenance, and other items was RMB 0.29 billion, +46.89% year over year, accounting for 1.44%. Net profit attributable to owners of the parent company was RMB 29M, -1.59% year over year. In the fourth quarter, total operating revenue was RMB 519M, -56.10% year over year, and -58.76% quarter over quarter; net profit attributable to owners of the parent company was RMB 23M, -83.98% year over year, and -86.39% quarter over quarter.

2 Overall pressure on profitability

In 2025, gross margin was 46.6%, -0.4 percentage points year over year; net sales profit margin was 25.5%, -0.7 percentage points year over year; period expense ratio was 15.1%, -1.9 percentage points year over year. Among them, selling expense ratio was 0.7%, -0.3 percentage points year over year; administration expense ratio was 3.4%, -0.2 percentage points year over year; R&D expense ratio was 11.3%, -2.7 percentage points year over year; financial expense ratio was -0.3%, +1.3 percentage points year over year. In 25Q4, single-quarter gross margin was 49.22%, +5.69 percentage points year over year, and +5.8 percentage points quarter over quarter; net sales profit margin was 9.17%, -15.94 percentage points year over year, and -18.55 percentage points quarter over quarter.

3 Double decline in contract liabilities & inventories; cash flow improved

As of the end of 2025, the company’s contract liabilities were RMB 1.41B, -19.8% year over year. This was mainly due to the slowdown in downstream customers’ capital expenditure progress during the downcycle of the photovoltaic industry, together with adjustments to the payment terms for core photovoltaic equipment orders added in 2025, such as BC laser micro-etching equipment and equipment related to the TOPCon process, which resulted in a lower advance payment ratio compared with traditional orders. Inventories were RMB 1.57B, -8.9% year over year. This was mainly because the company entered a dense delivery period for laser equipment such as BC and TOPCon in 2025; inventories stocked in advance completed acceptance and delivery to form revenue, and the photovoltaic industry prudently controlled inventory scale and optimized the inventory structure. In 2025, the company’s operating cash flow was RMB 116M; in 25Q4, the company’s operating cash flow was RMB 105M. For both full-year 2025 and the single quarter of Q4, operating cash flow turned positive significantly. This was mainly due to an increase in cash received from sales of goods and provision of services.

4 Continuously focusing on core businesses; actively expanding into areas such as semiconductors and new displays

1）TOPCon & BC laser equipment: The core consists of laser equipment such as TCP, TCI, and LIF, as well as supporting laser equipment for copper paste/copper electroplating. TCP improves battery conversion efficiency and module power, LIF strengthens photoelectric performance, and it is compatible with industry cost reduction and efficiency improvement—making it a core leading product for N-type high-efficiency batteries; 2）Module-end system processing equipment: The company is developing a new laser welding process, which can simplify the production process, reduce damage to battery cells, improve welding quality, and enhance module efficiency. It is compatible with multiple technology routes, such as BC and TOPCon, and multiple module form factors. The company has already achieved deliveries and is continuously expanding the application market for laser equipment at the module end; 3）TGV laser micro-hole equipment: The company’s TGV equipment is used in fields such as advanced semiconductor packaging and display panels. Shipments of wafer-level and panel-level glass substrate through-hole equipment have been completed, achieving full coverage of TGV encapsulation laser technologies at both wafer level and panel level. 4）PCB equipment: Based on the company’s prior application and continued R&D of MWT battery hole-drilling technology and TGV micro-hole technology, and in combination with the PCB industry’s demand for high-density multilayer boards, the company has begun development of PCB laser drilling technology.

Earnings forecast and investment rating

Considering the order revenue recognition schedule, we adjust our forecast of the company’s net profit attributable to shareholders for 2026-2027 to RMB 0.68 (original value 0.72) / 0.79 (original value 0.76) billion. We expect net profit attributable to shareholders in 2028 to be RMB 0.90 billion. Based on the current market capitalization, the corresponding P/E ratios are 30/25/22 times, respectively. We maintain the “Buy” rating.

Risk disclosure

Risks of fluctuations in downstream demand and risks of intensifying market competition.

Soochow Machinery team

Honor of the Soochow Machinery research team

2024 New Fortune Best Analyst — Machinery industry — 4th place

2024 Wind Gold Medal Analyst — Machinery industry — 1st place

2023 New Fortune Best Analyst — Machinery industry — 4th place

2023 Wind Gold Medal Analyst — Machinery industry — 1st place

2022 New Fortune Best Analyst — Machinery industry — 3rd place

2022 Wind Gold Medal Analyst — Machinery industry — 2nd place

2021 New Fortune Best Analyst — Machinery industry — 3rd place

2021 Wind Gold Medal Analyst — Machinery industry — 1st place

2020 New Fortune Best Analyst — Machinery industry — 3rd place

2020 Sell-side Analyst Crystal Ball Award — Machinery industry — 5th place

2019 New Fortune Best Analyst — Machinery industry — 3rd place

2017 New Fortune Best Analyst — Machinery industry — 2nd place

2017 Taurus Award — Best Analyst — High-end Equipment industry — 2nd place

Bachelor’s degree in Economics from Southwestern University of Finance and Economics; Master’s degree in Business Administration from Renmin University of China. Joined Soochow Securities in 2023.

Bachelor’s degree in Economics from Shanghai University of Finance and Economics; Master’s degree in Business Administration from Renmin University of China. Joined Soochow Securities in 2025.

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