Han's Laser delivered strong profit and margin improvement in 2Q26, with 3C and PCB orders supporting growth and 3D printing orders potentially emerging as the next catalyst

Overview

The report reviews Han's Laser's 2Q26 results, order mix, and outlook by business segment. BofA believes that the company's revenue and margin improvement was in line with expectations, orders for 3C, PCB, and semiconductor equipment were strong, and 3D printing equipment orders could become the next catalyst. Following minor adjustments to its earnings forecasts and valuation, it reiterates its Buy rating and slightly lowers the target price to CNY185.

Core views

Han's Laser announced its 2Q26 results and held an earnings briefing on August 20, 2026. Quarterly revenue increased 77% YoY to RMB8.3bn; gross margin was 35.5%, up 5.2 percentage points YoY and 1.5 percentage points QoQ. Operating profit excluding non-core impacts increased 436% YoY to RMB1.4bn, while net profit rose 188% YoY to RMB934mn, in line with the earnings preview. Net margin increased 4.3 percentage points YoY to 11.3%, driven jointly by gross margin improvement and economies of scale: the operating expense ratio declined 6 percentage points YoY to 18.1%. This indicates that growth during the quarter was attributable not only to revenue expansion but also to operating leverage and broader margin improvement. Orders are the report's primary basis for assessing the sustainability of subsequent growth. Management disclosed that total new orders doubled YoY to RMB21.6bn in 7M26; excluding business taxes, the figure was approximately RMB19bn. By business segment, 3C orders increased 160% YoY to RMB4bn, PCB orders rose approximately 140% YoY to RMB8.5bn, and semiconductor orders doubled YoY to RMB1.5bn. Management expects full-year 2026 revenue from 3C-related equipment to reach approximately RMB4bn, up 62% YoY, and believes the strong momentum can continue into 2027E, driven by broader adoption of new camera designs, upgrades to vapor-chamber cooling designs, and the development of AI glasses. The report also views new orders for 3D printing equipment as a new growth driver and the next potential catalyst, although the extent of the contribution will still depend on order progress and market share. PCB equipment continued to demonstrate strong resilience. Revenue from this business increased 113% YoY in 2Q26 and 109% YoY in 1H26; its 2Q26 gross margin rose to 36.5%, up 5.7 percentage points YoY and 3.4 percentage points QoQ. BofA believes that AI development will increase demand for high-end PCBs, thereby supporting the company's PCB equipment business. As one of China's largest laser equipment manufacturers and a leader in the dedicated PCB production equipment market in China and globally, the company stands to benefit from this demand transmission. For higher-margin semiconductor-related laser equipment, management expects 2026E revenue to increase approximately 30% YoY to around RMB3bn for the full year. New businesses such as fiber and TGV equipment are viewed as potential sources of long-term growth. The report forecasts adjusted net profit of RMB2.744bn in 2026E, up approximately 131% YoY, followed by RMB4.014bn in 2027E and RMB4.345bn in 2028E. EPS estimates for 2026E, 2027E, and 2028E were slightly adjusted from CNY2.66, CNY3.88, and CNY4.18 to CNY2.67, CNY3.90, and CNY4.22, respectively, representing YoY growth of approximately 130.66%, 46.29%, and 8.23%. Revenue forecasts for the same periods are RMB28.532bn, RMB39.174bn, and RMB47.864bn, respectively. The report forecasts a 2026-2028E EPS CAGR of 26% and believes the current valuation of approximately 24x 2027E P/E is not expensive; the precise figure in the forecast table is 23.5x. The target price is slightly lowered from CNY187 to CNY185, based on the average of the DCF and P/E valuation results. The DCF valuation is reduced from CNY180 to CNY175, assuming a 2% perpetual free cash flow growth rate and a 12.4% WACC. The reduction reflects lower medium-term free cash flow forecasts, with projected free cash flow increasing from RMB361mn in 2026E to RMB4.166bn in 2027E and RMB5.216bn in 2028E. The P/E valuation rises from CNY194 to CNY195 due to higher earnings forecasts, based on an unchanged target P/E of 50x 2027E, approximately two standard deviations above the company's ten-year historical average, to reflect the Apple supply-chain upcycle and the growth rate of the PCB business. After combining the two valuation approaches, BofA reiterates its Buy rating and identifies upgrades in handset design and manufacturing technology, AI-driven demand for high-end PCBs, and progress in 3D printing equipment orders as the main growth and catalyst drivers.

Analysis framework

The report first breaks down 2Q26 revenue, gross margin, the operating expense ratio, and net profit to identify the sources of earnings growth. It then uses management's disclosed 7M26 orders to assess the growth strength and 2026-2027 outlook for the 3C, PCB, and semiconductor businesses, and accordingly makes minor adjustments to its 2026-2028 earnings forecasts. For valuation, it separately applies DCF and a 2027E P/E methodology to derive fair values, averages the two to determine the target price, and ultimately maintains its rating after considering the current valuation, earnings growth, potential catalysts, and clearly identified downside risks.

Methodology notes

• Valuation MethodDCF

  Discounted cash flow valuation

  The report discounts forecast free cash flow using a 12.4% WACC and assumes a long-term perpetual free cash flow growth rate of 2%. Due to lower medium-term free cash flow forecasts, the DCF fair value declines from CNY180 to CNY175.

• Valuation MethodPE/PEG valuation

  Target P/E valuation based on 2027E EPS

  The report applies a target P/E of 50x to 2027E EPS, deriving a fair value of CNY195. This multiple is approximately two standard deviations above the company's ten-year historical average and reflects the Apple supply-chain upcycle and PCB business growth.

• Valuation Method

  Equal-weighted average of DCF and P/E valuations

  The final target price is based on the average of the DCF fair value of CNY175 and the P/E fair value of CNY195, resulting in CNY185 rather than relying on a single valuation methodology.

• Industry/Sector Analysis FrameworkUpstream, Midstream, and Downstream Industry Chain Transmission

  Transmission of end-product design upgrades and AI demand into equipment orders

  The report links upgrades in handset camera, vapor-chamber cooling, and AI glasses designs, together with AI-driven demand for high-end PCBs, to growth in orders and revenue for 3C, PCB, and laser processing equipment.

• Corporate Fundamentals and Financial Framework

  iQmethod standardized financial metrics framework

  The report uses BofA's iQmethod to present operating performance, earnings quality, and valuation metrics on a standardized basis, supported by the analyst model and historical and forecast data from the three financial statements for cross-period comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Han's Laser (002008.SZ)

  The report believes the company benefits from upgrades in handset design and manufacturing technology, AI-driven demand for high-end PCBs, and the development of new equipment businesses such as semiconductors and 3D printing.

  Strengths

  One of China's largest laser equipment manufacturers; a leader in the dedicated PCB production equipment market in China and globally; 7M26 orders doubled, while 2Q26 gross and net margins improved significantly.

  Weaknesses

  Medium-term free cash flow forecasts were lowered, while growth in new businesses remains dependent on order fulfillment, market share, and the pace of technological upgrades.

  Comparison

  The report believes that approximately 24x 2027E P/E is not expensive relative to the 26% 2026-2028E EPS CAGR; the 50x target P/E is approximately two standard deviations above the company's ten-year historical average.

  Risks

  Consumer electronics demand, upgrades in handset manufacturing technology, PCB growth, 3D printing market share, margins, competition, and progress in ultrafast laser drilling equipment could all fall short of expectations.

Key data

• 2Q26 RevenueRMB8.3bnUp 77% YoY
• 2Q26 Net ProfitRMB934mnUp 188% YoY, in line with the earnings preview
• 2Q26 Operating Profit (clean EBIT)RMB1.4bnUp 436% YoY
• 2Q26 Gross Margin35.5%Up 5.2 percentage points YoY and 1.5 percentage points QoQ
• 2Q26 Net Margin11.3%Up 4.3 percentage points YoY
• 2Q26 Operating Expense Ratio18.1%Down 6 percentage points YoY
• Total New Orders in 7M26RMB21.6bnDoubled YoY; approximately RMB19bn excluding business taxes
• 7M26 Orders by Business Segment3C RMB4bn; PCB RMB8.5bn; Semiconductor RMB1.5bnUp 160%, approximately 140%, and 100% YoY, respectively
• 2026 Revenue Guidance for 3C-related EquipmentApproximately RMB4bnManagement expects 62% YoY growth
• 2026E Revenue from Semiconductor-related Laser EquipmentApproximately RMB3bnManagement expects approximately 30% YoY growth
• 2Q26 PCB Equipment PerformanceRevenue up 113% YoY; gross margin 36.5%Gross margin increased 5.7 percentage points YoY and 3.4 percentage points QoQ
• 2026E-2028E EPSCNY2.67 / CNY3.90 / CNY4.22Previous estimates were CNY2.66 / CNY3.88 / CNY4.18, respectively
• 2026E-2028E Adjusted Net ProfitRMB2,744mn / RMB4,014mn / RMB4,345mnYoY growth of 130.66%, 46.29%, and 8.23%, respectively
• 2026-2028E EPS CAGR26%Used for comparison with the current valuation of approximately 24x 2027E P/E
• Target PriceCNY185Previously CNY187; DCF valuation CNY175, P/E valuation CNY195
• Key DCF Assumptions2% perpetual growth rate; 12.4% WACCLower medium-term free cash flow forecasts reduce the DCF value from CNY180 to CNY175
• P/E Valuation Assumption50x 2027E P/EApproximately two standard deviations above the ten-year historical average, with fair value increasing from CNY194 to CNY195

Impact & implications

The report believes that Han's Laser's growth foundation has expanded beyond pure revenue growth to encompass joint improvements in orders, product mix, and operating leverage. Upgrades in 3C designs and AI-driven demand for high-end PCBs can continue to support the core businesses, while semiconductor, 3D printing, fiber, and TGV equipment provide incremental growth. Among these, progress in 3D printing orders is viewed as the most notable near-term potential catalyst. On the other hand, lower medium-term free cash flow forecasts weigh on the DCF valuation. As a result, despite a slight increase in earnings forecasts, the blended target price is still trimmed from CNY187 to CNY185.

Risks

• Growth in demand for consumer electronics products may slow.
• Progress in handset manufacturing technology upgrades may be slower than expected.
• The company's market share in 3D printing equipment may be lower than expected.
• Growth in the PCB business may be lower than expected.
• Margins may be lower than expected.
• New entrants may intensify competition.
• Progress in ultrafast laser drilling equipment may be slower than expected.

What to watch

• Track progress in new orders for 3D printing equipment, which the report views as the next potential catalyst.
• Monitor whether 2026 revenue from 3C-related equipment can reach approximately RMB4bn and whether the strong momentum can continue into 2027E.
• Track the adoption of new camera designs, vapor-chamber cooling designs, and AI glasses, as well as their impact on equipment orders.
• Monitor whether PCB equipment revenue, orders, and gross margin can maintain strong growth, as well as the realization of AI-related demand for high-end PCBs.
• Track the 2026E revenue growth target of approximately 30% for semiconductor-related laser equipment and the revenue expectation of approximately RMB3bn.
• Monitor whether new businesses such as fiber and TGV equipment can gradually become long-term growth drivers.