Analysis of the Impact of Raycus Laser's Price Hike Moratorium Strategy Amid Rising Raw Material Costs

Based on the collected data and analysis, I now provide you with a systematic, comprehensive professional analysis report.

According to laser industry chain research data, raw materials account for approximately 90% of the total cost in the cost structure of laser equipment, with the cost of lasers, core components in the midstream, accounting for about 30%-50% [1]. The sharp rise in prices of raw materials such as copper, aluminum, and gold poses significant cost pressures on laser manufacturing enterprises.

According to the industry sensitivity analysis model, when raw material prices rise by 20%, gross profit margin may decrease by 3-4 percentage points [2]. For enterprises where raw material costs account for 60%-70% of total costs, their gross profit margin is more sensitive to raw material prices.

As the only domestic enterprise that independently develops and produces core devices such as laser chips, special optical fibers, and combiners, Raycus Laser has significant vertical integration advantages:

• Over 90% localization rate of core components
  , with costs 30% lower than imported brands
• 30% product cost reduction in 2024
  , with gross profit margin rising against the trend to over 35% (high-power product line)
• Established a regular annual cost reduction planning mechanism
  , improving production efficiency through product miniaturization and standardization of core components

• Significant rise in raw material costs: copper +35%, aluminum +22%, gold +65%
• If price hikes are not implemented, the incremental raw material costs will directly erode gross profit margins
• It is expected that gross profit margin may face pressure of 1-2 percentage points in the short term

1. Economies of scale emerging
   : cumulative shipments of 132,000 units in the first three quarters of 2025, up 6.94% year-on-year; improved capacity utilization dilutes fixed costs
2. Product structure optimization
   : revenue share of 10,000W+ products increased from 42% to 48%, and high-value-added products have higher gross profit margins
3. Cost reduction measures taking effect
   : cost advantages brought by vertical integration are gradually emerging

• Suspending price hikes amid rising raw material costs will compress profit margins
• Gross profit margin is already at a relatively low level in the industry (approximately 19.69%), and further pressure may affect R&D investment capabilities

• Domestic leader in fiber lasers
  : 26.8% market share in 2024, surpassing IPG to become the top in China [3]
• Absolute leader in the 10,000W+ market
  : market share of 45%, far exceeding IPG’s 28%
• Second-largest fiber laser supplier globally
  : market share of approximately 15%-20%

• Leading technological innovation capabilities
  : one of the few global enterprises capable of mass-producing 300kW-class lasers
• Improved patent layout
  : number of patents exceeded 1,030 by the end of 2023
• Continuous increase in R&D investment
  : R&D expenses of RMB 260 million in the first three quarters of 2025, accounting for 10.38% of revenue

1. Respond to national policy guidance
   : actively respond to the spirit of the Central Economic Work Conference, reflecting the social responsibility of state-owned enterprises
2. Maintain industry ecology
   : prevent the worsening of price wars and protect the interests of small and medium-sized suppliers and customers
3. Enhance customer stickiness
   : strengthen cooperative relationships with downstream equipment integrators through price stability

Based on the DCF valuation model, assuming a WACC of 10% and a perpetual growth rate of 3%, the company’s reasonable market capitalization range is RMB 18-22 billion, corresponding to a stock price of RMB 32-39, representing a 20%-45% upside from the current price [4].

• Short-term
  : Against the backdrop of rising raw material costs coupled with the price hike moratorium, gross profit margin will face pressure of 1-2 percentage points
• Medium to long-term
  : Product structure optimization, effective cost reduction measures, and emerging economies of scale will drive sustained improvement in gross profit margin (inflection point already appeared in Q3)

• Short-term
  : Profit margins are under pressure, but market share and customer relationships are consolidated
• Medium to long-term
  : State-owned enterprise brand value, technological innovation advantages, and overseas market breakthroughs will strengthen comprehensive competitiveness

1. Whether the gross profit margin can continue the quarter-on-quarter improvement trend (21.06% achieved in Q3)
2. Volume growth and structural upgrading progress of high-power products (10,000W+)
3. Overseas business expansion and breakthroughs in the new energy sector
4. Whether industry price wars ease

[1] Dongguan Securities - Laser Industry Special Report: Broad Downstream Application Scenarios, Rising Penetration Rate (https://pdf.dfcfw.com/pdf/H3_AP202204061557602415_1.pdf)

[2] Eastmoney Securities - Analysis of the Impact of Rising Raw Material Prices on Gross Profit Margin of the Machinery Industry (https://pdf.dfcfw.com/pdf/H3_AP202103231474980382_1.pdf)

[3] Caifuhao - In-Depth Research on Raycus Laser (300747.SZ) as the Leading Domestic Fiber Laser Enterprise (https://caifuhao.eastmoney.com/news/20251227062730776850030)

[4] Eastmoney Securities - In-Depth Research on Raycus Laser (300747.SZ) (https://pdf.dfcfw.com/pdf/H3_AP202407181638041289_1.pdf)