Key points of investment

This Friday (6/9), a GEM listed company, “Meishuo Technology”, asked for a quote.

Meishuo Technology (301295): The company has been deeply involved in relay control devices and their derivative actuators for 15 years. The main products include general relays, automotive relays, fluid solenoid valves, and magnetic latching relays. The company achieved revenue of 463 million yuan/577 million yuan/537 million yuan/537 million yuan respectively in 2020 and 2022, YOY was 17.35%/24.77%/-6.97% in that order, and the three-year revenue compound annual growth rate was 10.85%; it achieved net profit of 67 million yuan/67 million yuan/66 million yuan, YOY was 12.13%/-0.36%/-1.79% in that order, and the three-year compound annual growth rate of net profit of 3.14% for Fumo. In the latest reporting period, 2023Q1 achieved operating income of 118 million yuan, a year-on-year decrease of 6.52%; it achieved net profit of 12 million yuan to its mother, a year-on-year decrease of 21.18%. According to preliminary forecasts, net profit attributable to parent company owners is expected to reach $031 million to $35 million, a change of 3.13% to 16.69% over the same period last year.

Investment highlights: 1. The company has established a deep bond with Midea, and its supply share in the relay field exceeds 40% all year round; with home appliances as the basic market, the company's market share of general relays for home appliances ranked first in Zhejiang Province in 2019-2020. Through technological research and development accumulation, the company has entered the supplier system of leading downstream home appliance manufacturers including Midea, TCL, Oaks, Galanz, Haier, etc. In the context where domestic companies mostly provide low-end supply, the company's products have taken a place in the middle and high-end markets, establishing deep adhesion with Midea, Oaks, TCL, etc. The supply share of the company's relay products to Midea has remained at a high level all year round. In 2020-2022, it was 46.36%, 43.00%, and 43.80% respectively. At the same time, the company has secondary development capabilities for customers. After entering the supplier system of American and Panasonic through conventional products such as general relays, the company used existing resources to develop new fluid solenoid valve products that can be used in the kitchen and bathroom fields of home appliances such as water purifiers, smart bathrooms, dishwashers, washing machines, etc. Taken together, in terms of sales, the market share of general relays for household appliances ranked first in Zhejiang Province in 2019-2020. 2. The company is actively expanding its product line to smart meters and other fields. Based on strong automation equipment design and production capacity, the company quickly built a production line and completed standard index debugging in the field of fluid solenoid valves that are in line with the underlying manufacturing logic of relays. Mass production was achieved in a short period of time. The products can be applied to the kitchen and bathroom fields of home appliances such as water purifiers, smart bathrooms, dishwashers, etc. In addition, the company actively grasped the trend of intelligence and digitalization and developed a magnetic holding relay with a short action time and low absorption and return, which greatly improved the consistency, stability and service life of the product while meeting the requirements of operation time. The relay is one of the essential electronic components of smart meters. The company's magnetic latching relays were released rapidly, and its revenue contribution increased from 246,700 yuan in 2020 to 298.15 million yuan in 2022.

Comparison of listed companies in the same industry: Taking into account business and product types, Hongfa Co., Ltd., Sanyou Lianzhong, and Aerospace Electric were selected as comparable listed companies of Meishuo Technology. Judging from the comparable companies mentioned above, the average revenue scale in 2022 was 6.535 billion yuan, the comparable PE-TTM (arithmetic average) was 36.24X, and gross sales margin was 28.04%; in comparison, the company's revenue scale and gross margin were lower than the industry average.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.