Main points of investment
The company released its report for the third quarter of 2017: in the first three quarters of 2017, the company achieved operating income of 445 million yuan, an increase of 57.45% over the same period last year, and a net profit of 67.2004 million yuan, an increase of 27.57% over the same period last year.
The revenue of the parent company increased by 35.95%, while the subsidiary company further increased its revenue. In the first three quarters, the company achieved revenue of 445 million yuan, an increase of 162 million yuan, of which 83.9377 million yuan came from the consolidated income of the acquisition company.
The parent company achieved revenue of 279 million yuan in the first three quarters, an increase of 35.95% over the same period last year, and the company's original instrument business achieved rapid growth.
The comprehensive gross profit margin reached 54.50%, an increase of 0.77pct over the same period last year; the expense rate decreased by 1.28pct. The company's quarterly gross profit margin was 52.96% in the third quarter, an increase in 2.68pct over the same period last year and a decrease in 3.43pct compared with the previous year. It will be affected by Tianrui Environmental recognized income and other factors in the single quarter, which fluctuates normally compared with previous years. The company's sales expense rate significantly reduced 4.97pct, while the financial rate increased 4.26pct, mainly due to the company's cash payment for mergers and acquisitions and reduced interest.
The company is the leader of XRF equipment, the field of food security is expected to usher in a new round of opportunities. The company is the leader of XRF equipment and has the most complete chemical testing equipment in China. The State Grain Administration issued a notice on the implementation of the "High quality Grain Project". It plans to invest 25 billion yuan in 2017-2019, from action demonstration counties and demonstration enterprises to food security inspection system, and then to the comprehensive construction of grain post-natal service system. The annual demand for new equipment is about 2.5 billion yuan, which is expected to bring a new round of opportunities for the company's traditional main business.
Epitaxial mergers and acquisitions strengthen the layout of environmental protection, food safety and medical areas, and capital operation enters the harvest period. The company has acquired four subsidiaries in cash, and its exam preparation performance reached 63.84 million yuan and 84.05 million yuan respectively in 17 and 18 years. Through epitaxial mergers and acquisitions, the company has moved from testing equipment to downstream environmental protection engineering and medical third-party testing, to fast-growing industries such as VOCs online monitoring and POCT in vitro diagnosis, and at the same time driving the sales of its own testing equipment, all four subsidiaries have merged, which will further improve the company's performance growth.
Profit forecast and rating: optimistic about the medium-and long-term growth trend of the inspection and testing industry, "high-quality food project" is expected to bring new opportunities for the company's traditional main business. The company is expected to maintain an "overweight" rating of 0.26 EPS from 2017 to 2019, respectively.
Risk hint: the price war of testing equipment, environmental protection and food safety policies are lower than expected.