The company is a holding subsidiary of Dongfang Keyi Holding Group Co., Ltd., a subsidiary of the Chinese Academy of Sciences Holdings Co., Ltd., and is one of the few comprehensive service providers in China that can fully provide instrument sales, leasing, system integration and related technical services. The company has been deeply involved in the field of testing and measurement for many years, providing customers with competitive products in various fields such as 5G communications, new energy vehicles, industrial electronics, consumer electronics, and research institutes.
Investment points:
From equipment agents to test environment integrated solution providers: Due to historical reasons and institutional characteristics in the field of science and technology in China, the only providers with large-scale test equipment system solutions over the years are companies and China Instrument Import and Export Group. In the early stages of development, the company started by representing foreign monopoly test equipment. On the basis of gradually consolidating the relationship between the original supply of upstream equipment and the demand of downstream customers, the company actively transformed into an overall laboratory system integration solution provider.
Currently, the company has the largest sales share of many domestic and foreign test equipment giants in the mainland China market. Among the many core test equipment for 5G standard formulation and large-scale construction, the company has comprehensive competitiveness in multiple dimensions such as customer resources, product inventory, capital and service.
Relatively irreplaceable drive the company's steady growth: with years of experience in the market, the company has a strong understanding and ability to meet customer needs. First, the company is closely linked to upstream and downstream, and customers consider supply guarantees and technical capabilities, and generally will not replace suppliers; second, the company continues to innovate around customers, from importing traditional agency equipment to providing overall one-stop solutions, making customers highly dependent on the ecosystem; third, the company's sales network is spread all over the country, which can provide strong guarantees for customers' R&D branches anytime, anywhere.
5G will first drive the company to open the growth ceiling: 5G construction has already begun one after another. Whether it is operators, equipment vendors, chip vendors, or terminal solution providers, it will face large-scale demand for test equipment simulation experiments, and the company's growth ceiling will quickly open up. In addition to 5G, China's transformation into a high-tech industry and the spread of new energy vehicles will protect the company's growth ceiling.
Factoring and agency business can be expected in the future: In addition to the instrumentation business that the company focuses on, the factoring and agency business is growing rapidly, the profit structure is excellent, and the future is very promising.
In particular, with the gradual upgrading of testing equipment in the future, unit prices will continue to rise, which will inevitably lead to an increase in the revenue of the factoring business; the agency business is mainly concentrated in the Chinese Academy of Sciences system, and with the continuous deepening of the transformation of high-end manufacturing in China, the agency business is also likely to continue to grow.
Profit forecast and investment suggestions: The company is expected to achieve net profit of 84 million, 132 million, and 234 million yuan in 2019, 2020, and 2021, respectively, corresponding to EPS of 0.53 yuan, 0.84 yuan, and 1.49 yuan respectively; corresponding to the current stock price PE is 38 times, 24 times, and 14 times, respectively; for the first time, we have covered the “buy” ratings given to the company.
Risk factors: the risk that 5G construction will not meet expectations, the risk of trade friction between China and the US, and the risk of lifting the ban and reducing holdings.