On October 22, 2020, the Traffic Management Bureau of the Ministry of Public Security announced 12 new measures for public security traffic management to improve the business environment in three aspects, including "remote office", "convenient office" and "online office". The new policy will be implemented from November 20, 2020. These include "expanding the scope of exemption from inspection for motor vehicles and exempting seven to nine non-operating minibuses (except minivans) within six years from inspection on the basis of exemption from inspection for less than six years. For non-operating minibuses (except minivans) that have been in operation for less than 6 years and less than 10 years, the inspection shall be adjusted from once a year to once every two years. If a vehicle has a casualty traffic accident or illegal modification is punished according to law, it shall still be inspected periodically in accordance with the original provisions to ensure the safety and performance of the vehicle.
The impact of the new rules: taking 2021 as an example, about 32.43 million vehicles affected by the new regulations are within the scope of exemption from inspection, accounting for about 17.82% of the proportion that should be inspected under the current policy; the number of vehicles to be tested under the new policy is 149.57 million in 2021, a decrease of 7.63% compared with the same period last year; the cost of vehicle testing varies across the country. According to the calculation of 300 yuan per inspection, the size of the national annual automobile inspection market in 2021 is about 44.87 billion yuan.
From the perspective of the company, the current main business of the company is motor vehicle testing equipment, and the company cuts into the motor vehicle testing service from 0 to 1. The company relies on the acquisition of high-quality sites and self-built sites to copy Linyi's honest management and service model, which will significantly improve the profitability of the acquisition sites. at the same time, the rise in annual inspection fees will further weaken the impact of the new rules and policies. In addition, the landing of the policy will also dispel the worries of investors in the new testing station, and the construction of the new testing station is expected to gradually return to normal, driving the steady growth of the company's main equipment business.
The company issued a forecast of results for the first three quarters of 2020: 1.5-163 million yuan in net profit, up-6.38%, 1.74% and 28.54% over the same period last year, with an increase of 2.01%, 28.54%.
We believe that the company's lower-than-expected 2020Q3 performance is mainly due to the following three reasons: ① overload control and remote sensing equipment due to the lack of government bidding this year, resulting in no revenue for overload treatment and remote sensing; ② affected by the epidemic may lead to slow progress of inspection and acceptance of testing stations, and longer payback cycle of company equipment sales. ③ is affected by the progress of the fixed increase, and the company's reserve testing station has not been acquired on a large scale. It is expected that the company has invested relevant costs (such as employee compensation and hospitality expenses, etc.) in the early stage, and the expenses may increase during the period.
We adjust our profit forecast and expect the company's net profit from 2020 to 2022 to be 2.05excerpt 440 million yuan, corresponding to the closing price of PE on October 23, which is 18.7 times that of 40.2 excerpt, maintaining a "prudent overweight" rating.
Risk hints: the motor vehicle testing policy has changed more than expected; the progress of mergers and acquisitions is not as expected; the government bidding for excess control and remote sensing is not as expected.
