Event: according to the company's three-quarter report for 2020, the company achieved revenue of 656 million yuan in the first three quarters of 2020, an increase of 6.31% over the same period last year, and a net profit of 158 million yuan, down 1.68% from the same period last year. The net profit after deducting non-return was 145 million yuan, an increase of 1.83% over the same period last year.
Comments:
The capital expenditure of the testing station slowed down and the performance was lower than expected. In the first three quarters of 2020, the company achieved revenue of 656 million yuan, an increase of 6.31% over the same period last year, and a net profit of 158 million yuan, down 1.68% from the same period last year. The net profit after deducting non-return was 145 million yuan, an increase of 1.83% over the same period last year. In the third quarter alone, the company achieved revenue of 257 million yuan, an increase of 24.34% over the same period last year, a net profit of 57 million yuan, an increase of 16.90% over the same period last year, and a net profit of 55 million yuan, an increase of 21.08% over the same period last year.
The lower-than-expected performance was mainly affected by two factors: first, it was greatly affected by the epidemic, the motor vehicle testing station resumed work later in the first half of the year, and the overall capital expenditure slowed down; second, the Ministry of Public Security launched a new policy of biennial inspection of private cars aged 6-10 years old, resulting in a weakening of capital expenditure enthusiasm at the testing station. The policy was officially released at the press conference of the Ministry of Public Security on October 22, and we believe that it will have a certain negative impact on the new capital expenditure of testing stations next year, but with the release of the negative effects of the new policy, vehicle inspection will pick up significantly in 2022, and the steady growth trend of the industry has not changed.
Profitability has declined in the short term, cost control is good, and future profitability is expected to be stable. In the first three quarters, the company's comprehensive gross profit margin was 42.03%, down 4.14 pct from the same period last year; the net profit margin was 24.0%, down 1.4pct from the same period last year. The decline in net interest rate in the first three quarters was less than that in gross profit margin, mainly due to the strengthening of cost control and the total decline in expense rate. In the first three quarters, the company's total expense rate was 18.29%, down 2.80pct from the same period last year. Among them, the sales expense rate, management expense rate and R & D expense rate were 6.70%, 8.21% and 3.74% respectively, down 2.38pct, 0.62pct and 1.76pct respectively. The R & D expenditure rate was-0.36%, an increase in 0.06pct compared with the same period last year. With the next increase in the proportion of the new station business (the environmental inspection transformation and upgrade has been completed), the company's overall gross profit margin still has room for further improvement.
Pay attention to the progress of the fixed increase, and be optimistic about the continuous layout of the company's testing stations. In the short term, the company has changed its fixed growth plan, and the pace of fixed increase is slower than expected, and the adjustment plan is expected to be completed by the end of this year. However, the acquisition of the company's testing stations has been carried out in an orderly manner, and we are actively optimistic about the continuous layout of the company in the field of testing stations. In the medium and long term, we believe that the company, as the leader of motor vehicle testing equipment, accounts for more than 60% of the market share in the motor vehicle testing network system, and the company has natural advantages in acquiring testing stations and improving the operational efficiency of testing stations in the future. In addition, the company has acquired Xingshi testing and Linyi integrity testing stations, and has accumulated a wealth of experience in the operation and acquisition of testing stations. We believe that the company is expected to integrate the motor vehicle testing industry by virtue of technology, capital and first-mover advantages, and build it into a domestic motor vehicle testing integrated service leader.
Profit forecast and investment rating. We downgrade the company's earnings forecast, and we estimate that the diluted EPS of the company for 2020-2022 will be 1.03 pound 1.31 shock 1.80, corresponding to the closing price of 43.38 yuan per share on October 29, 2020, the price-to-earnings ratio of 33-25-19. Maintain the company's "buy" investment rating
Risk factors. Car sales continue to decline, testing station acquisition integration is not as expected, the industry has vicious competition.
