Event: the company released the third quarter report of 2020, the company achieved operating income of 188 million yuan in the first three quarters, down 2.59% from the same period last year, and achieved a net profit of 43.5906 million yuan, down 18.59% from the same period last year.
In the third quarter, the company realized operating income of 81.0918 million yuan, an increase of 18.87% over the same period last year, and a net profit of 22.0853 million yuan, an increase of 24.12% over the same period last year.
The results recovered significantly in the third quarter, and domestic and foreign demand continued to recover. The company increased its market expansion in the third quarter to achieve the overall steady growth of pressure testing products and the incremental growth of temperature testing products. In the first three quarters, the company's domestic market orders grew by more than 6%. The company's international market orders increased by 1.3% in the first three quarters compared with the same period last year, of which orders increased by 15% in the third quarter compared with the same period last year. The company has made great efforts to expand its business in the United States and improve its testing service capacity, with orders growing by 10 percent in the first three quarters of the United States against the backdrop of outbreaks and trade disputes. The company's gross profit margin reached 74.18% in the third quarter, and the net profit margin reached 27.64%. Since the beginning of this year, profitability has continued to recover, which also shows that the company's performance is on the track of recovery under the situation that the domestic epidemic has been fully controlled and overseas demand is picking up.
The high-end customers of the company's products are of high quality, and the import substitution space is huge. The global pressure testing and temperature calibration market has the characteristics of fragmentation, and is closely related to the level of industrial development and economic scale. The company's main competitors are Fluke, Druck, WIKA and other European and American enterprises. The import scale of Chinese pressure testing instruments in 2018 is 8.213 billion yuan, and the company's domestic sales in 2018 is only 148 million yuan. The company's customers are high-end, and domestic customers include three major oil companies, five major power generation groups, iron and steel companies, provincial and municipal metrology institutes, automobile companies, railway groups, medical institutions, research institutions, food and beverage enterprises, etc. Overseas customers include BMW, Mercedes-Benz and other automobile companies, Pfizer Inc Pharmaceutical, Bombardier, Airbus, Shell, Coca-Cola Company and other leading enterprises in many fields.
Set to increase production and long-term growth of MEMS project layout. During the reporting period, the company will promote the fixed production expansion project and add 30,000 pressure and temperature testing instruments per year, which will greatly alleviate the bottleneck of the company's production capacity. At the same time, the company promotes the construction of MEMS sensor vertical industry intelligent manufacturing project, with an annual production target of 300000 pressure sensor cores. It is estimated that after reaching production, the annual sales income is about 819 million yuan and the net profit is 205 million yuan.
Company profit forecast and investment rating: we expect the company's operating income from 2020 to 2022 to be 319 million yuan, 377 million yuan and 519 million yuan respectively; the net profit returned to the parent is 89 million yuan, 106 million yuan and 150 million yuan respectively; and the EPS is 0.41 yuan, 0.48 yuan and 0.69 yuan respectively, corresponding to the PE of 44x, 37x and 26x respectively, maintaining the "highly recommended" rating.
Risk tips: 1, production expansion and MEMS project construction are not as expected; 2, downstream demand is not as expected.
