Event
The company released its half-yearly report on August 28th, with 2022H1 operating income of 119 million yuan (+ 20.369%), net profit of 23 million yuan (+ 19.29%), gross profit margin of 55.18% (+ 1.l6pcts) and net profit rate of 19.46% (+ 0.14pcts). 2022 Q2 has an operating income of 68 million yuan (year-on-year + 23.28%, month-on-month + 36.529%) and a net profit of 15 million yuan (year-on-year + 49.649%, month-on-month + 86.17%).
Double benefits in the field of military equipment and civil aircraft, driving continuous improvement in performance Western testing was established in 2010 and listed on the gem on July 26, 2022. The company is a third-party inspection and testing service organization mainly engaged in the inspection and testing of military equipment and civil aircraft products, providing customers with environmental and reliability testing, electronic components testing, electromagnetic compatibility testing and other inspection services. At the same time, it involves the R & D, production and sales of testing equipment, and entered the Denso business in 2021 and began to lay out the supporting business of the industrial chain.
With the gradual installation of land, sea, air and other new types of weapons and equipment, as well as the vigorous development of the aerospace industry, it has promoted the purchase of military equipment and effectively driven the growth of the military third-party inspection business; at the same time, the rise of C919 and other large civil aircraft has brought huge development space for the company's civil testing business field. 2022 the operating income of H1 Company is 119 million yuan, + 20.36%) the steady growth is mainly due to the gradual completion of the acceptance of the project and the gradual expansion of laboratory capacity in Xi'an and Chengdu.
From a business point of view:
L) the operating income of inspection and testing service is 111 million yuan (+ 20.59%), and the proportion of business income (93.70% quotation 0.18pcts) remains stable, of which:
The environmental and reliability test business achieved revenue of 69 million yuan (+ 4.47%), and the proportion of business income decreased from 8.84pcts to 58.12%. It still occupied a large share of the business, mainly due to the influence of the 2022 Q1 epidemic in Xi'an, and the obvious seasonal characteristics of military reliability tests, resulting in slow revenue growth during the reporting period, with the acceleration of product delivery and the release of production capacity of new equipment. Business revenue will increase greatly in the second half of the year. The revenue of electronic components inspection and screening business reached 31 million yuan (+ 58.19%), and the proportion of business income increased from 6.28pcts to 26.25%. This is mainly due to the gradual completion of acceptance of independent controllable projects undertaken by the company at the end of 2021. The company's investment in program development and technology iteration increased, and the related screening business increased; the revenue of electromagnetic compatibility test business reached 11 million yuan (+ 70.44%), and the proportion of business income increased by 2.74pcts to 9.33%, mainly due to the release of new electromagnetic test capacity in the first half of 2021, and the volume of electromagnetic business increased rapidly.
(2) the sales of testing equipment realized business income of 5 million yuan (- 17.00%), and the proportion of business income (3.91%) decreased (3.91%). We believe that it is mainly due to the substantial reduction in the number of goods issued (846200 yuan,-46.51%) caused by the impact of the epidemic. (3) the electronic assembly business is a horizontal extension of the electronic components testing screen business, with a business income of 3 million yuan (+ 493.349%) and a slight increase in the share of business income (2.300% score 0.84pcts).
The growth rate of homed net profit (23 million yuan, + 19.29%) has declined, which we believe is mainly due to the substantial increase in income tax expenses (5.8293 million yuan, + 46.02%) caused by subsidiary companies turning losses into profits. The gross profit margin (55.18% minutes 1.16pcts) has increased. We believe that the gross profit margin of the electronic components screening business has increased to 67.39%. At the same time, the proportion of the business superimposed by this business has increased significantly, leading to the increase of the overall gross profit margin.
Research and development capability continues to improve, pay attention to the payback situation
In terms of cost, the company's cost during the period was 37 million yuan (+ 22.61% 6), and the expense rate increased slightly by 31.47% (+ 0.58pcts). This is mainly due to the company's increased R & D investment, such as improving the test capability of large-scale equipment, enhancing the research and development of automatic test systems for RF devices and autonomous controllable technology for electronic components, etc., and R & D expenses during the reporting period (6 million yuan) + 41.579%) and the rate of R & D expenses (5.239% focus 10.78pcts) have all increased. The company's three-fee fee is 31 million yuan (+ 19.420%), and the three-fee rate (26.249% 6 maxim 0.21pcts) is well controlled, among which, except for the slight increase in the management fee rate (12.57% maxim 0.28pcts), the sales fee rate (12.23% maxim 0.26pcts) and the financial expense rate (1.449% 6memtel 0.23pcts) have decreased.
From the perspective of assets and liabilities, the company's 2022 H1 accounts receivable totaled 241 million yuan, an increase of 23.60% over the end of 2021, mainly due to factors such as military industry procurement plans and settlement processes. Accounts receivable increased with the expansion of business scale. The inventory was 18 million yuan, an increase of 28.70% over the end of 2021, mainly due to the increase in contract performance costs (16 million yuan, + 60.826) caused by the company's independent controllable verification projects that had not yet completed the test. We believe that with the gradual delivery of autonomous and controllable projects, superimposing the characteristics of military customers' repayment in the second half of the year, the performance can be expected in the second half of 2022. From the cash flow situation, the net cash flow generated by the company's 2022H1 operating activities is-8 million yuan (- 233.32%), mainly due to the fact that the rebate is not up to expectations due to the epidemic in Xi'an. The net cash flow generated by investment activities is-20 million yuan (+ 63.64% 6), which is mainly due to the investment of a large number of special equipment to expand production capacity; the net cash flow generated by fund-raising activities is 8 million yuan (- 400.58%), mainly due to the increase in cash inflows brought about by capital-related business.
The testing area is relatively limited and the company currently has testing bases in Xi'an and Chengdu. During the reporting period, Xi'an laboratory's operating performance and financial condition are good, and its production capacity is also gradually expanding. Chengdu Laboratory has also entered the growth period, and the funds raised by IPO will help expand the Chengdu laboratory, expand the scale of inspection, increase the coverage of tests, improve the ability of inspection and testing, further meet the testing needs of customers, better serve customers in the southwest region, and enhance the competitiveness of the company.
In the future, the company plans to complete the layout of regional laboratories in East China, North China, South China and Central China one after another, so as to form a national service network, expand the service radius and improve the timeliness of testing.
The implementation of IPO fundraising project will enhance the company's profitability.
The funds raised by the company's IPO project will be used for the Xi'an headquarters testing base construction project and the Chengdu testing base expansion project, which, after implementation, will expand the capacity of publicly available inspection and testing services in the main business. At the same time, the Xi'an headquarter project realizes rational allocation of laboratory resources and omni-directional supervision of the testing process through the construction of an information system, effectively improving the company's management level and service efficiency.
The construction project of the R & D center carries out research and development through four parts: the environment and reliability test of aero-engine parts, the comprehensive marine environment test, the comprehensive test of temperature, humidity, vibration and high four stresses, and the localization verification of electronic components. While helping the company to enter the engine parts testing industry, it also carries out technical reserves for the company, which significantly improves the company's technical level and overall competitiveness.
The net cash flow generated by fund-raising activities is 8 million yuan (- 400.58%), which is mainly due to the increase in cash inflows brought about by capital contact business.
The testing area is relatively limited and the company currently has testing bases in Xi'an and Chengdu. During the reporting period, Xi'an laboratory's operating performance and financial condition are good, and its production capacity is also gradually expanding. Chengdu Laboratory has also entered the growth period, and the funds raised by IPO will help expand the Chengdu laboratory, expand the scale of inspection, increase the coverage of tests, improve the ability of inspection and testing, further meet the testing needs of customers, better serve customers in the southwest region, and enhance the competitiveness of the company.
In the future, the company plans to complete the layout of regional laboratories in East China, North China, South China and Central China one after another, so as to form a national service network, expand the service radius and improve the timeliness of testing.
The implementation of IPO fundraising project will enhance the company's profitability.
The funds raised by the company's IPO project will be used for the Xi'an headquarters testing base construction project and the Chengdu testing base expansion project, which, after implementation, will expand the capacity of publicly available inspection and testing services in the main business. At the same time, the Xi'an headquarter project realizes rational allocation of laboratory resources and omni-directional supervision of the testing process through the construction of an information system, effectively improving the company's management level and service efficiency.
The construction project of the R & D center carries out research and development through four parts: the environment and reliability test of aero-engine parts, the comprehensive marine environment test, the comprehensive test of temperature, humidity, vibration and high four stresses, and the localization verification of electronic components. While helping the company to enter the engine parts testing industry, it also carries out technical reserves for the company, which significantly improves the company's technical level and overall competitiveness.
Investment advice.
We believe that:
1) the company benefits from the development of military weapons and equipment and civil aircraft industry, and its performance is expected to continue to improve in the future.
2) the company will enter the Denso business, improve the layout of the industrial chain, meet the further Denso needs of customers after completing the screening of electronic components, and provide customers with more comprehensive and complete services.
3) the company's future coverage of multi-regional laboratory sites across the country may help the company increase its business volume.
4) the landing of fund-raising projects, the realization of the company's capacity expansion, rational allocation of resources, and entry into the field of engine parts testing will improve the overall competitiveness of the company and promote the performance.
Based on the above point of view, we estimate that the operating income of the company from 2022 to 2024 will be 302 million yuan, 370 million yuan and 451 million yuan respectively, the net profit will be 83 million yuan, 100 million yuan and 120 million yuan respectively, and the EPS will be 0.98,1.18,1.42 yuan respectively. The corresponding PE from 2022 to 2024 was 44.19,36.70,30.50 times, respectively.
Risk hint
Product research and development is not as expected, fund-raising projects are not as expected, large scale of accounts receivable and seasonal payback risk
