Non-destructive testing industry long slope thick snow, downstream application scene expansion, policy support + import substitution, promising development prospects. At present, non-destructive testing has become an indispensable and effective tool in industrial development, with a wide range of applications, from aircraft, satellites and other aerospace to daily necessities, so it plays a key role in various industries of the national economy. it is an important means to ensure and improve product quality. According to the company's prospectus, the global ultrasound market is expected to grow to $3.93 billion in 2022 and grow at a compound annual growth rate of 8.3% from 2016 to 2022, according to a study by market consultancy Markets and Markets. In recent years, the competitiveness of domestic manufacturers has been increasing, but high-end products are still dominated by foreign enterprises. according to the relevant data of Chinese customs statistics, from 2019 to 2021, China imported non-destructive testing equipment (excluding probes and other accessories) import volume of 1.646 billion yuan, 1.486 billion yuan and 1.39 billion yuan respectively, the import substitution trend is more obvious. At the same time, under the background of "Industry 4.0" and the sustained and rapid development of the national economy, the national industrial policy continues to support the non-destructive testing industry.

The leading enterprises of domestic ultrasonic phased array testing equipment, with high profitability and solid technical reserves, are expected to benefit from the import substitution trend and downstream application scenario expansion. The company's main products include industrial ultrasonic phased array testing equipment, automatic testing equipment, ultrasonic transducers, customized testing and analysis software and other testing spare parts. The company can provide targeted and complete testing programs, from front-end testing technology to probes and equipment, to back-end system integration and intelligent evaluation and other high-end software algorithms, can provide customers with "one-stop" ultrasonic testing equipment and services, forming a full-chain service capability. The company's performance grew steadily, with total operating income from 72 million yuan to 202 million yuan from 2018 to 2022, with CAGR of 29.12%; net profit from 19 million yuan to 85 million yuan, and CAGR reaching 45.36%.

The consolidated gross profit margin remained high, at 75.92 per cent, 76.69 per cent and 73.90 per cent respectively in 2020-2022.

Since its inception, through independent research and development based on phased array technology, the company has formed a number of key core technologies around the full chain business system of phased array ultrasonic detector, ultrasonic transducer and industry application solution. build a higher product technical barrier, the company's R & D expenses from 2020 to 2022 are 14.2722 million yuan, 17.8251 million yuan and 22.5486 million yuan respectively. The corresponding R & D expenditure rates are 11.16%, 11.89% and 11.16%, respectively.

Fund-raising projects help the company solve the problem of long-term development constraints, and its core competitiveness continues to enhance. The net amount of the actual funds raised by the company after deducting the issuance expenses is planned to be invested in the construction project of intelligent production base for non-destructive testing and the construction project of headquarters building and R & D center, with a total investment of 489 million yuan.

After the completion of the construction project of the intelligent production base for non-destructive testing, it is expected to form the production capacity of 1000 sets of industrial portable nondestructive testing equipment, 100 sets of automatic testing equipment, 200000 industrial ultrasonic probes, 18000 phased array probes and other accessories such as scanning devices. The implementation of the project will solve the company's existing capacity bottlenecks and site restrictions, improve the company's production process and production efficiency, enhance product supply capacity, and expand the company's business scale. The headquarters building and R & D center construction project plans to invest 161 million yuan to build the headquarters office building and R & D center, which will improve employees' workplaces, set up multi-function exhibition halls to display the company's high-quality products in all directions, and continuously improve the company's technical level and independent innovation ability. enhance the company's core competitiveness.

Earnings forecast and valuation analysis: considering both the relative valuation method and the absolute valuation method, we select the intersection of the relative valuation range and the absolute valuation interval as the overall forward fair value range of 6-12 months after listing, which is 3.499 billion-4.024 billion yuan. Suppose the total share capital after the issue is 61.9 million shares, the corresponding share price is 56.53 yuan ~ 65.01 yuan, and the price center is 60.77 yuan. According to the company's non-return net profit deducted in 2022, the corresponding PE is 41.16-47.34 times; according to the company's non-return net profit in 2022, the corresponding PE is 44.86-51.59 times; according to the company's 2023 forecast net profit, the corresponding PE is 32.40-37.26 times. The net profit of the company in the past four quarters is 86 million yuan, the corresponding non-pre-deduction PE (TTM) is 40.69-46.79 times, the issuer's non-post-return net profit is 79 million yuan, and the corresponding non-post-deduction PE (TTM) is 44.29-50.94 times.

Risk hint: the assumption of profit forecast is not valid, which affects the risk of profit forecast and valuation revision; the risk of falling gross profit margin; the risk of increasing accounts receivable; the risk of technology substitution; the risk of raising funds for investment projects; the risk that products can not effectively achieve import substitution; the risk of industry policy change; the risk of economic cycle fluctuation and market development; the risk of changing preferential tax policies for high-tech enterprises. The operation and management risk caused by the expansion of scale; the risk that the land of this investment project has not yet been acquired; the risk of sustained growth in performance; the procurement risk of major raw materials; the risk of product quality; the risk of loss of technical personnel; the risk of core technology disclosure; the risk of diluting the immediate return of the IPO; the risk of failure; the risk controlled by the actual controller.

Investors should make their own investment decisions and bear their own investment risks.