Main points of investment:
Company: revenue is growing rapidly and gross profit margin remains high. 1) steady revenue growth: benefiting from the extensive distribution downstream, the company's operating income and return net profit CAGR in 17-22 were 41.81% and 57.80% respectively, with stable growth. 2) Equity incentive shows confidence in development: on September 25, 2023, the company issued a restricted stock incentive plan (draft), which intends to grant 2.1 million restricted shares to the incentive target. For income assessment, the target compound growth rate for the period from 23 to 25 is 15% and 12% respectively. 3) based on optical principle, focus 1: 4 strategy: the company's sensors and analytical instruments are mainly based on optical technologies such as infrared, ultraviolet and light scattering detection. Through the development of coking, the company has a comparative advantage in R & D costs and technology iterations. with the layout of the high-end instrument industry, this advantage will be gradually highlighted.
Gas sensor: the civilian products market maintains the fundamentals, and the car market opens and grows. 1) maintenance of the civilian market: civil air quality sensors account for 85% of the company's sales revenue in this field, and the downstream applications are mainly air purifiers and fresh air systems. With the improvement of residents' health awareness, the domestic market is expected to grow. 2) the fixed points of the vehicle market are continuous: the company actively distributes the vehicle field. According to the announcement, in April 2023, its vehicle gas sensors have been designated by 24 million projects. With the improvement of the permeability of new energy vehicles, the accumulation of technologies such as laser Raman and micro-flow infrared makes the company have a strong competitive advantage in this field.
Gas analysis instruments: policy to promote market demand, technology to achieve domestic substitution. With the improvement of people's requirements for environmental safety and the landing of government-related policies, the market of gas analytical instruments is expected to usher in an increase. Among them, the estimated demand for exhaust gas analyzers from 23 to 26 is 3.4 / 3.7, 4.3, 000, and CAGR is 12.88%. At the same time, the laser Raman spectroscopy technology developed by the company can realize the on-line real-time monitoring of a variety of gases, and is expected to achieve domestic substitution in the high-end gas analysis instrument industry.
"+ 4" industries: emerging industries are advancing steadily. 1) Ultrasonic gas meter: compared with the traditional gas meter, it has the advantage of precision and a wide range of alternative space. The company's "new annual production project of 3 million ultrasonic gas sensors and 1 million supporting instruments" was completed in May 23 and is expected to expand production capacity. 2) Medical and health: benefiting from the opening of the market end of the epidemic, the company's sales revenue of 2023H1 medical and health gas sensors increased by 270.77% compared with the same period last year. With the expansion of the medical device market, the demand for medical sensors is expected to increase. 3) low-carbon thermal engineering: the European market is more mature. 65% of the total sales of condensing furnaces in China in the past 22 years come from imports, and there is more room for substitution. The dual-carbon policy is expected to improve the permeability of condensing furnaces. 4) High temperature gas sensor: the company has realized self-production of ceramic chips and batch supply of oxygen sensors, and is expected to achieve rapid growth in 2023 through domestic substitution and customer layout at home and abroad.
Cover for the first time, giving a "buy" rating. We forecast that the homing net profit of the company from 2023 to 2025 will be 1.94 million, 288 and 412 million yuan respectively, the current share price (2023-9-26) is the corresponding price-to-earnings ratio of 27-18-13, and the 23-year PEG is 0.6. The average PE of the comparable company in 23-25 is 24x20, respectively, and the average PEG is 1.1in 23. Taking into account the company's deep ploughing of gas sensors, continued implementation of the "1x 4" strategy, multiple blossoms in emerging fields, steady progress, and first-time coverage, the company is given a "buy" rating.
Risk tips: optical technology market space is limited; emerging industries do not advance as expected; downstream demand fluctuations; in September 2023, the company issued a restricted stock incentive plan (draft), but the final implementation is uncertain. If there is a conflict between the incentive plan and the latest laws and regulations issued by the regulatory authorities, the latest laws and regulations shall prevail to remind investors to pay attention to the relevant risks.