This report is read as follows:

The company announces that the application for issuing convertible bonds will be considered by the exchange, and raising funds will further improve the company's cash flow, enhance the existing laboratory capacity, and improve management efficiency.

Main points of investment:

Maintain the "overweight" rating. The company issued a notice on the application for issuing convertible corporate bonds to non-specific objects and was examined and approved by the listing Review Committee of the Shanghai Stock Exchange. The total amount of funds raised by convertible bonds does not exceed 800 million yuan, maintaining EPS0.39/0.46/0.56 yuan for 23-25 years, and maintaining the target price of 13.86 yuan.

Raise funds to consolidate the internal skills of management and enhance the capacity of the laboratory. Where the funds raised will go:

1) acquisition of small equity: 118 million yuan will be used to acquire the remaining shares of Yunnan Yuntest, Anhui Tuowei and Hunan Huake, to enhance the company's management efficiency of M & A targets by increasing the control over subsidiaries, and to build a food and agricultural testing platform company in Central and Southwest China. 2) laboratory capacity replenishment: about 444 million yuan is used for the laboratory construction of Hunan Huake, Hunan Company, Xiongan Company and carbon emission management platform. Hunan Company's project focuses on increasing equipment capacity in the field of water conservancy testing. Xiongan project is invested in the potential market of Xiongan New area, and the dual-carbon platform project, a forward-looking carbon testing project, is laid out in advance. 3) the compensation liquidity is 239 million yuan, and the more abundant liquidity also lays the foundation for the acceleration of the company's subsequent epitaxial mergers and acquisitions.

Engineering testing has rebounded significantly in the past 23 years, and epitaxial mergers and acquisitions are expected to speed up. The revenue of 23H1 engineering testing plate is + 14% compared with the same period last year, which is significantly better than the market expectation. although the real estate demand is weak, the company takes orders for infrastructure projects faster, and rapid structural optimization drives plate repair, indicating that building materials testing, as the basic market of the company, has stabilized and rebounded. 23-24 "cross-regional, cross-domain" extension M & An is expected to return to the acceleration channel. From the company's secondary equity incentive target, the annualized compound growth target during the 14th five-year Plan period is still between 23-25%.

Risk hint: the landing of infrastructure projects is not as expected, and the return of government customers is not as expected.