Introduction to this report:
The company's new production base has been put into operation, new product promotion efforts have been strengthened, and 23Q3 revenue increased 20% year over year. Color-quality combination instruments and ICP spectroscopy R&D and production projects were established to develop organic sample analysis layouts and achieve full coverage of inorganic sample analysis instruments.
Key points of investment:
Maintain the “Overweight” rating. According to the company's financial data, we lowered the company's attributable net profit forecast for 2023-2025 to 0.53/0.84/103 million yuan (previously 0.67/0.92/114 million yuan), respectively, and the corresponding EPS to 0.78/1.24/1.53 yuan, respectively. Tianrui Instruments and Gangyanak were selected as comparable companies. Comparable companies' average PE value in 2024 was 40 times higher. Since the comparable company has the same laboratory analytical instrument business as the company, considering that the company is developing the field of organic analysis and achieving full coverage of inorganic analysis, the company was given 40 times PE in 2024, and the target price was lowered to 50.19 yuan (originally 57.73 yuan), maintaining the “increase in holdings” rating.
The performance was slightly lower than expected. The first three quarters of 2023 achieved revenue of nearly 300 million yuan, a year-on-year increase of 20%; imputed net profit of 26.6 million yuan, a year-on-year decrease of 23%. 2023Q3 achieved revenue of 104 million yuan in a single quarter, up 11% year on year; imputed net profit was 3.83 million yuan, down 69% year on year. The reasons for the decline in attributable net profit are: ① the increase in depreciation and property expenses after the new production base is put into use; ② the increase in R&D personnel and material investment in new R&D projects; ③ the increase in marketing expenses due to the marketing of new products.
The remaining funds from the fundraising project are used for GC-MS combiners and ICP spectrometers projects to develop organic analysis layouts and achieve full coverage of inorganic analysis. The company's fund-raising project balance of 70 million yuan will be used for gas chromatography-mass spectrometry (GC-MS) combined instruments, pre-treatment systems, and inductively coupled plasma (ICP) spectroscopy production and R&D projects, respectively. The GC-MS project will expand the company's layout in the field of organic sample analysis instruments; the ICP spectroscopy project will achieve full coverage of the company's inorganic analysis and testing instruments.
R&D investment gradually increased, and net operating cash flow increased 20% year over year. 1) The company continues to establish R&D projects. 2023Q3 has invested 36.86 million yuan in R&D, an increase of 37% over the previous year. 2) The decline in procurement expenses was compounded by the increase in cash received from the sale of goods. The net operating cash flow of 2023Q3 was 15.77 million yuan, an increase of 20% over the previous year.
Risk warning: risk of technology iteration, risk of price fluctuations of raw materials.