Core views:

A small giant of scientific instruments based on three-spectrum technology, with high R&D investment to help long-term growth. The company started with helium mass spectrometry leak detectors and is based on mass spectrometry, chromatography and other technologies, and has now formed three major business layouts:

In '22, environmental online monitoring/leak detector/analytical instruments achieved revenue of 2.94/2.89/037 million yuan.

The top two shareholders, Zang Mu and Huang Wenping, are the chairman, general manager, and R&D leaders, and have many years of experience in instrument sales and R&D; the company's 2023Q1-3 R&D expenses reached 118 million yuan (+14.94% year-on-year), and the corresponding R&D expenses rate reached 23.35%.

Analytical instruments: Chromatography has broken through university research customers, and since 22 years, various types of mass spectrometry have been developed and marketed. The company's analytical instrument business focuses on chromatography, spectroscopy and consumables products. In '22, it achieved revenue of 37.15 million yuan (+32% year-on-year) and a gross margin of 50.8%. According to the Chinese government procurement network, in August 2022, the company sold 1 ultra-high performance liquid chromatograph to the Chinese Academy of Sciences, breaking through the field of university research.

In addition, the company is also actively deploying mass spectrometry: according to the June 2023 investor relations activity record table, construction, complete machine development and testing and verification of the four-stage pole flight time liquid quality instrument development platform; according to the Instrument Learning Network, the company launched a new triple quadrupole liquid quality combination system and atmospheric VOCs multi-component dynamic monitoring system (TOF) in September 2023, hoping that the scientific instrument business will inject new momentum into the company.

A leading company in the leak detector industry, environmental monitoring lays the foundation for performance. The company's industrial process leak detection instruments are mainly used in new energy, semiconductors, etc., and its core technical indicators have a leading edge, which is the company's main driving force for growth. Revenue reached 289 million yuan in '22 (nearly 34% CAGR in 2018-2022) and gross margin reached 47.6%. Environmental online monitoring instruments had 22-year revenue of 294 million yuan (-0.56% year-on-year) and gross margin of 45.31%, building the foundation for steady performance.

Profit forecasts and investment advice. The company's net profit for 23-25 is estimated at 0.63/0.89/123 million yuan, corresponding to the latest PE of 43.12/30.72/22.22x. The reference industry gave 35xPE in '24, with a corresponding reasonable value of 23.11 yuan/share, covering the “buy” rating for the first time.

Risk warning. Order acquisition falls short of expectations; heavy reliance on government subsidies; increased competition risks, etc.